The document summarizes a presentation on impact investing from a fiduciary perspective. It discusses the evolution of impact investing strategies, the role of fiduciaries, defining mission and values, implementing impact investing policies, and collaborating and networking. It provides examples of impact investment funds and case studies of foundations' approaches to impact investing.

1. A Fiduciary’s Approach to
Impact Investing
Lauryn Agnew, Seal Cove Financial
Christa Velasquez, Annie E. Casey Foundation
Georgette Wong, Correlation Consulting/Take Action!
March 14, 2011

2. Bay Area Equity Fund I
$75M private equity fund
Invests in companies in low income communities of the Bay Area
Partnership with Bay Area Council for deal flow and workforce development
$1.65M Casey equity investment (PRI)
10 year partnership
Originally set PRI-like return expectation
of 10-12%
Now performing in top quartile and
expect 20+%
10 year goal of 1,500 new jobs created
Cumulative jobs created since inception
(2010Q1): 2,125
Cumulative jobs for low-income
individuals created: 1,224

3. Agenda
Evolution of Impact Investing Strategies
Role of the Fiduciary
Defining Mission and/or Values
Implementing Impact Investing Policies
Expectations of Return
Building Impact Portfolios
Collaborating and Networking

4. Who’s investing?
More than foundations Motivations
Asset Owners Financial
• Foundations • Looking for outperformance
• Individuals, Families & Family Offices • Qualitative signals
• Major Pension Plans – CalSTRS, CalPERS • Reduce risk
• Insurance Companies – Prudential • Transparency
Their Ecosystem
Social/Environmental
• Consultants/Financial Advisors
• Tangible Impact – beyond
• Philanthropic Consultants
intent
•Alignment with values
Asset Managers & Other Intermediaries
• Use all assets – financial and
• Across asset classes
non-financial
• Investment Banks – JP Morgan, Morgan
Stanley, Goldman Sachs
Interdisciplinary, Silo-Busting
Business, Finance, Nonprofits, Government

5. History of Impact Investing
Predominantly in the public equity space
Socially Responsible Investing: negative screening
South Africa Free/anti-apartheid
Faith based screening
Weapons, tobacco
CDFIs/Community Investing
ESG: Environmental, Social & Governance
Green themes, Workplace issues, Shareholder Activism/Proxy voting
Sustainable Investing – smarter company management yields
better returns?
Green, upstream & downstream influences

6. Impact Investing Terminology
Program Related Investing (PRI) specific for foundations
Primary motivation is social impact; financial return can vary
Mission Related Investing (MRI) specific for foundations
Supports mission
Returns can vary; greater emphasis on competitive returns
Impact Investing * ESG/Sustainable * Triple Bottom Line
Market Rate (or greater) Financial Return + Social Impact

7. Impact Investments & Themes
(Source: Solutions for Impact Investors: From Strategy to Implementation, Rockefeller Philanthropy Advisors, p. 64-65.)

8. Impact Investing Policy
Policy decisions
Across impact investing spectrum
Across asset classes
Ongoing program or opportunistic
Direct investments or through intermediaries
Create new product
Sole investor or with co-investors
In-house expertise or contracted

9. Impact Investing Process
Articulate Mission and Values
Create Program/Impact Themes
Define Desired Impact
Develop Impact Investing Policy
Generate Deal Flow
Analyze Deals
Evaluate Impact
Source: Solutions for Impact Investors: From Strategy to Implementation, Rockefeller Philanthropy Advisors

10. Case Studies
Annie E. Casey Foundation
Social investments complement grantmaking and provide
additional philanthropic tools
$125 million allocation of endowment
Flexible terms but always invest through financial
intermediaries
Leverage/co-investment requirement
Systems in place to track financial and social returns

11. AECF SOCIAL INVESTMENT TAXONOMY
MISSION INVESTMENT PORTFOLIO POSITIVE VALUES-DRIVEN
High Screened
impact PRI MRD MRI DBL SRI
PRI Deposits
Source of $: grant Source of $: Source of $: Source of $: Source of $: Positive Negative
endowment endowment endowment endowment
Very high-risk PRIs
Market rate Market rate
Below market rate Market rate
Tracked separately Proactive All non-SRI Source of $:
from SI portfolio Clear program link Clear program investments with endowment
Clear link to
(all program link (place social purpose
Casey mission Market rate
Below market rate areas) based, FES) but doesn’t have No specific No specific
to meet IRS connection to
Clear program link Meets IRS connection to
charitability Casey mission
(all program areas) charitability Casey mission
requirements
requirements
Meets IRS charitability
requirements
Example: Example: Example: Example: Example: Example:
EBDI ACCION Latino Credit Invest NW Clean-tech or Generation
Texas Union Green funds Community Inv. Index

12. Guidelines for Impact Investing
Fiduciary
A person to whom property or power is entrusted for the benefit of
another
Standard of Conduct
Fiduciary duty to act with care, skill, prudence and diligence
Prudent Person Standard
ERISA and UPMIFA

13. Strategic Considerations
General economic conditions
Inflation/deflation
Make decisions on a total portfolio basis
Allocate risk and return across the portfolio
Consider needs and resources to achieve both prudent
spending levels + capital preservation

14. Establishing Policies
Investment Policy
Asset Allocation
Due Diligence and Monitoring
Stable Spending Policy
Smoothing over time: rolling 12 quarters
Prudent levels of spending vs. asset allocation
Code of Fiduciary Conduct
Checks and Balances, no conflicts of interest

15. Integrating Impact Investing
Assess portfolio positioning
Which asset class (es)?
Carve out % or 100%?
Time Frame
Risk and Return Expectations
Impact Expectations
Measuring Impact
Deal flow and other investment opportunities
Collaborations and Structuring deals

16. Impact Investments & Themes
(Source: Solutions for Impact Investors: From Strategy to Implementation, Rockefeller Philanthropy Advisors, p. 64-65.)

17. Case Studies
United Way of the Bay Area
Mission: Cut Bay Area poverty in half by 2020
• Themes: affordable housing, community development
100% Impact portfolio across all asset classes
• Attractive to donors for permanent gifts
• Spending from the endowed portfolio goes to support operations
-> cuts need for fundraising for operations
• Asset allocation being developed
– Liquidity needs may affect asset class choices in the near term
– Measuring impact and developing policies

18. Collaborations and Co-investors
Deal Structures can be creative
Unique risk and return expectations for each investor, collaborations
provide liquidity
Collaborating for Impact
Community Foundations
Private and quasi-public foundations and charities
Public funds: redevelopment, agency or district funds
Community development financial institutions
Conferences, networking and databases

19. Example: Initial Deutsche Bank
Eye Fund Structure
(Source: Deutsche Bank Global Social Investment Funds & Community Development Finance Group)
36% first-loss protection, 1% loan loss reserves, 6-month interest reserve

20. Example: Living Cities Catalyst Fund
The Integration Initiative
Restricted fund in Catalyst
$55M bank debt
$80M invested in 5 cities LIBOR + 250-300 bps
Designated financial
intermediary in each city
Flexible resources to
integrate change across $17.3M PRI
• Disciplines 3.5%
• Geographies (can be but not always subordinate)
• Sectors
• Funding sources 10% grant funded
equity

21. Impact Investing Resources
Not-For-Profits
Confluence Philanthropy: www.confluencephilanthropy.org
Global Impact Investing Network (GIIN): www.thegiin.org
Initiative for Responsible Investment: www.hausercenter.org/iri
Investors’ Circle: www.investorscircle.net
More for Mission Campaign: www.moreformission.org
Rockefeller Philanthropy Advisors: www.rockpa.org
Social Investment Forum: www.socialinvest.org

22. Impact Investing Resources
Monitor Institute: www.monitorinstitute.com
FSG Social Impact Advisors: www.fsg-impact.org
Other impact investors:
FB Heron Foundation: www.fbheron.org
KL Felicitas Foundation: www.klfelicitasfoundation.org
PRI Makers Network: www.pri-makers.net
Foundation Center: www.fdncenter.org (PRI Directory)
Grantcraft: www.grantcraft.org (PRI grantcraft guide)

23. Biographies
Georgette Wong, Correlation Consulting/Take Action!
Georgette is the Creator & Curator of the Take Action! Impact Investing Conference series and President of
Correlation Consulting. Georgette currently is assisting the US State Department, the Board of Governors
of the Federal Reserve System and the Federal Reserve Bank of San Francisco’s Center for Community
Development Investments to catalyze impact investing across the government, private and public sectors.
She is considered a leading speaker and advisor on trends in impact investing. Georgette's most recent
work has been published in Community Development Investment Review (Federal Reserve Bank of San
Francisco), Solutions for Impact Investors: From Strategy to Implementation (Rockefeller Philanthropy
Advisors), Private Asset Management, and Financial Planning Magazine.
Over the last eighteen years, she has: advised families, foundations and Fortune 100 businesses on public and
private investments; developed and funded early stage companies; and created organizations focused on
strategic philanthropy and partnerships between the business and social sectors. Before starting
Correlation Consulting, Georgette was: a Director of Client Relationships for Sterling Stamos, a multi-
billion dollar private investment firm; a Financial Advisor at Piper Jaffray; and the Development Director
for the Asian Law Caucus, the nation’s oldest legal and civil rights organization for Asian Pacific Americans.
Georgette is a graduate of the Anderson School of Management at the University of California, Los
Angeles (MBA) and Amherst College (BA magna cum laude).

24. Biographies
Christa Velasquez, Anne E. Casey Foundation
Christa is Director of Social Investments for the Annie E. Casey Foundation, a private charitable organization
whose principal mission is to help build better futures for disadvantaged children and families. She is
responsible for managing the foundation's $125 million social investment fund. Her work encompasses all
aspects of social investing, including program design, developing investment strategies, underwriting and
structuring investments and portfolio management. She is a leader in the social investing field and helped
found the More for Mission Campaign and the PRI Makers Network. Prior to joining the Foundation,
Velasquez spent six years at the consulting firm Brody-Weiser-Burns, specializing in social investing,
community development financing and business planning for social ventures. Her current and former
board experience includes: The National Writing Project, TRF Urban Growth Partners, the American
Visionary Art Museum, Catholic Charities of the Archdiocese of Baltimore and Goodwill Industries of the
Chesapeake. She received a Bachelor's degree in Latin American Studies from the University of Chicago
and an MBA from the Yale School of Management.

25. Biographies
Lauryn Agnew, Seal Cove Financial
With nearly three decades of experience in developing and implementing strategies in the institutional
investment industry, Lauryn Agnew provides leadership and insight to public fund trustees, non-profit
boards and committees, and to investment consulting and advisory firms.
Lauryn serves not only as a resource to non-profit organizations for investment consulting services and
provides fiduciary education and trustee training for public fund and non-profit board and committee
members, she also offers strategic marketing analysis and recommendations to firms with specialized
investment strategies.
Currently, Lauryn is a Trustee on the Board of the San Mateo County Employees’ Retirement Association
(SamCERA), is Chair of both investment committees at the United Way of the Bay Area and the Girl Scouts
of Northern California, and is a member of the finance committee of the Immaculate Conception Academy
of San Francisco. Lauryn has a Bachelor of Arts degree in Economics from Whitman College in Walla Walla,
Washington and an MBA in Finance from the University of Oregon. She is a member of the CFA Society of
San Francisco and the Financial Women's Association of San Francisco.

26. Appendix

27. UPMIFA
Uniform Prudent Management of Institutional Funds Act
(Source: www.upmifa.org)
UPMIFA requires a charity and those who manage and invest its funds to:
1. Give primary consideration to donor intent as expressed in a gift instrument,
2. Act in good faith, with the care an ordinarily prudent person would exercise,
3. Incur only reasonable costs in investing and managing charitable funds,
4. Make a reasonable effort to verify relevant facts, (due diligence)
5. Make decisions about each asset in the context of the portfolio of investments,
as part of an overall investment strategy,
6. Diversify investments unless due to special circumstances, the purposes of the
fund are better served without diversification,
7. Dispose of unsuitable assets, and
8. In general, develop an appropriate investment strategy for the fund and the
charity.

28. UPMIFA
Uniform Prudent Management of Institutional Funds Act
Prudent Person Standard for Non-Profits
No conflict of interests
Expectation of higher standard of behavior
Updates financial concepts
Total return, portfolio risks, diversification
Aligns investment policies with spending policies
Asset allocation strategies, stable spending, purchasing power
protection