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BD Giving Notes #10 – What makes our investment policy different

The primary objective of the portfolio is to invest the Community Endowment Fund and any financial returns, using a total impact approach, achieving financial, social and environmental impact.

Less than a week before the launch of Barking and Dagenham Giving’s new community-led investment policy at the House of Commons on 20 June, I wanted to reflect on a few things that, in my view, make this policy different from other policies out there. This also follows a number of conversations held with trust and foundation investment directors recently.

Transparency
From the outset, the Community Endowment Fund was designed with the idea that it was the community of Barking and Dagenham’s money, not BD Giving’s. For us, this was a logical continuation of a process started in 2019, when we began experimenting with [participatory grantmaking], and recognised that transparency and accountability are necessary for building trust, and to create change.

Working with the Community Steering Group we carefully documented the design of the investment policy and unpacked assumptions, opening ourselves up for scrutiny along the way. The public launch of the policy follows this same logic. In the coming months, we will publish quarterly reports, which will include the Portfolio’s performance and impact.

Accessibility
We are aware that none if this really matters if this information is not made accessible. It’s probably fair to say that investment policies are not everyone’s cup of tea. Policies in general can be quite dry and heavy on jargon. They are documents written by professionals for professionals and it’s probably mostly fine because they are not necessarily designed to be read or understood by the wider public.

By opening up the design process to the local community, we put a heavy focus on on accessibility from the outset. Not being investment professionals, the Community Steering Group felt the need for the language to be as jargon free as possible and, where it was not possible, to include definitions and explanations right there, in the policy. This was particularly important for them because they wanted it to be accessible to the wider community, I.e. people who hadn’t gone through the same training process than them.

Permanency
Traditionally, restricted charitable endowments are held in perpetuity, while the earnings from the invested assets are spent in accordance with the charitable objectives of the organisation. A typical approach focuses on growing the endowment above inflation and only spending the returns once capital has been secured. This strategy is pretty good for long term growth but it can also be difficult to justify in times of economic turmoil as it essentially locks away money, and prevents it to be invested in the riskier, local economy.

Inversely, the Community Steering Group wanted the endowment to play a direct role in the local economy. The primary objective of the portfolio is to invest the Community Endowment Fund and any financial returns, using a total impact approach, achieving financial, social and environmental impact. This focus on impact means that we have a very different outlook on what a successful investment is, and that we do not have the same constraints as other investors.

Armed with a transparent and participatory governance process and patience, we are looking to invest in a way that will make a real difference to the local community long term.

BD Giving Notes is a weekly blog aimed at sharing some CEO Geraud de Ville de Goyet’s thoughts on running a social infrastructure charity. Each post focuses on a couple of things we have learnt or done in the previous week; what’s gone well and what didn’t.
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