How a Big Community Foundation Embraces Impact Investing in Arizona

ACF provided an impact investment loan of $1,050,000 to the Phoenix Art Museum. BondRocketImages/shutterstock

Impact investing is a strategy that was once dominated by private foundations, but we can’t help but notice the increasing number of community foundations looking to deploy assets in this way. In the Bay Area, the San Francisco Foundation recently committed $50 million for an investment pool aimed at generating positive social and financial returns. Meanwhile, the 105-year-old Cleveland Foundation recently allocated $150 million in capital to expand its social impact investing strategy through MRIs, recoverable grants, PRIs, and a socially responsible investment SRI pool.

But now our attention turns to the Southwest, where the Arizona Community Foundation (ACF) has been engaging in impact investing as well. ACF is among the top 25 community foundations in the U.S. and has more than $938 million in trust and endowment assets. The foundation and its partners have now invested an additional $1,456,000 in below-market funding to two groups through its Community Impact Loan Fund, and this funding is set to be used for both capital costs and capacity-building.

For example, ACF provided an impact investment loan of $1,050,000 to the Phoenix Art Museum to help the museum upgrade and expand its vault and storage system. It is also loaning $406,000 to the Torah Day School to help the school boost its capacity and reach additional students. In total, ACF’s Community Impact Loan Fund is worth about $23 million, providing capital in ways that grants alone simply can’t.

However, traditional ACF grantmaking is still making waves too, especially as the funder recently announced $63.4 million in discretionary and advised grants and scholarships in its five priority areas. The bulk of traditional grants have been for health innovations lately, with 2,565 organizations sharing a new $22.5 million commitment for programs in health, healthcare, medical research, and human services efforts. The next-most funded category is education, and ACF holds the title of Arizona’s largest private provider of scholarships for college. Meanwhile, ACF also set aside millions of grant dollars for 642 community improvement and development programs, 471 environment and sustainability organizations and programs, and 498 arts and culture organizations in the fiscal year ending March 31, 2019.  

There’s no denying that impact investing can be risky and not the optimal choice for every foundation. But for a major powerhouse like ACF, it is helping to bring projects to scale and recycle charitable capital as nonprofits repay their loans and then make those funds available for other projects. Other well-established organizations that have received ACF loans include the Desert Botanical Garden, Desert Stages Theater, Mariposa Community Health Center, and Jewish Family and Children’s Services.

Keep up with who’s committed to this style of philanthropy by following IP’s impact investing news section.