The Leichtag Foundation aims to have its entire portfolio in “mission-aligned” investments by 2025, Charlene Seidle, executive vice president of the foundation, told eJewishPhilanthropy. “It’s a culture shift and it’s a constant educational process,” Seidle said. “But there’s more awareness now that you can do well and do good.”
Based in both Encinitas, Calif., near San Diego, and Jerusalem, the foundation, which has $105 million in assets, has adopted a “broad” definition of mission alignment that includes programs and projects compatible with or directly supportive of the foundation’s work in those locations, or that combat climate change, Seidle said. Financial return is still a goal, but it’s considered along with other measures, such as “social good,” when deciding whether to invest, and how to gauge the success of an investment.
“Leichtag is the first Jewish organization to go all-in on impact investing,” said Julie Hammerman, the founder and CEO of JLens, which maintains an index of about 300 public companies screened for compatibility with a set of six Jewish values. “They’re setting a terrific example of a partnership between the mission side and the investment side.”
The structure of Leichtag’s investments runs a wide range; they invest in real assets, like housing, and in the equities screened by JLens.
One example: Leichtag Commons, a 68-acre campus in Encinitas that hosts a farm, educational programs and arts and culture events. The foundation is also considering investments in affordable housing.
Leichtag’s announcement reflects a much broader investment trend, said Hammerman, citing a Bloomberg article that estimates that more than a third of assets globally, or $53 trillion, will be in investments that have met “ESG” criteria — environmental, social and corporate governance — by 2025.
The Jewish world is proceeding relatively slowly, said Michael Lustig, an investor and philanthropist who wrote the Jewish Funders Network’s guide to impact investing.
Assets under management at JLens have increased from $120 million to more than $130 million since June, and 11 Jewish community funds or federations that administer donor-advised funds (DAF), including the Dallas Jewish Community Foundation, the Jewish Federation of Greater Pittsburgh and the Oregon Jewish Community Foundation, are offering JLens as an investment option to DAF holders, Hammerman said.
Leichtag’s effort to make its entire portfolio mission-aligned is a work in progress that’s compatible with the foundation’s culture of “learning by doing,” Seidle said.
The foundation is limited in how much of its capital it can put into certain impact investments, such as those in startup social enterprises, that require a long-term commitment, Seidle said. As it seeks more opportunities, it is increasingly looking for liquid options that yield a return more quickly.
Leichtag is also working with a task force to customize its own measurements of impact, and has been particularly influenced by the work of the Heron Fund, one of the first foundations to announce its intention to put its entire portfolio into mission-aligned investments.
Jewish community foundations are more likely to explore impact investing because they are competing to attract new DAF holders against the biggest administrators in the country, such as Fidelity Charitable, Hammerman said.
“They have to be creative and innovative, and impact appeals to younger donors or people who aren’t currently investing,” she added.
Federations, by contrast, tend to have long-established processes of managing their endowments with the help of investment committees and advisors.
Lustig said that as a supporter of UJA-Federation of New York, he had tried to encourage impact investing but didn’t have as much influence as he wanted.
However, the New York federation has allocated 3% of its endowment to Israel bonds and funds, Eric Goldstein, the federation’s CEO, told eJewishPhilanthropy.
“I consider that a good move in the right direction,” Lustig said.
Goldstein also said that the federation considers ESG values in selecting its investment managers, and that it has declined to work with managers who have invested in businesses such as predatory debt collection.
“That’s not a business we’re comfortable investing in, because it’s antithetical to the mission we’re in,” Goldstein said.