THE WEINGART FOUNDATION Cambridge Associates Client Spotlight

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The Weingart Foundation

MEET THE WEINGART FOUNDATION

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Their bold commitment led the Foundation to reassess how every dollar was spent, invested, and allocated. Recognizing that traditional grantmaking was not enough to achieve the scale of change they envisioned, the Foundation's leadership decided to leverage their full endowment in pursuit of enhancing their mission and delivering impact to the communities they serve. Merely excluding investments that could cause social harm fell short of their ambitious objectives—instead, they saw an opportunity to demonstrate how a foundation's investment capital can drive significant societal and intergenerational change while also pursuing above-market returns. The Board, Investment Committee, and staff embarked on a journey to better understand the impact investing landscape. They considered the range of investment options for aligning the portfolio to maximize community impact, the potential of investing with diverse managers to deliver alpha while addressing investment industry inequalities, the creation of inclusivity-promoting standards, and how to begin achieving each of these goals. The search for a partner to help guide their transition led Weingart to Cambridge Associates in 2018. Cambridge's expertise in identifying diverse managers and innovative strategies, and tailoring a model to the Foundation’s needs, allowed them to develop an innovative investment strategy optimizing three key dimensions: deliver impact, embrace diversity, and generate alpha. Yet, evaluating each investment posed a challenge since the goal was to find managers capable of delivering on all three fronts and some investments naturally aligned more closely with one or two dimensions. As a result, Weingart had to develop a multi-faceted manager evaluation framework.

Meet the Weingart Foundation, a private grantmaking foundation working to advance racial, social, and economic justice in Southern California. Founded in 1951 by Ben and Stella Weingart, the Foundation has provided more than $1 billion in grants and loans to thousands of organizations across the region. By strengthening organizations focused on providing critical services and building power in communities of color, Weingart aims to demonstrate what is possible when you invest and trust in your partners. Located in the heart of Los Angeles, Weingart has been on a transformative journey to align its entire $850 million investment portfolio with its mission while creating a new standard for how foundations leverage their financial assets to drive systemic change. Their journey was catalyzed by the Foundation's 2016 "Equity Commitment," which aimed to base all decisions on promoting fairness and opportunity, particularly for communities of color impacted by inequality.

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FULLY COMMIT

CREATE A FRAMEWORK

Cambridge Associates helped guide the Foundation through the process of mission alignment, including to facilitate education sessions and to develop a "mapping" tool to evaluate and rank each investment. This allowed for a more complete assessment of each investment where the Foundation looked beyond firm ownership statistics to actual practices and outcomes.

The Foundation holds investment managers accountable for making tangible progress on diversity. As an example, they terminated an investment manager based on the firm's lack of progress on diversity initiatives. The Foundation made it clear that it expected tangible change and only re-invested once substantive progress was made, demonstrating its commitment to its mission-driven investment principles.

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CHANGE TAKES TIME

The pool of managers is expanding, yet the Foundation's primary objectives—meeting its spend rate plus inflation, generating impact, and promoting racial equity—are crucial for enduring sustainability. While they have yet to achieve 100% alignment, 60% is an impressive milestone along their journey.

LESSONS LEARNED

WALK THE TALK

BUILD A STRONG—AND DIVERSE—ORGANIZATION

Weingart wanted their leadership to reflect the communities they served and committed to building a diverse Board and staff, including leaders like Monica Lozano, the first Latina director, and Miriam Muscarolas, Investment Committee Chair. This diversity has been crucial in developing and implementing a mission-aligned investment strategy. They were also strategic in their staff hires, including Rosa Benitez to lead program-related investment (PRI) work and Tim Ortez as CFO to help build internal capacity for mission-aligned investing.

Recognizing that grantmaking was not enough to reach their impact goals, the Foundation decided to engage its full investment portfolio. It worked to develop a learning agenda to dispel myths about mission investing and demonstrate that mission alignment could meet both investment and impact goals.

Here are six things the Weingart Foundation has learned as they've advanced their mission-driven investment strategy:

Weingart’s journey has not been without its challenges. Engaging investment managers on diversity and impact, re-evaluating traditional investment metrics, and navigating the complexities of mission-aligned investing require a steadfast commitment and a willingness to learn and adapt. Even with these challenges, Weingart has made significant progress with more than 60% of its portfolio now aligned with its mission, demonstrating that it is possible to achieve both financial returns and social impact. They continually evaluate their progress and have solicited both internal and external feedback as they push forward and consider what’s next in their journey. Weingart’s story is one of transformation, innovation, and progress—guided by a committed Board with vision and implemented through a strong partnership. It serves as a powerful example of how foundations can use their financial assets not just to support their mission but to lead the charge toward a more equitable and just society.

“The future of investing will undoubtedly include new models of social responsibility and innovation. We have a duty to ask ourselves if we are doing enough to align our investments with our values and whether we are building a future where the benefits of growth are shared by all.”

—Katie Kalvoda, Weingart Foundation Director & Investment Committee Chair

"This is a transformational moment in the Foundation’s history. We’ve determined that to create the greatest impact we must use all the tools available to us."

As the investment strategies used began delivering promising results toward alignment, the Foundation also increased their use of program-related investments (PRIs). These PRIs provided significant financing to local organizations engaged in mission-critical work, such as developing innovative affordable housing models in Los Angeles. The Foundation also set a target allocation for affordable housing with capital market assumptions similar to other asset classes as part of its portfolio optimization process. Although the pool of institutional managers in this space is limited, working through this transition has unlocked new investment opportunities with more managers now entering the market.

Each dot represents a different manager relationship and where they place on the diagram. Dots illustrate positioning and are not relative size of actual investment. Diversity: strategy’s ownership, investment team, or hiring/staffing processes. Impact: investments that align with the Foundation’s social equity objectives, including those targeted to local communities. Alpha: investments seeking to outperform the markets or provide differentiating exposure.

Though relatively straightforward, their strategy mapped each investment in the portfolio according to the Foundation’s core factors—diversity, impact, and alpha. The approach demanded thorough diligence, analytical rigor, and governance to support each investment. If an investment failed to meet the Foundation’s standards or demonstrate significant progress toward aligning with core values, the Foundation would provide feedback and the team would move on. As one example, a hedge fund manager in the portfolio failed to demonstrate material progress in its hiring practices and staffing year-over-year, which resulted in their termination. In another instance, following feedback provided to a manager that had historically lacked diversity, the Foundation leveraged its capital and relationship to motivate notable changes in that manager’s hiring practices, including a majority-diverse incoming analyst class and the firm’s first female senior partner. Another proactive and innovative investment supported scholarships for historically black colleges and university (HBCU) students through the manager’s incentive structure and promoted diversity within Silicon Valley's tech industry. This investment further benefited HBCU endowments that invested in the fund on advantaged economic terms. Today, the Foundation has made significant progress as evidenced by the diagram below whereby each dot represents one the Foundation’s managers and their positioning on diversity, impact, and alpha alignment.

—Miriam Muscarolas, Weingart Foundation Director & Former Investment Committee Chair

THINK BIG

Weingart views success not just in their own portfolio shift but in catalyzing wider adoption of these strategies to drive positive societal impact at scale. Their journey demonstrates that a mission-alignment approach can be successfully paired with growing assets to support grantmaking. Weingart continues to drive deeper integration and aims to inspire other foundations by showing that impact can be pursued without sacrificing returns.

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