Laura Kind McKenna, an Investors’ Circle member, is a Trustee and the former Managing Trustee of the Patricia Kind Family Foundation. Laura has been a true pioneer in the space and has demonstrated that small family foundations can substantially increase their impact beyond grants. Most recently, Laura was credited by the Barra Foundation for helping them to make their first impact investment. We are privileged to have members like Laura in our network who are leading the way and bringing others on board. We sat down with Laura learn how the Patricia Kind Family Foundation makes their impact investments and how philanthropists can take her lead in bringing philanthropic capital into the impact investing space. Below is the edited and condensed interview.
Rebecca: Tell us about the Patricia Kind Family Foundation.
Laura: The foundation was started in 1998 by my mother, Patricia Kind, with money from my grandparents. About ten years ago, after hearing from Luther Ragin of the F.B. Heron Foundation that we could make more of a difference if we didn’t just use grants, we made a decision to change. So we began to look at ways that we could align our endowment investments with our mission.
Rebecca: What is the mission of the Patricia Kind Family Foundation?
Laura: We are geographically focused on the Philadelphia area and focused on alleviating poverty and helping people obtain basic human needs of housing, clothes, shelter, food, education, and health care. We focus our granting making on funding efforts focused on the poorest of the poor. We look for grassroots organizations that have budgets under $1 million.
Rebecca: So how did you start the process of aligning your endowment and other deployed capital with your mission?
Laura: We first invested into the Reinvestment Fund, a local CDFI. We invest across asset classes including direct investments. Some of our investments are more generally negatively screened and some are more directly mission aligned. I’m proud to share that we are now close to having 100% of our endowment invested in ways that align with our mission.
Rebecca: What was your first direct impact investment, and what it its status now?
Laura: It was a loan to a local non-profit that provides housing for men struggling with alcoholism. They wanted to start a cleaning business to generate revenue to offset their costs and not be completely reliant on grant funding. Instead of making a grant for them to open the franchise, we made a 0% interest loan and the advantage to that was multifold. By paying us back over time we were able to hold them accountable to their business plan goals. They had to pay us back once a year for seven years. We just got the last payment! If we had made a grant, the business may have gone belly up in the first year when they hit their first hurdle. But they were committed to paying us back and maintaining good terms with us. The company is still inexitence and continues to provide several thousand dollars in revenue to the non-profit, as well as employment opportunities. The overall impact has been very significant—even more than if it was a grant.
Rebecca: How does the focus of your mission-aligned investments differ from your grants?
Laura: Start with a broader purpose that says, ‘I want to use these dollars to do more good in the world.’ You make a mistake if you think the only investment to make is one that is exactly aligned with your mission. A lot of people miss an opporuntity by trying to keep their mission-aligned investments as narrowly defined as their grants. As such, at the Foundation, we define our investments more broadly. We seek companies in the Philadelphia area that are addressing poverty that have a strong social and environment impact along with a strong financial return. Even if your traditional investments had nothing to do with your focus area, making your first investment has an impact. Look at your investments now and say, ‘Let’s get started with investing that results in a more positive social, environmental or governance impact.’
Rebecca: How did you decide to put more of the foundation’s assets to use?
Laura: Philanthropic organizations are governed by tax laws that mandate the 5% of the foundation’s assets must be granted every year. The other 95% can be invested traditionally with no requirements to be mission aligned. We realized that we had all of this untapped impact! If we only used 5% of our dollars to make an impact, we were missing the potential to use 95% of our assets for impact. We decided that we needed to use more than 5% of our assets to make the world a better place.
Many people have read how the Ford Foundation is committing $1 billion to impact investing which is about 10% of their assets, and they have a full-time staff working on this. But I want people to realize that you don’t have to be a large foundation to make mission-aligned investments. We have $35 million and a part-time grants manager, and we are able to do it. There are simple and accessible opportunities to use your money to have more of an impact. Investors’ Circle has been a great way to find great deals and have a community to work with.