Investment Policy Statement [Affirmed December 2017]
Heron’s December 2017 investment policy embodies eight guiding principles, summarized below:
- All investing is impact investing. All enterprises, regardless of tax status, produce both social and financial results, on a spectrum from positive to negative, including neutral. Their financial and social performance is measureable and varies over time. The conscientious investor takes note of both. In addition to forecasting expected financial return, Heron aspires to evaluate social and financial performance using a “net contribution” framework in which the deployment of human, natural, and societal capital is measured for each investee. We strive to work with outside vendors of indicators, metrics, and scoring methodologies to determine the impact of each investment we make.
- Heron, like all philanthropic institutions, is subject to the fiduciary duties of care, loyalty, and obedience to mission. This obliges Heron to examine all of our investment holdings for both social and financial performance, and to make investment decisions that optimize both together to fully abide by our duty as a custodian of tax-privileged assets.
- All enterprises, regardless of tax status, fall within the scope of this policy. Enterprises that receive Heron grants and PRIs receive the same duty of care with respect to those investments as do for-profit enterprises, even when Heron expects no financial return for itself or when risk of non-performance is relatively high.
- For Heron, investment risk encompasses beneficiary risk. Risk assessment includes but goes beyond financial or mission risk to the foundation itself. While these are considered, our definition of risk also encompasses risks to beneficiaries, including the risk that companies cannot deliver results, reliable jobs, or both.
- Heron acts primarily as a capital investor in making both grants and investments. In all sectors, we seek to invest in strong enterprises with reliable revenue. Investing with the overall needs of an enterprise in mind, with shared performance goals, promotes the resilience that enterprises and their leaders require to succeed. Most importantly, strong, reliable enterprises are better positioned to deliver results and employ and serve the people on whom we focus.
- Heron’s investment decisions are fundamentals-driven. We believe that enterprises that provide superior performance on both mission and financial dimensions are identified through thoughtful analysis of an enterprise’s fundamentals — broad social contribution, market opportunity, management team, and business model, including revenue reliability — as compared against peers and understood within a larger industry, sector, and market context.
- Heron intends to operate as a strong and productive enterprise, like those in which it invests. We strive to identify, build, and maintain the capacity to invest, co-invest, and leverage our funds well.
- Full achievement of our mission entails extending the reach of this policy beyond our walls, and aligning ourselves with like-minded investors and enterprise leaders who can participate in transactions with us, help promote the kind of investing we envision, and leverage capital together. The changes we seek in the function of markets and civil society cannot be achieved by one investor acting alone, or even by many investors acting within individual funds, including philanthropy’s largest. We will therefore develop, with others, data infrastructure, comparable performance analyses, certification protocols, investment vehicles, and similar practices that extend this style of investing beyond Heron and beyond philanthropy—bringing financial and non-financial impact together — with the goal that it becomes standard for the investment world and the economy as a whole.