Friends Provident Foundation has increased its impact investment allocation from 10% of its endowment to 33%.
It has achieved this by doubling its investment in Snowball, a specialist impact fund, and has pledged to invest a further £1m for every £10m Snowball raises.
Prior to the increase, the foundation held £2.5m in impact investments, of which £1.5m was with Snowball.
The foundation believes that the positive impact the move will have will outweigh a slight reduction in investment income.
“A whole endowment approach brings immense mission value,” said Danielle Walker-Palmour, a director of Friends Provident Foundation.
“Plus, we estimate our increased allocation to impact investing of 33% of our endowment will result in an estimated income foregone of just 0.46% compared to our existing portfolio. We believe this income foregone, the equivalent of a couple of grants per year, is excellent value for the significant contribution to mission and positive impact.”
Golden Bottle Trust
Friends Provident foundation is not alone in increasing its investment in Snowball.
The Golden Bottle Trust, the philanthropic vehicle for the UK’s oldest privately-owned bank C. Hoare & Co and the Hoare family, has also doubled its investments in the fund.
“We think that it is vital that the good done with our grants is not unintentionally undone by the impact of our investments,” said Rennie Hoare, partner and head of philanthropy at C. Hoare & Co.
“This is why we use a total portfolio impact approach - where both investments and grants seek to produce an intentional positive impact. 100% of our portfolio is invested for a market-rate-return and positive impact - our increased commitment to Snowball is an important part of this.”
The Golden Bottle Trust currently has £5.22m invested in Snowball.
Snowball
Snowball is a diversified, multi-asset class, impact fund of funds, which invests across the themes of social equity and environmental sustainability.
It is also a certified B Corporation, an accreditation for businesses with high standards of social and environmental performance, transparency and accountability.
Existing investors in the fund include Trust for London, the EIRIS Foundation, the Ian Taylor Family Foundation and City Bridge Trust.
“Making and managing a portfolio of direct impact investments is resource intensive and may not be feasible for many foundations,” said Colin Baines, investment engagement manager at Friends Provident Foundation.
“This common barrier is one of the reasons we became a founding partner in Snowball five years ago. Now it is accessible to smaller investors and has established a successful track record of delivering social, environmental, and financial returns on investment, we are delighted to be supporting it to scale and challenge market incumbents with new best practice.”
ESG Olympics and minimum standards
In recent years, Friends Provident Foundation has led initiatives to help improve the responsible investment services offered to charities.
At COP26 in November 2021, it was part of a group of charities that unveiled eight minimum standards on climate-related issues that it expects investment managers to meet.
The eight standards fall into four areas, namely strategy, asset allocation, active ownership and transparency.
Prior to this in 2020, it was one of three foundations, along with the Joffe Charitable Trust and the Blagrave Trust, that organised and ran the ESG Investing Olympics.
This invited fund managers to put forward proposals for managing an investment portfolio with social and environmental impact.
The three foundations contributed a combined £33.5m to an investment mandate for the winning firm, which was Cazenove Capital.
At the end of the process a report was produced showing the common strengths and weaknesses of the entries.
Amongst its findings was that purposeful impact funds, especially from “boutique high-impact managers”, provided the best impact reporting.
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