When New York’s F.B. Heron Foundation, a private, grant-making institution, was created, it had a mandate to invest assets and donate 5 percent of returns annually to help low-income people and communities to help themselves.1 The year was 1992, the cusp of one of the greatest economic booms in U.S. history. But as Heron’s asset base swelled, 5 percent for community work began to look insufficient to help the many Americans who were missing out on the boom. In a 1996 meeting, directors realized they were spending too much time reviewing a particular investment manager’s performance and too little time discussing Heron programs. It was time to reevaluate priorities. The foundation’s social mission and tax-exempt status suggested that it should be more than a private investment company using excess cash for charitable purposes. It needed to be different from conventional investment managers. Heron concluded that the 5 percent payout requirement was the narrowest expression of its philanthropic goals. The other 95 percent of assets, the corpus, could give the board the tools it needed for greater social impact. Staff members were encouraged to explore ways in which Heron could engage more of its assets through a combination of grants and mission-related investment strategies.2 The foundation decided to leverage an increasing amount of its resources to pursue its mission and to maximize its impact in low-income communities.
Communities and Banking
Federal Reserve Bank of Boston
Swack, Michael, "Expanding Philanthropy’s Reach" (2008). Communities and Banking. 1.