What Motivated This Foundation to Become an Impact Investor?
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Acknowledging grant dollars alone cannot accomplish systemic change
Under prior strategic plans, The Sapelo Foundation leveraged its grantmaking, public policy, and advocacy tools to fulfill its mission of a "just Georgia...[whereby] all Georgians — especially marginalized communities, communities of color, and rural communities — live in healthy environments, have access to the resources they need to thrive, and engage in a just democracy." In 2019, the Foundation adopted a five-year strategic plan that reasserted its commitment to systemic change and identified that investment assets, in addition to grant dollars, must be marshalled for mission fulfillment.
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Tapping into the interest of individual board champions
The Sapelo Foundation, Z. Smith Reynolds Foundation, and Mary Reynolds Babcock Foundation are all philanthropic institutions rooted in the wealth generated by the R.J. Reynolds Tobacco Company. While each foundation operates independently with its own mission and geographic focus—Sapelo in Georgia, Z. Smith Reynolds in North Carolina, and Mary Reynolds Babcock across the broader Southern region—they share a common legacy, and in some cases, there is board-level overlap across the institutions. Several family members, including those with connections to MRBF, gained exposure to the field-level growth of philanthropic impact investing, and these champions became important internal advocates for The Sapelo Foundation to embrace the practice.
Where Does the Capital Come From?
In 2019, the Board of Trustees laid the groundwork for a complete mission-aligned approach. While the Foundation's journey is just beginning, it's committed to aligning 100% of its capital — grants (at least 5% of financial capital), endowment (95% of financial capital), human, partnership, advocacy, convening, etc. — with mission.
Initial PRI Program Structure
The Foundation elected to carve out a fixed amount of its endowment ($600,000) to make PRI loans. As part of this process, the Foundation created a supplemental PRI Policy to establish:
What Types of Investments Are They Making?
The Sapelo Foundation provides low-interest loans to qualified non-profit organizations to further its charitable mission by investing in organizations and programs that provide sustainable benefits for communities, especially the underserved, that align with its mission to increase environmental protection, social prosperity, and civic power in Georgia.
Strategic Benefits of CDFI Focus
- Allows The Sapelo Foundation to leverage its modest investments alongside other sources of public and private capital
- CDFIs and capital intermediaries have professional investment management systems, providing peace of mind that repayment, investment monitoring, and required investor reporting will be delivered as expected
Current PRI Portfolio (as of 2024)
- Access to Capital for Entrepreneurs (ACE)
- Albany Community Together
- Capital Good Fund
- Georgia Micro Enterprise Network
- NeighborWorks Columbus
- Working Farms Fund
Case Study: Albany Community Together (ACT!)
In May 2018, The Sapelo Foundation awarded a collaborative grant to both ACT! and its sister CDFI, Access to Capital for Entrepreneurs (ACE). Then, in October 2019, staff and trustees traveled to Albany for a site visit with ACT! In September 2020, The Sapelo Foundation awarded ACT! with its first Program Related Investment (PRI), in the form of a $100,000 loan, for a duration of three years.
Impact: This capital infusion allowed ACT! to grow its entrepreneurial lending activity and enhanced ACT!'s capital raising efforts. Ultimately, the Foundation's modest $100,000 loan helped ACT! secure an additional $2.1M of private investment and $250,000 of grant support from the Nathan Cummings Foundation.
How Are Investment Decisions Made?
- Available PRI funding is determined annually during the Foundation's budgeting process. The Foundation invests in batches based on capital availability.
- Interested prospective investment partners must submit a Letter of Introduction by July 15.
- Organizations deemed to be a good fit will be asked to submit a full application with additional financial information and join the Foundation for a virtual site visit.
- Historically, the Foundation has engaged external impact investing advisors to conduct formal due diligence.
- The Board of Trustees makes all investment decisions.
- Foundation staff communicate investment decisions to prospective investees (generally in November).
Important Lessons Learned
Managing expectations around OCIO or investment manager/advisor involvement with MRIs and PRIs
As a family foundation staffed by a small team, The Sapelo Foundation relies on OCIOs and external investment advisors for endowment management. Early on, the Foundation assumed that the OCIO could, rather easily, support future MRI investing as well as ESG/socially responsible portfolio construction. Despite the OCIO's willingness and interest, it became clear that the traditional investment management model does not necessarily facilitate this. OCIO and investment management firms often lack the bandwidth to source mission-aligned investment opportunities, especially for place-based foundations. In response, the Foundation recognizes that both staff and board members may be asked to take a more proactive role in sourcing prospective MRIs.
Right-sizing impact investment guardrails to the source of funds
During its most recent strategic planning process, the Foundation conducted interviews with its PRI recipients. Several smaller partners highlighted how PRIs were an important leverage factor for raising additional capital. Other partners, often with larger balance sheets and longer operating tenures, reflected that small investment amounts have a somewhat limited impact on their ability to grow and scale programming and lending.
Moving forward, the Foundation is reconsidering not just the amount of the endowment allocated for PRIs but also the size of single transactions. In essence, the Foundation is asking, "Is it better to invest smaller amounts in a greater number of partners, or should we drive more capital into fewer, more targeted partners?" There isn't a right answer, but philanthropic impact investors have a "clean slate" when designing impact investing programs. It's important to hold space for reflection and reiteration over time.
Growing the broader impact investing ecosystem is important for smaller-dollar investors
Given its relatively modest endowment, The Sapelo Foundation acknowledges it may never be able to invest large amounts of capital in single PRI transactions. As such, it's in the Foundation's interest to grow a robust pool of philanthropic impact investors across Georgia. The Foundation has supported field-building efforts and frequently plugs into networks like the Georgia Social Impact Collaborative, Mission Investors Exchange, and Georgia Grantmakers Alliance. Moving forward, The Sapelo Foundation may double down on these efforts to help peer foundations embrace impact investing practices. More philanthropic co-investors will enable the Foundation to continue making smaller investments, and more deals can get done across Georgia.
What Motivated This Foundation to Become an Impact Investor?
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Bringing a different tool to critical community leadership issues
CFGA recognized that some community challenges, like housing, food security, and growing local businesses, are better suited for investing than grantmaking. In its community leadership capacity, CFGA identified that it could play an outsized role as an aggregator and provider of flexible, catalytic investment resources, particularly in the areas of affordable housing, community development, and placemaking.
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Growing pools of discretionary capital
CFGA, like many community foundations, sees local impact investing as a strategic tool to grow its pools of discretionary capital, which are often far less available than donor-advised funds and designated giving areas. By deploying capital into mission-aligned, financial return-generating projects, they not only address pressing local needs but also demonstrate the value of flexible, discretionary funds. Successful investments can generate both social returns and modest financial gains, which in turn help to replenish or grow discretionary funds over time. This creates a virtuous cycle: as impact investments prove their worth, foundations can attract new contributions earmarked for similar efforts.
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Capitalizing on donor interest
Across the country, including in Atlanta, donors are increasingly looking to community foundations to have greater impact and to be innovative. A 2020 survey conducted by the University of New Hampshire revealed that, on average, DAFs would allocate 18.5% of their investable assets toward mission-fulfilling investing. CFGA recognized a business & mission opportunity to seize.
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Modeling innovation and leadership among the Southeast regional landscape
Relative to other regions across the country, the Southeast has lagged slightly behind in terms of adopting impact investing practices, particularly by community foundations. CFGA recognized there was an opportunity to model a different type of community foundation leadership, and impact investing innovation might distinguish the foundation as a regional or even national philanthropic leader in this space.
Where Does the Capital Come From?
GoATL Fund Evolution
CFGA's earliest impact investing effort, the GoATL Fund, launched in 2018. GoATL was initially structured as a pooled investment offering for internal CFGA fundholders.
$14.325M
Total Raised & Deployed
$10M
CFGA Discretionary Capital
$4.325M
From Leading DAFs
As a proof of concept, the first iteration of GoATL demonstrated that donors would allocate portions of DAF investable assets for local impact investing. Additionally, it proved that there was demand from CDFIs and financial intermediaries for patient and low-cost debt, and CFGA staff had the requisite skills and relationships to develop an investment pipeline as well as assess, execute, and monitor impact investments.
Given the success of the GoATL Fund, in 2022, the Foundation went "all-in" on impact investing. Today, CFGA operates multiple funds within the GoATL Evolution strategy.
Current Fund Structures
| Fund Details |
GoATL Community Capacity Fund |
GoATL Affordable Housing Fund |
| Structure |
Wholly owned LLC subsidiary of CFGA |
Delaware limited partnership (LP) |
| Minimum Investment |
$25K (internal); $50K (external) |
$1M (institution); $250K (individual) |
| Term |
5 years |
10-15 years |
| Anticipated Return |
1.5% (net of fees) |
2%-3% IRR (net of fees) |
| Fees |
70 bp (internal); 1% (external) |
1.5% AUM-based fee |
| Investment Size |
$250K - $2M loans |
$1M - $5M deals |
| Investment Terms |
5-7 years at 3%-3.5% |
Up to 15 years at 3%-6.5% |
| Investee Type |
Nonprofit CDFIs and intermediaries |
Nonprofit & For-Profit developers |
What Types of Investments Are They Making?
GoATL Community Capacity Fund
A diversified fund-of-funds, meaning desired investment partners are CDFIs and nonprofit financial intermediaries. CFGA issues patient, impact-first, below-market-rate loans to investment partners. In turn, investment partners relend CFGA's capital to support affordable housing, entrepreneurship, childcare and educational facilities, food systems businesses and farmers, and more.
GoATL Affordable Housing Fund
The primary goal is to support the creation and/or preservation of affordable housing in the Atlanta community. For many housing projects to deliver true long-term affordability, the market needs both equity (via site control, tax incentives, cash equity, or credit enhancements) as well as flexible, low-cost impact capital. Affordable housing advocates identified that Atlanta has an excess of senior, market-rate loan capital for housing, and yet, the local market lacks sources of equity and mezzanine or subordinated debt. AHF's investment thesis was developed to fill this gap.
Geographic Coverage
Clayton, Cobb, DeKalb, Fulton, & Gwinnett Counties
Investment Types
- Preferred & traditional equity
- Joint ventures
- Mezzanine loans
- 1st & 2nd mortgage loans
Case Study: Cityscape Housing Investment (November 2024)
GoATL AHF invested in Cityscape Housing, a black-owned, for-profit developer. Cityscape transforms neighborhoods throughout Atlanta, providing much-needed affordable homeownership. One such project, the Villages at Brown's Mill, saw Cityscape partner with Atlanta Habitat for Humanity to bring affordable homeownership to SW Atlanta.
How Are Investment Decisions Made?
The ambitious GoATL Evolution strategy is core to CFGA's mission and way of working. The Foundation has invested resources into staff and leadership capacity to oversee the capital raising and investing activities. Impact investing staff integrate these functions across finance & accounting, philanthropic services, grantmaking, and community programming teams.
Standard Six-Step Pipeline Process
- Prospective investment partners complete an introductory conversation with relevant CFGA team members.
- If the prospective partner and CFGA see a "there there," the partner submits an investment application.
- Relevant CFGA staff review application material. CFGA may request additional information or follow-up discussions. Assuming alignment, CFGA issues a term sheet.
- The prospective investment partner signs the term sheet, and if necessary, remits an application fee payment so that CFGA may initiate formal underwriting (which may be conducted by internal CFGA staff or a contracted external advisor).
- The final underwriting package is submitted to the appropriate Impact Investment Committee for decisioning.
- If approved, CFGA staff initiate closing. CFGA uses external legal advisors to draft loan documents. Prior to execution, CFGA's in-house legal counsel reviews agreements, and final documents are presented to the investment partner for closing.
Important Lessons Learned
Prepare your cross-functional team for a different type/pace of work
For larger foundations, especially those that desire to grow sizable impact investing programs with greater portfolio volume, impact investing will likely require cross-functional team support. Using CFGA as an example, the GoATL Fund strategy is led by a three-person team, but it involves finance and accounting, philanthropic services, and legal team members. It's critical to train supporting departments and staff in program mechanics and expected workflows. Often, impact investing deal flow is slow in the build-up and urgency-driven when capital needs to close. When cross-functional teams do not have shared expectations and strong working norms, the cadence of impact investing activities can create tension within the foundation and for investment partners.
Be open to iterating based on what the market needs and emerging opportunities
To avoid stalling in design and strategy-setting, it's often important for foundations to pick a starting point and iterate over time. For CFGA, the earliest iteration of the GoATL Fund allowed the Foundation to build its impact investing muscles and internal comfort. During the early months of the COVID-19 pandemic, CFGA staff recognized that nonprofits were not able to effectively access new federal relief capital because of the reimbursable nature of such awards. In response, the CFGA impact investing team quickly structured and secured capital for a guarantee pool that incentivized CDFIs to provide bridge loans to local nonprofits. This example demonstrates the value of foundation impact investors operating as adaptive, solutions-oriented partners within local capital markets.
Use agreement templates when possible and identify reliable partners
Early on, CFGA developed some standard loan agreements. Standardized legal templates for loans, notes, guarantees, and equity term sheets can save staff time, reduce errors, reduce closing expenses, and level the playing field for smaller investment partners. However, it is unrealistic to expect that all impact investments will conform to template agreements. Many, if not most, philanthropic impact investments have unique structures, covenants, or features. The bespoke nature of impact investments is due to the investor's willingness to structure investments that meet the needs of both parties and allow for impact.
Realistically, foundations should expect to customize many investment agreements. In CFGA's experience, it was important for staff to have go-to closing attorneys and tax advisors. These external resources buttress staff capacity, ensure consistency in tax structuring and compliance, support future audit reporting, and cover all legal bases.
Codify everything, especially as you are modifying or standing up new processes
As GoATL expanded in 2022 to include direct affordable-housing and economic-inclusion funds, staff documented each step—from deal sourcing criteria to impact metrics reviews—to avoid knowledge silos and ensure smooth scaling. While some may perceive thorough documentation as bureaucratic, for CFGA, the practice drives quality and accountability. Investment evaluation and management work best when processes, from evaluation frameworks to due diligence checklists to post-investment reporting templates, are written down, standardized, and (when necessary) iterated over time.
Thorough documentation is increasingly important in the current environment. Executive orders and shifting federal policy targeted towards DEI, ESG, socially responsible investing, and more are meant to dissuade and discourage philanthropic leadership, particularly around investment activities. Many legal scholars and attorneys are confident that case law will continue to support impact investing by foundations, but in the meantime, foundations should make every possible effort to use standard systems, document everything, and maintain strong decision-making records.
What Motivated This Organization to Become an Impact Investor?
Moving the needle on Columbus's affordable housing crisis
The Bradley-Turner Foundation and other key community & economic development partners grew increasingly aware of Columbus's affordable housing crisis. At the time, research developed by the Federal Home Loan Bank of Atlanta (FHLBA) revealed critical challenges facing the greater Columbus area.
16,246
Affordable Housing Unit Shortage
80%
Extremely Low-Income Households Cost Burdened
74%
Very Low-Income Households Cost Burdened
71%
Low-Income Households Cost Burdened
The low inventory of affordable housing units for working families drives up the sales price and mortgage costs. Moreover, the housing market was creating conditions whereby renters and homeowners alike were spending disproportionate amounts of household income on housing. The Foundation recognized that grants alone were not sufficient to move the needle on a community challenge of this scale.
Where Does the Capital Come From?
The Bradley-Turner Foundation, like many foundations, chose to "dip their toe in the water" with a pilot investment to accelerate its entry into impact investing. The Foundation leveraged its first PRI as an opportunity to engage board members in a hands-on experience whereby they exercised new muscles.
Capital Allocation Strategy
Not only did this approach result in the Foundation making its first PRI loan, but it also unlocked the board's willingness to carve out a modest amount of the endowment (up to 5%) for future local impact investing efforts. Setting aside a modest amount of capital alleviated concerns of more hesitant board members while also giving the Foundation permission to continue to make PRIs in a learn-by-doing manner.
What Types of Investments Are They Making?
The Bradley-Turner Foundation makes Program-Related Investment loans to housing-focused community development efforts in Columbus and the surrounding Chattahoochee Valley region. To date, the Foundation has made two PRI loans to nonprofit, community development organizations.
First PRI: Historic Columbus Foundation (2016)
Amount: $500,000
Purpose: Support for HCF's newly launched loan fund designed to make loans to LMI homeowners in Columbus
Use of Funds: Homeowners could use loan proceeds to finance:
- Façade updates
- Minor exterior improvements
- Larger rehabilitation projects on older homes throughout the Columbus area
Second PRI: NeighborWorks Columbus (2021)
Amount: $2 Million
Purpose: Address Columbus's insufficient affordable housing stock
Project: Elliott's Walk Development
- 24 single-family homes
- Sold at price points ranging from $150,000 to $180,000
- Leveraged alongside capital from Synovus Bank and the State of Georgia's Department of Community Affairs
Important Lessons Learned
Balance nimble learning-by-doing and thoughtful institutionalization
The Foundation recognizes the important role its pilot impact investment played in accelerating the board's willingness to consider future impact investing activities. Early on, the Foundation's President made the strategic decision to recommend that the board create a "band" of portfolio assets that could be used for further impact investments. The President recognized that the Foundation's existing decision-making culture was more responsive to applied vs. abstract learning.
Pilot investing efforts can create a "lower stakes" learning environment. The trade‑off is that without a formal strategy, the pilot may not align neatly with broader organizational goals, and/or the absence of a dedicated source of funds, foundations may not have a capital pool to tap for future investments. In these instances, a foundation runs the risk of "pilot drift," where subsequent investments become ad hoc, inconsistent in size or scope, and difficult to integrate into a cohesive program.
The Bradley-Turner Foundation's story demonstrates that a balanced learn-by-doing and institutionalization approach is possible, but it requires clear intention and expectation-setting with board members.
What Motivated This Foundation to Become an Impact Investor?
Stewarding financial assets while maximizing the present value of dollars used for mission
As a relatively small foundation, the William Josef Foundation leadership sought ways to marshal more dollars for impact without "materially degrading its long-term financial capacity." The Foundation explored increasing its spending policy to pay out more than the minimum distribution requirement (5%).
Were the Foundation to pursue this option, leadership determined that its traditional 65/35 equity/fixed income investment allocation would be insufficient to generate the financial returns necessary to cover a 7-10% annual grant budget. To address this, the Foundation discussed increasing its equity allocation up to the 80-85% range, but the Foundation felt that the risk of periodic drawdowns in equity markets might introduce more volatility that could negatively impact its grantmaking ability on a year-to-year basis.
The Foundation determined that impact investing was the answer, as it presented an opportunity to:
- Increase the present value of its impact by creating a supplemental pool of capital available to mission-fulfilling partners
- Maintain existing portfolio allocations intact
- Minimize the likelihood of long-term endowment erosion
Where Does the Capital Come From?
The Foundation elected to reallocate a portion of the endowment towards future PRI investments. As a part of this process, the Foundation created a supplemental PRI Policy that established specific PRI investment criteria, target investment terms, and decision-making processes.
What Types of Investments Are They Making?
Over time, the Foundation's PRI portfolio has grown to include two types of investments:
CDFI Impact Notes
Like many philanthropic impact investors, the William Josef Foundation directed its earliest impact investments to CDFIs. The Foundation purchased low-interest impact notes from key CDFIs located throughout the Metro Atlanta region. Notes were a low-hanging fruit means of providing patient, concessionary capital to CDFIs working in housing, access to capital, and income and wealth building.
Direct Bridge Loans to Nonprofits
As the Foundation grew more comfortable with impact investing, its investment appetite expanded. The Foundation recognized that many of its key nonprofit partners were consistently experiencing delayed government payments, which were creating cash flow challenges. At this time, the Foundation began making direct bridge loans to nonprofits. These loans infused nonprofits with the operating capital needed to deliver key community programs and services without drawing on reserves or needing to secure high-interest commercial lines of credit.
Mission-Related Investment Example
To this point, the Foundation has principally pursued PRIs. On occasion, the Foundation has made select Mission-Related Investments when presented with promising market-rate private partnerships.
Center Creek Housing Fund II: The Foundation is an equity investor in this market-rate impact fund raised by Center Creek Capital Group. The Fund buys, renovates, and holds affordable single-family rentals for cash flow and appreciation. The Fund prioritizes investments in three markets: Atlanta, Birmingham, and Tampa.
The Pathway to Homeownership Program (created by Center Creek, D&E Group, & Truist) helped Douglasville residents purchase affordable homes.
How Are Investment Decisions Made?
The William Josef Foundation, perhaps more so than many lean family foundations, has tremendous in-house financial and investment expertise. Its founder, Scott Satterwhite, spent his career in banking, investment management, and venture capital. In his current capacity as the William Josef Foundation's President, Satterwhite draws on his decades-long professional expertise in service of the Foundation's impact investing efforts.
Investment Decision Process
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Foundation leadership identifies potential investment opportunities. Potential investments are assessed by the Foundation's President based on four factors:
- Compliance with the Impact Policy (relative to investment type, size, and effect on the impact portfolio diversification)
- Tightness of fit between the recipient of the investment and the Foundation's mission and programmatic goals
- Appropriate tool (i.e., PRI or MRI)
- Dimensions of investment risk
- If, after this initial evaluation, the President wants to proceed with an investment, further due diligence commences. At this stage, the Foundation requests key documents (e.g., financial statements, pitch books, private placement memoranda or offering documents, etc.) The Foundation also produces an investment questionnaire that the prospective investee completes.
- Once sufficient documentation and Q&A responses have been collected, the President produces an investment recommendation memo that covers the aforementioned four criteria/elements.
- The recommendation memo is presented to the Board for consideration and decisioning.
- Following investment approval, the President and Program Manager support investment closing and are responsible for tracking the investment and reporting to the Board quarterly.
Important Lessons Learned
Document program goals, guardrails, and processes on the front-end
The William Josef Foundation recognizes the role its Impact Investing Policy Statement has played in keeping its impact investing efforts on track. At the outset of its impact investing journey, the Foundation elected to craft and ratify a well-constructed Impact Investing Policy Statement that integrates into its overall Investment Policy Statement. This impact investing-specific policy establishes clear guidelines and guardrails that empower staff to source, evaluate, underwrite, and monitor impact investments over time.
Revise the Impact Investing Policy Statement when necessary or appropriate
With the benefit of five years' experience and transactions under its belt, the Foundation is currently reevaluating and amending its Impact Investing Policy Statement to guide future impact investing efforts. The Foundation's experience can be a lesson to future philanthropic impact investors. Your impact investing journey can be thorough and imperfect. Boards should be diligent and considerate when establishing impact investing programs, and yet, acting prudently does not require perfection at the outset. There will be opportunities to revise and amend guiding policies as the foundation gains experience.