Aligning our investments with our values to drive social and environmental progress
Foundations fund their activities through the proceeds of endowments. For many public-good organizations, the vast majority of their portfolio is invested in the market - predominantly the stock market – sometimes with little consideration of how profits arrive and the implications for the environment or workers. That money needs to work harder and smarter.
At Catherine Donnelly Foundation, we aim to leverage our capital to serve the causes we care about. It starts by overseeing our endowment money so we don’t fund the activities we work hard to eradicate, such as the burning of fossil fuels. We are committed to investing in corporations that embrace positive social change and to use our position as a shareholder to encourage companies to uphold practices and policies consistent with our values and mission.
CDF has strong environmental, social, and governance (ESG) screens related to how we invest; exclusions we believe also bring better returns. In early 2020, amid unprecedented market volatility related to the Covid-19 pandemic and unstable political conditions in the United States, 83% of responsible investing funds with strong ESG screens outperformed their average asset class.
To really maximize the positive change an endowment creates, foundations can align each dollar of their investments with the good of their charitable mission. Impact investing provides one way of doing this by generating specific social or environmental benefits with financial gains. As the quality and range of beneficial investment options increase, so too does the logic of investing more in these causes.
“The Catherine Donnelly Foundation has not only worked with SHARE to align its activity as an investor with its values as a foundation, it has consistently been willing to take the lead on issues that matter and use its leverage as a shareholder to push both individually and collectively for a sustainable, inclusive and productive economy. CDF has been an outspoken advocate for making finances and investments serve people, not the other way around.”
CEO, Shareholder Association for research and Education (SHARE)
Impact investing at a glance
Since 2014, The Catherine Donnelly Foundation has made 15 impact investments.
These investments total $3.4 million.
We have pledge to invest 10% of our assets in impact investments.
Objectives and approach
Our Investment Objectives
Engaging with our capital and fully understanding its power is a matter of ethical integrity for The Catherine Donnelly Foundation; there is an inherent contradiction in granting for a healthier environment and a more equitable and just society with funds from investments that may pollute our communities or treat our residents unethically.
The Catherine Donnelly Foundation believes how we invest our endowment is an extension of our mission to transform the lives of those most in need. Our responsible investment approach takes environmental, social and governance factors into account and excludes profit from companies that support fossils fuels, the manufacture of weapons or benefits from human rights abuses, among other screens.
We work to enact positive change in the corporate partners we invest in through direct engagement and initiating shareholder proposals at annual meetings.
What We Look For
Our Impact investing actively seeks positive social and or environmental objectives delivered with a financial return. Foundation investments range between $50,000 and $500,000, with funds in any individual entity not to exceed $1,000,000 and can include, but are not limited to, social impact bonds, community bonds, loans, direct private debt, private debt funds, private equity funds, loan guarantees, and Letters of Support.
Factors considered in our analysis include: a balance between achieving targeted investment returns and strong social impact; financial and operational sustainability of the business and the business model; and the track record, reputation, and credibility of the business and key personnel.
Managing our capital to produce positive and sustainable change
The Catherine Donnelly Foundation has pledged to invest 10% of our assets in impact investments and since 2014 has made, approved or committed to 15 investments totalling $3.4 million. This includes “exited” investments.
CDF and other impact investors are motivated to make investments because of – not in spite of – financial return. We are also motivated by the belief that the success of our investments will encourage others to follow our example and generate more capital to produce positive and sustainable change.
In 2018, the Toronto-based Responsible Investment Association (RIA) recognized the Catherine Donnelly Foundation for being part of a trend toward “publicly seeking to make an impact with their endowment … [and] aligning portfolios with organizational values.”
Most of our impact investments are aligned to our core funding areas, so we provide guarantees for operating loans to non-profits impacted by COVID-19, help create new clean, renewable energy projects in Latin America or access to capital and financial inclusion for newcomers across Canada.
The Catherine Donnelly Foundation was among the earliest of investors in Raven Indigenous Impact Fund I, the world's only purpose-driven Indigenous venture capital fund providing financing to early-growth Indigenous businesses who otherwise wouldn't have access to capital. Our $250,000 investment has helped Raven offer expertise and capital not otherwise available to support the ongoing revitalization of Indigenous entrepreneurs and the Indigenous economy in Canada.
In 2020, we invested $300,000 in the Saint John Community Loan Fund to assist in building their capacity. SJCLF provides community loans ranging from $50 to $50,000 to help people grow a business or social enterprise, return to work, go to school or increase the availability of affordable housing or commercial spaces that rejuvenate neighborhoods. This investment adds resources at a grassroots lender and encourages a social enterprise ecosystem in New Brunswick that works with creative and enterprising partners to scale innovative solutions to reduce poverty and strengthen community wellbeing.
The Catherine Donnelly Foundation is also committed to leveraging our investments in companies to improve governance, operational practices and conditions for workers. In the third quarter of 2020 alone, SHARE (Shareholder Association for research & Education) brought proxy votes before annual meetings and engaged directly with 12 companies on behalf of the Foundation in the areas of civil rights, reconciliation and climate change, among other areas.
CDF’s findings, learnings, successes and failures are documented in Impactful Investment Capital as a Force for Good: Moving from Theory to Practice.
Find a complete list of our impact investments below.
Our Impact Investments
Timeframe: 2014 to 2019
Investment type: Community Bond
Impact: Alternative energy
The Foundation made its first impact investment in the spring of 2014 – a $100,000 investment in SolarShare bonds. SolarShare is a leading Ontario renewable energy co-op that develops commercial-scale solar energy installations ranging from 10 kW rural systems to 600 kW arrays on industrial rooftops and in non-arable fields. To date, SolarShare has invested over $39 million and has returned over $5 million for investors.
Location: Toronto, ON
Timeframe: 2015 to 2022
Investment type: Community Bond
Impact: Alternative Energy
Projected return: 7%
In April 2015, the Foundation invested in the Zooshare Biogas Cooperative to develop a $6 million 500kW electricity generation facility at the Toronto Zoo which would sell energy to the Ontario Power Authority. Fuel for the 500kW plant will come from 30,000 tonnes of inedible food waste via a major grocery retailer and animal manure from the zoo. Zooshare expected commercial operation to begin in Spring 2020, however, is delayed.
Timeframe: 2015 to 2017
Investment type: Limited partnership
Impact: Alternative energy and energy efficiency
CDF invested with CoPower Inc., a leading Canadian clean energy investment platform, as part of a $2.5 million round of financing for clean energy infrastructure loans. Among the projects funded were energy efficiency retrofits, solar rooftop installations as well as geothermal heating and cooling systems in condominiums.
Location: Toronto, ON and Vancouver, BC
Timeframe: 2016 to 2021
Investment type: Pay-for-success contract (Social Impact Bond)
Impact: Seniors cardiovascular health improvement
The Community Hypertension Prevention Initiative is a lifestyle-change program to help seniors at risk of developing hypertension adopt healthier habits to lower their blood pressure. To fund the project, MaRS Centre for Impact Investing worked with Heart & Stroke and the Public Health Agency of Canada to structure a social impact bond. The bond was the first occasion a social impact bonds was used to fund better health outcomes for Canadians. The federal government repays investors based on successful outcomes. In 2019, Heart & Stroke began enrolling 4,100 participants in the free six-month wellness program.
Location: Quebec, Ontario, Saskatoon and British Columbia
Timeframe: 2017 to 2018
Investment type: Limited partnership and pay-for-success contract (Social Impact Bond)
Impact: Literacy and essential skills interventions
Colleges and Institutes Canada (CICan) implemented the first national social finance project of its kind in Canada. The Essential Skills Social Finance project was a partnership between the federal government; CICan; College Service Delivery Partners; private investors; and, the Social Research and Development Corporation. Investor capital funded four College Service Delivery Providers to raise the essential skill levels of unemployed adult Canadians. The federal government repaid investors on the basis of essential skills gains among participants. 88% of the unemployed Canadians who received training achieved measurable skills improvements, but funders only received 96% of their original investment.
Timeframe: 2017 to 2022
Investment type: Limited Partnership
Impact: Social housing
Projected return: 16%
New Commons Development is a non-profit real estate development company that creates affordable housing for some of Canada’s most marginalized communities. The New Commons Development Fund pools investments from community groups and other non-profit as well as government-owned agencies. Among recent initiatives is the development of 36 new affordable rental housing units for seniors, a Parent-Child resource centre and a community gathering space for Woodgreen Community Services in Toronto.
Location: Toronto, ON
Investment type: Private debt
Impact: Co-op retrofit – energy and resource efficiency
The Atmospheric Fund invests up to $500,000 in debt funds where returns are expected within three years and projects offer the potential to reduce carbon emissions and offer benefits for the Greater Toronto region. To date, TAF has invested $35 million. Among recent investment opportunities are the energy retrofit of the Scarborough Heights Co-op and the installation of equipment in Oakville to create renewable gas from food waste.
Location: Latin America and the Caribbean
Timeframe: 2019 to 2024
Investment type: Fixed-income Bond
Impact: Women entrepreneurs, SME financing, affordable housing and renewable energy
Deetken Impact and Pro Mujer, a provider of vital services to low income women, partnered in 2016 to manage the Ilu Women’s Empowerment Fund to advance gender equality in Latin America and the Caribbean. US$25 million was raised from so-called catalytic investors, Canadian foundations and Credit Unions. A second US$10 million is planned. The fund invests in a diversified portfolio of businesses that promote women in leadership and governance, products and services that meet the needs of women and girls, gender-sensitive value chains and equity.
Location: Guelph, ON
Timeframe: 2019 to 2022
Investment type: Community Bond
Impact: Social-purpose real estate
Projected return: 4.5%
42 Carden is a joint project between not-for-profit organizations 10 Carden Shared Space (10C) and Chalmers Community Services Centre. The building was purchased in 2015 to create a larger space for 10C, which established Guelph’s hub for community activators and changemakers in 2009. To finance the purchase, redesign, and renovation of the new location, 42 Carden has issues a series of Community Bonds.
Timeframe: 2020 to 2030
Investment type: Limited Partnership
Impact: Indigenous-focused equity investing
Projected return: 4-6%
The Raven Indigenous Impact Fund focuses on bringing patient capital to invest with Indigenous social enterprises and community-owned enterprises in Canada at an early-and-growth stage. The Fund focuses on deal sizes that range from $250K to $1.1M and enterprises are screened through an Indigenous impact lens. Raven offers technical and managerial assistance to support Indigenous social enterprises.
Location: Saint John, NB
Timeframe: 2021 to 2027
Investment type: Loan
Impact: Poverty reduction community capacity-building
Projected return: 2.5%
This investment builds capacity at this grassroots lender and encourages a social enterprise ecosystem in New Brunswick that works with creative and enterprising partners to scale innovative solutions to poverty reduction and community wellbeing. The Saint John Community Loan Fund provides accessible loans, equity investment and matched savings to help people create income and build assets as well as creating social-purpose residential and commercial real estate that offer affordable spaces that rejuvenate neighborhoods. To learn more about Saint John Community Loan Fund visit their website.
Timeframe: 2020 to 2024
Investment type: Fixed Income Bond
Impact: Supporting newcomers and refugees
Funds provide access to capital and financial inclusion for newcomers to Canada. Windmill offers microloans to help skilled immigrants and refugees continue their careers in Canada. Loans of up to $15,000 help clients attain Canadian licensing or training required to work in their field or to secure work matching their level of education, skills, and experience. Microloans can pay for exams, training, assessments, books and materials, living allowance, relocation costs, professional association fees or other expenses related to advancing their career. Funded by the public and private sector, Windmill is Canada’s largest and most successful microlending program for immigrants and refugees, with a repayment rate of 97%.
Resources and Reports
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