The Ford Foundation is on a Mission in Detroit
The Impact Investor
The Ford Foundation is a globally oriented private foundation with the mission of advancing human welfare through grant giving, Program-Related Investments, and as of spring 2017, Mission-Related Investments. The Ford Foundation makes between 500M USD and 600M USD in grants each year, drawn entirely from returns on its endowment.
PRIs and MRIs
In 1968, the Ford Foundation originated the concept of "program-related investments” (PRIs). By law, PRIs must be of a charitable nature, not be made to produce substantial income, and should not support any activities prohibited of private foundations. PRIs allow foundations to use the 5% of endowment assets that are mandated for charitable giving for low-interest loans and equity investments, in addition to grants. These investments have been made in areas of focus such as urban development, homeownership, microfinance, and more.
In April 2017, the Ford Foundation announced that over the next ten years, it will commit up to 1B USD from its 12B USD endowment to Mission-Related Investments (MRIs). Unlike PRIs, MRIs are made from the foundation´s endowment – the 95% of assets invested for profit – and are therefore made with thoughtful investment standards of risk and expected return, in alignment with the foundation´s social mission. This is Impact Investing in its essence.
A PRI in Health Tech
The Ford Foundation has financed more than 650M USD in revenue-generating, social-purpose projects at hundreds of organizations through PRIs. In 2014, the Ford Foundation provided a 1.5M USD program-related investment to BeneStream, in the form of a low-interest loan. BeneStream is a U.S. based health-tech startup that helps identify and enroll employees who are eligible for Medicaid, so that they may receive essential health care coverage.
An MRI in Detroit Housing
The Ford Foundation´s recent endowment commitment to MRIs is the largest by any private foundation. Less than half a year later, the Ford Foundation´s invested 10M USD in The Platform, a private community development with a mixed-income approach.
The Platform Neighborhood Initiative has raised 27.5M USD in total, and will bring affordable housing and market-rate apartments to underserved areas of Detroit, that have been excluded from the recent surge of developments in downtown and midtown areas. This MRI aligns with the Ford Foundation´s intents to increase access to affordable housing and support equitable development, and is expected to generate market-rate returns.