Case Study: The Fleishhacker Foundation’s Journey into Impact Investing

Reimagined Philanthropy: Advanced Strategies for a More Just World, Volume 2.
© 2023 Rockefeller Philanthropy Advisors

Established in 1947, the Fleishhacker Foundation has dedicated itself to improving the quality of life in the San Francisco Bay Area. It is guided by values passed down from its founders such as integrity, honesty, humility, respect, and an unwavering commitment to fairness and equity. This case study explores the transformative journey the Foundation undertook into impact investing to align its financial activities with its longstanding values and its commitment to advancing Diversity, Equity, and Inclusion (DEI) in all of its work.

Deborah Sloss, long-time trustee and Chair of the Fleishhacker Foundation’s Investment Committee, noted “There had long been in interest in having the organization’s investments better reflect its values.” In 2019, the Foundation launched a special task force to strengthen DEI practices across all of its programs and operations. “We knew this important work would be incomplete without including a review of the Foundation’s investment portfolio,” Deborah added. “The time had come for us to take action in a thorough, well-structured, and strategic way,” added David Blazevich, the Fleishhacker Foundation’s Executive Director. “We recognized that our investments could have an impact, either in alignment with or in opposition to our values,” he noted. “We decided to put a framework in place to ensure alignment.”

Doing so provided the Foundation’s trustees with an opportunity to engage in a collaborative exploration of what was truly important to them. Since board members had varying levels of understanding about impact investing, fostering a supportive learning environment was essential. In board meetings and small-group discussions, trustees explored everything from defining terms and developing a shared vocabulary to determining how to integrate their shared values into a cohesive impact strategy.

David noted that previously, investments were considered separate from grantmaking. These conversations, however, initiated a paradigm shift in which investments are no longer siloed but inextricably linked to the Foundation’s philanthropic mission.

As part of the Foundation’s impact investing journey, the organization conducted a trustee survey which explored themes related to impact goals, DEI considerations, and environmental concerns. Survey responses related to corporate governance practices identified a significant interest in promoting racial, gender, and socio-economic equity. Top priorities included promoting diversity, equity, and inclusion in hiring practices, leadership roles, and compensation. David explained that impact goals therefore now incorporate a DEI lens, with a commitment to elevate and support historically marginalized communities.

In addition, since promoting cleaner air, land, and water and a low-carbon economy is critical to improving the quality of life in the Bay Area and beyond, the survey helped identify a priority of investing in clean energy and screening out companies with harmful environmental practices, including those that derive revenue from fossil fuel or palm oil.

Finally, while there was considerable discussion early on about what additional level of risk the Foundation should take on to align its investments with its values, David explained that they, “have since learned that it may have been a false choice. Investors may need not sacrifice overall financial returns to have a positive impact. Our risk profile has therefore not changed as a result of our impact investing work. Impact investments will receive the same level of analysis, scrutiny, and due diligence with regard to their financial risk as traditional investments.”

Throughout the journey, the Fleishhacker Foundation employed several strategies to embrace impact investing. They found that learning from other foundations was instrumental, as was attending philanthropic conferences. Deborah explained, “Learning from other foundations about how they developed and implemented their impact investing strategies was crucial.” Their process also involved sharing their progress along the way, being open about their journey, and using tools like Rockefeller Philanthropy Advisors’ Impact Investing Handbook.

The Fleishhacker Foundation firmly believes that smaller family foundations have the potential to make a real difference through impact investing. They offer valuable advice, encouraging their peer organizations to embrace impact investing as a powerful tool to complement grantmaking efforts. Smaller foundations can overcome the barriers to entry, which can be intimidating, by learning the language and tools of impact investing. By learning from each other and leveraging their collective resources, foundations can make a significant difference in the communities they serve.

The Fleishhacker Foundation’s journey in the realm of impact investing epitomizes a deliberate, purpose-driven shift, underpinned by DEI and a commitment to embedding values in their financial fabric.