Managing your Place-based Investment Portfolio

Designing your team and governance structure

Advice from the Field

Cathy Rowan, director of socially responsible investments, manages most of Trinity Health’s relationships with community development financial institutions (CDFIs): “If a health system invests in this strategy and hires one dedicated staff person, there are many people with incredible capacity in both sustainable finance and community development. Having someone on staff with sustainable and impact investment expertise who also understands the mission of the organization is key.”1Cathy Rowan, interview by David Zuckerman and Katie Parker, Bronx, NY, January 29, 2016.

Who will be responsible for managing place-based investment decisions?

The decision about who will manage place-based investments is driven by a number of factors: 1) your place-based investment approach, 2) internal competencies, and 3) committed resources.

What approach to place-based investment will your health system pursue: direct investing in specific projects or working through financial intermediaries and investment managers?
Different Models for Staffing a Direct Investment Program
  • Full-time position: From 2002 to 2015, Pablo Bravo, vice president of community health at Dignity Health, oversaw the community investment portfolio as one of his primary responsibilities. In 2015, a program analyst was hired to assist Bravo. Bravo’s responsibilities include drafting loan agreements and sharing them with the legal department; the analyst helps with the work leading up to this stage: preparing memos, handling much of the due diligence, providing financial information, and ensuring that borrowers submit monitoring reports.2Pablo Bravo, phone interview by David Zuckerman and Katie Parker, March 18, 2016.
  • Part-time positions within different departments: At St. Joseph Health, Lisa Laird, vice president for cash and investments, and Gabriela Robles, vice president of community partnerships, and their support staffs manage the different responsibilities required for their community investment program. For all of them, it is a small portion of their total job responsibilities. Laird recommended allocating at least one-third of a full time employee’s total work time to implement a direct investment program successfully.3Lisa Laird, interview by David Zuckerman and Katie Parker, May 9, 2016.
  • Outsourced: This role can also be outsourced to an investment advisor or service provider with expertise in advising on direct place-based investing.
Investing via intermediaries
  • Part-time position within different departments: At Trinity Health, Cathy Rowan, director of socially responsible investments, spends about 20 percent of her time overseeing the program. Jody Wise, a socially responsible investment consultant, has helped Trinity Health become more proactive in building connections between local hospitals and specific CDFIs where Trinity Health has made investments. A staff person in treasury services assists with financials, due diligence, and loan servicing.4Cathy Rowan, interview by David Zuckerman and Katie Parker, Bronx, NY, January 29, 2016.
  • Outsourced: Historically, Catholic Health Initiatives (CHI) managed its mix of direct and indirect investments internally between community outreach and treasury. In 2015, they decided to work with Partners for the Common Good, a CDFI focused on creating tools to grow community development finance and steer investment towards high social impact organizations.5Partners for the Common Good, pcgloanfund.org. Partners helps CHI with back-office administration and identifying investing opportunities, although CHI still completes the final financial review.6Jennifer Neppel and Diane Jones, phone interview by David Zuckerman and Katie Parker, December 10, 2015. 

Advice from the Field

“A successful community investment program really benefits from having a staff member who understands financial analysis, impact investment, community or public health, and partnership and trust building. Ideally, this person should also be adept at building relationships across many different internal teams and garnering support from senior leadership so the program has the backing it needs. If you can’t find one person to fill all these roles, then you can leverage cross-system expertise and capacity to successfully carry out community investment,” explained Pablo Bravo, vice president of community health at Dignity Health, who oversees their $100 million community investment portfolio.7Pablo Bravo, phone interview by David Zuckerman and Katie Parker, March 18, 2016.

Which department/s in the institution will manage place-based investments?

There are a number of competencies required to implement a place-based investment program. Investment analysis expertise alone is not sufficient. Research for this toolkit found that a number of key competencies are especially in-demand for institutions running successful place-based investment initiatives (see the chart below).

Competencies Required Staff Person Responsible
Be able to identify potential borrowers and other investment opportunities
Successfully build and maintain relationships with borrowers and other investees
Provide investment due diligence
Analyze environmental, social, and governance risks in investment due diligence
Service loans
Track monitoring reports
Create standard form documents
Have knowledge of health equity, community health, population health, and/or community health
Experience in sustainable, responsible, and impact investment
Community economic development expertise

 

Describe who will be the lead responsible for managing place-based investments:

 

Governance Structure

What is the internal approval process for authorizing place-based investments?

 

Example:

Stage Role Responsibilities Frequency
1 Place-based investment staff Manage place-based investments by identifying opportunities and providing due diligence and financial analysis Ongoing, quarterly, biannually, annually
2 Advisory committee Review and confirm/reject place-based investment staff recommendations Quarterly, biannually, annually
3 Executive staff Approve investment decisions Quarterly, biannually, annually
4 Board investment committee Provide final approval of investment decisions (optional)

Receive annual updates

Authorize place-based investment policy

Quarterly, biannually, annually

 

 

Stage Role Responsibilities Frequency
1
2
3
4

A place-based investment policy should be instituted through governance to formalize the program as part of the institution’s official investment strategy. Bon Secours Health System’s policy is included as a sample in the More Resources section of the online version of this toolkit. The next resource in this toolkit section provides examples for how health systems have allocated assets for place-based investments.

Tracking Dollars

Often the best place for a health system to begin the process of building a place-based investment program is by assessing its current asset allocation and investment choices.

Deciding Your Approach

What is your purpose or mission as a place-based, community investor?

Allocating Assets

How will assets be allocated from the investment portfolio for place-based investments?

Creating Forms and Templates

Hospitals and health systems have developed a variety of resources and materials to implement their place-based and community investment programs.

Moving to Impact

Communicating wins, building relationships, monitoring borrowers, and scaling impact

References   [ + ]

1, 4. Cathy Rowan, interview by David Zuckerman and Katie Parker, Bronx, NY, January 29, 2016.
2, 7. Pablo Bravo, phone interview by David Zuckerman and Katie Parker, March 18, 2016.
3. Lisa Laird, interview by David Zuckerman and Katie Parker, May 9, 2016.
5. Partners for the Common Good, pcgloanfund.org.
6. Jennifer Neppel and Diane Jones, phone interview by David Zuckerman and Katie Parker, December 10, 2015.