In this podcast, Surdna President Don Chen and ImpactAlpha Editor David Bank discuss Surdna’s early response to the pandemic, the foundation’s increase in grantmaking for racial justice, mission investing, and where do we go from here?
Following are excerpts from their discussion as originally reported in AlphaImpact.
Don Chen, who has led Surdna since 2018, is also taking leadership in mobilizing even larger pools of capital. With the Ford Foundation’s Darren Walker, he leads a council of foundation presidents who are starting to invest some of the other 95% of philanthropic assets – the endowments – toward the social missions the foundations seek to champion.
Surdna has carved out its own $100 million mandate for impact investments. The foundation was an early investor, for example, in Kesha Cash’s Impact America fund (see, “Impact America’s $55 million second fund is hunting for unicorns in the disruption of systemic racism”). Other small foundations, including the Heron and Nathan Cummings foundations, are also moving their endowments toward “mission,” but few of the biggest foundations have followed suit.
“The progress may seem to be rather slow in some areas,” Chen acknowledged in the interview, but said, “I’ve seen a lot of progress in the last few years in terms of the level of interest in impact investing over this period of time, and hopefully that will just increase in the coming years.”
High risk, high reward
For philanthropy nerds, Surdna’s mandate is split between $82 million in “mission-related” investments that are expected to make risk-adjusted market rates of returns, and $18 million in “program-related” investments, or PRIs.
“Rather than treat it entirely as low-cost patient capital, which tends to be the case, we decided to treat our PRI funds as high-risk, high-reward funds,” Chen says. “We really tried to introduce this notion of social value into the risk profile… When we think about high-risk, high-return, we’re also thinking about the high return on the social impact side.” (See Surdna’s Mekaelia Davis’s essay in Stanford Social Innovation Review, “Risks for the Future We Want.”)
Even in total, philanthropic revenues are tiny in relation to government resources. “We are trying to do what we can with every asset, every resource that we have, including grants, investing, our voices, our public platforms,” Chen said. Equally important, he says “is to really think about how government can use its resources, and leverage additional investors, additional capital, to the challenges that are facing all of us.”
Read the full article on AlphaImpact.