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INVESTING/PORTFOLIO STRATEGIES

Foundation executives dive into value of impact investing at Milken conference panel

Ford Foundation President Darren Walker
Ford Foundation President Darren Walker

Ford Foundation CEO Darren Walker says the foundation intends to earn “market rate” investments returns in its $1 billion commitment to mission-related or impact investments over the next 10 years.

The $12.5 billion foundation announced the commitment in early April.

Mr. Walker, speaking at a panel May 1 at the Milken Institute Global Conference in Beverly Hills on mission-related investing, offered some details, saying he sees a big opportunity in building affording housing in low-income areas in the U.S.

“A lot of money can be made from building affordable housing,” he said, noting that would serve the dual-purpose of helping poor people while still making money for the foundation.

But Mr. Walker also expressed concerns about pending cutbacks in the housing development subsidies from the Trump administration that could hurt new projects going forward.

Mr. Walker said the New York-based foundation had an approximate 9% investment return in the last year, equaling the investment goal it shoots for on a yearly base.

The Ford Foundation’s commitment is being watched closely by other foundations, said another panelist, Kim Lew, Carnegie Corp. of New York vice president and chief investment officer.

Ms. Lew said the $3.3 billion foundation does not do mission-related investing but began discussing the idea after Mr. Walker’s announcement. Ms. Lew was previously a senior managing director of private equity for the Ford Foundation.

“These conversations would not be happening if the Ford Foundation had not taken the lead,” she said.

Ms. Lewis said the concern in the past has been whether the foundation could receive adequate returns from such investments.

One foundation official speaking at the panel, Brian O’Neil, chief investment officer at the $10.5 billion Robert Wood Johnson Foundation, said the foundation decided to forgo market returns when it funded a $10 million low-interest loan to build a supermarket in downtown Newark, N.J. The supermarket opened in 2015.

Mr. O’Neil said the foundation decided that it was worth passing on market investment returns because of the importance of bringing a grocery store to an underserved area.

Panelists also expressed concern about the lack of minority and women investment personnel at investment firms they visit for mission-related and other investment needs.

“The investment managers are 98%, white men,” said Mr. Walker.

Mr. Walker, who is black, said his own chief investment officer at the Ford Foundation is white, but is sensitive to issues about bringing more women and minorities into the investment management industry.