Winter 2013-14

Member Spotlight: W.K. Kellogg Foundation


Date: January 13, 2014

Q: How does the foundation’s Mission Driven Investments program (MDI) tie in with how the W.K. Kellogg Foundation is seeking to achieve its mission?

A: The mission of the W.K. Kellogg Foundation (WKKF) is to support children, families and communities as they strengthen and create conditions that propel vulnerable children to achieve success as individuals and as contributors to the larger community and society. The MDI program seeks to invest endowment dollars to further that mission while achieving both social and financial returns.

We have committed $100 million of our $8 billion endowment to develop the MDI program and make impact investments that cut across our programmatic and geographical priorities. By investing endowment dollars in mission-aligned, for-profit and nonprofit entities, we maximize social returns to promote educated kids, healthy kids and secure families – all while attempting to achieve aggressive financial returns. Grantmaking is still a very important tool for foundations like WKKF, but in a fast-changing world with scarce resources, we are exploring ways to leverage endowment dollars to achieve the greatest possible impact toward the mission.

Q: What key lessons has the foundation learned about mission investing?

A: We approach our MDI investments in much the same way we approach our grantmaking – with clear goals, with focus on our mission and with openness to continuous learning. We weren’t the first organization to adopt impact investing, and we won’t be the last. That said, below are some key lessons we’ve learned thus far:

Be Scientific: Before investing a dime, we take deep, sector-wide looks at the areas in which we seek to invest. One critique in this space is that there are not enough investments out there to warrant a dedicated program. However, we found the opposite. Through dedicated research and scans, we uncovered significant opportunities to invest in entities tied to our mission. The result is a robust portfolio of nearly three dozen investments dedicated to the health and well-being of children.

Invest Directly: Part of our portfolio includes direct investments – investments not through third-party funds or brokers but directly in companies. We have learned that this brand of investing allows for a level of partnership and activity that investments through third-party funds and entities simply can’t achieve.

Maintain a Diverse Portfolio: Our investments come in all shapes and sizes, and in a variety of asset classes (for example, cash deposits, fixed income securities, structured loans and private equity) and across all our program areas of interest. It has been advantageous to our foundation, both financially and socially, to maintain a portfolio of investments that cut across our programmatic priorities and fit within different financial molds. Once we identify a mission-fit opportunity, we work with the organization’s management team to structure a deal that meets both our needs and theirs to establish a strong bond between WKKF and the investment partner.

Q:  What three tips do you have for other foundations looking to start or boost their mission investing?

A: Many peer philanthropic and nonprofit organizations are engaged in this field. Just as we learn from them, here are three insights from our MDI program that we hope others will find helpful:

Board buy-in: WKKF had the full backing of its board before entering into this work. Our board operated quickly and swiftly about buying into this work. Working collaboratively with your board is extremely advantageous.

Staffing: WKKF’s MDI team works between the foundation’s program team and the investment management team, and engages strong, external consulting support. The result offers us incredible flexibility and insight, not just within the MDI team but across the foundation and in the field.

Learning from your investments:  One of the great “learning returns” of our MDI work is the ability to foster collaborations and learning between our grantees and grantmakers and our investees and investors. We are excited by some of the relationships we’re fostering and the opportunities they present to have greater impact in the lives of vulnerable kids.