The Cleveland Foundation

The Cleveland Foundation is the world’s first community foundation — and one of the largest nationally — with $3.2 billion in assets and annual grants of more than $120 million made in partnership with our donors since 2020. In addition to our grantmaking, the Cleveland Foundation is a national leader in impact investing, with $385 million in direct and indirect impact investments. As such, it stands to influence the market and the practice of social investing, in addition to its primary purpose of advancing Northeast Ohio’s economy and our place-based mission.

Catalyzing Meaningful Social Change

The Cleveland Foundation defines impact investments as opportunities that align social good with financial return to bring about positive social change. Our long-term objective is to achieve a meaningful impact that benefits the social health of the community and preserves or recycles capital while achieving a positive real return on loans and investments. With our impact investing tools and numerous partnerships, the foundation firmly believes that we must go beyond grantmaking to affect the social change we hope to see locally, nationally, and globally.

Typically, our impact investments focus on green energy, health care, job creation, neighborhood revitalization, social services, technology, and workforce development.

Unlocking Capital for the Greater Good

The Cleveland Foundation has been developing and deploying its impact investing program for 40 years. Currently, the program utilizes six primary vehicles:

• Recoverable Grants
• Program Related Investments
• Mission Related Investments
• Socially Responsible Investment Pool
• Racial Equity Investment Pool
• Real Estate Investments

Project Showcase

Famicos Foundation & Twelve Literary Arts

Evergreen Cooperatives

Astrup Building

RECOVERABLE GRANTS

Recoverable grants are extended to nonprofit organizations and paid back to the Cleveland Foundation without interest over a period of time. Our program areas include: arts & culture, economic & workforce development, education, the environment, leadership development, neighborhood revitalization & engagement, and youth development.

PROGRAM RELATED INVESTMENTS (PRIs)

PRIs are below market-rate loans, equity investments, and bank deposits or debt guarantees that the Cleveland Foundation uses to fill capital gaps and address community issues. As regulated by the IRS, PRIs must be made for the primary purpose of accomplishing a charitable outcome and not primarily for financial gain. These outlays can be extended to nonprofit organizations and community development financial institutions.

The Cleveland Foundation was the first community foundation in the United States to deploy a PRI in 1982 when it advanced nearly $4 million to purchase the land and buildings that saved Cleveland’s Playhouse Square from demolition and preserved the theater district as the unified whole that it is today: our country’s second-largest performing arts center outside New York City, attracting more than 1 million visitors per year.

MISSION RELATED INVESTMENTS (MRIs)

The Cleveland Foundation supports nonprofits, early-stage private equity and venture capital, and public or private companies that are aligned with our mission via direct or indirect MRIs. Our MRIs frequently center on job creation, economic development, research, and technology advancements that will provide impact for the community. We also look for environmental and sustainable impact investments, housing development investments, and financing for BIPOC- and women-led and owned companies.

SOCIALLY RESPONSIBLE INVESTMENT (SRI) POOL

Cleveland Foundation donors are invited to participate in our impact investing program through the SRI pool, which was established in 2002. The pool was custom built for the foundation and invests in U.S. public and private companies screened for social and environmental responsibility, gender diversity, and a place-based emphasis on Cleveland.

RACIAL EQUITY INVESTMENT (REI) POOL

Also an option for donors, the Cleveland Foundation launched an REI pool in fall 2020, the first of its kind among the largest U.S. community foundations. The pool is focused on investing in U.S. public and private companies that (1) are inclusive of Black, Indigenous, and people of color (BIPOC) representation on their boards (targeting 50% more representation than the Russell 3000 Index), (2) have a history of fostering an inclusive, equitable and diverse workplace culture, and (3) have a stated commitment to racial equity. Outside the U.S., the pool invests with BIPOC owned (>50%) investment firms to help equalize the diversity imbalance in investment management.

REAL ESTATE INVESTMENTS

With our MidTown Cleveland headquarters project as an example, the Cleveland Foundation invests in real estate deals that serve the community via economic development, resident wealth building, place preservation, and the environment.

Impact Investing Program

	Recoverable Grant	Program Related Investment	Mission Related Investment	Socially Responsible Investment Pool	Racial Equity Investment pool
	Lower	Expected Investment Return			Higher
Return	0% interest	2-3% (Subsidized)	Market return	Market return	Market return
Definition	Grants paid back to the foundation without interest	Loans, equity investments, and bank deposits or debt guarantees that fulfill a social benefit aligned with the foundation’s mission	Direct or indirect investments (fund of funds) that fulfill a social benefit aligned with the foundation’s mission	U.S. public and private companies screened for social and environmental responsibility, gender diversity, and a place-based emphasis on Cleveland	U.S. public and private companies that are inclusive of BIPOC representation on their boards and BIPOC-owned (>50%) investment firms outside the U.S.
Eligible Recipients	Nonprofit organizations	Nonprofit organizations and CDFIs (Community Development Financial Institutions)	Nonprofits, early stage private equity and venture capital, and public or private companies	Publicly traded and private companies	Publicly traded and private companies
Term	Less than 5 years	1-7 years	5-7 years	Trades daily Pool est. in 2002	Trades daily Pool est. in 2020
Funding Source	Grantmaking	Special purpose fund	Endowment	Donor-advised funds, Organizational funds, Corporate-advised funds	Donor-advised funds, Organizational funds, Corporate-advised funds

Recent Impact Investing accomplishments

Knight Diversity of Asset Managers Research Series: Philanthropy  

The Cleveland Foundation is proud to be part of the Knight Foundation’s Circle of Transparency by participating in the Knight Diversity of Asset Managers Research Series. Learn more about the series here. 

ABFE’s Investment Manager Diversity Pledge

The Cleveland Foundation is proud to sign ABFE’s Investment Manager Diversity Pledge, demonstrating a focus on finding the best investment management talent and aligning with the mission of community philanthropy by helping to build wealth in communities of color and among women. We also seek to collaborate with other entities that share our values of diversity, equity and inclusion. Click here to learn more.

Police Brutality Bond exclusion

Police Brutality Bonds are municipal bonds that have a clause that allows them to be used to settle police misconduct claims, putting the repayment and interest burden on the taxpayer instead of the officers committing the crimes. As part of our Impact Investing program, the Cleveland Foundation took the position of not owning these types of bonds anywhere in our portfolio. After a scan of our holdings in fall 2020, we found and immediately sold a very small position in such assets. Although this divestiture is a small statement in dollars, we hope that it will lead to a conversation inspiring other investment managers to screen their own portfolios and encourage municipalities to put more of this burden on the liable officers and not the public.

Interested in learning more? Please contact us via: ImpactInvesting@clevefdn.org