​In early 2016 CFFP hired Ecotrust, a high-functioning regional non-profit, to research market factors in six food sectors: beef, poultry, pork, small grains, leafy greens and storage crops. The goal was to identify sustainable production models already in use, identify the market drivers and investment opportunities, inform outreach to potential financiers, and determine whether a dedicated fund should be established in Washington and Oregon. CFFP hoped to align different types of capital around the findings of the Ecotrust report.

The full market research successfully identified sustainable production models currently in use along with specific supply and demand drivers for each product.  However, when presented with the same information, non-profit and for-profit investors had different conclusions on how the collaborative should proceed.

​Ecotrust had made its recommendations as a non-profit investor. It focused on opportunities that could transform the actual system of food and agriculture, especially those working on overarching sustainability goals and crossing product lines. For example, no-till grains can generate grain and improve soil health and sequester carbon and be used for chicken feed.  

In contrast, Mark Bowman, a seasoned agricultural lender, analyzed the same data as a for-profit investor. He emphasized investment repayment factors: production costs, potential linkages and gaps for investors, industry trends, business configuration and entrepreneur expertise. 

​Surprised, CFFP partners discussed the divergent recommendations and what they meant for the group’s next steps. Foundations tend to fund for transformational system change, they observed, while for-profit investors seek to “pick winners” based on transactional financial success. In other words, non-profit audiences reading the report sought opportunities to transform the overall food system, while for-profit investors looked for enterprises with the best chance of repaying their investments.

“It was described as a difference between a utopian ‘I want to change the world’ view to a ‘what’s actually going to provide some returns?’ view,” said Mauri Ingram, Whatcom Community Foundation CEO, who praised Tim Crosby, Project Coordinator, for having the research evaluated from both points of view.

The logic model gap between non-profit and for-profit investors needs to be acknowledged and overcome, CFFP members agreed, for any project seeking to bring funders together for maximum community benefit — not only for investing in a regional food system, but for any issue area, in any geographic footprint.

This report submits practical recommendations for investing towards deep social equity – some of which are totally in line with CFFP’s current approach, and some from which we could benefit to learn. The recommendations are informed by the work of leaders and field-builders in impact investing and impact evaluation, including the GIIN, Ford Foundation, RSF Social Finance, and Sonen Capital among others. Scattered throughout the report, case studies from funds and philanthropies around the globe present the challenges and triumphs of taking on such strategies. Overall, we get a very down-to-earth picture of what it looks like to invest for deep and lasting social equity.
 
Here are some highlights that speak to CFFP’s current approach and our remaining questions:

• Align philanthropic and for-profit capital.
  • This is a strategy that can leverage several other strategic wins for investing in systems change.
  • First of all, layered capital is a means to rethinking and restructuring of risk as well. The Gates Foundation will layer grant funds with PRI dollars in a form of “RiskShare” when the social benefits of an investment seem to outweigh the financial risk.
  • Additionally, integrated capital can affectively leverage additional investors and resources that might otherwise not engage:

“We continue to iterate on blending capital to ensure that when we use subsidy, if applicable, we do so in a manner that efficiently and effectively addresses gaps and leverages other investors. The goal is to crowd in versus crowd out investors, in an effort to contribute to long-term investment solutions to social challenges”
– Christine Looney, Ford Foundation

• Develop investment theses with social equity as the main driver
  • Center your outcome goals explicitly around social equity, and your activities and investment decisions will fall into line similarly.
  • Evaluation of the long-term and systemic outcomes of an individual investment is a realm that remains unstandardized, messy, and daunting for many impact investors. However, measurement of outputs and engagement with beneficiaries can, at minimum, help us to learn internally and improve our investment strategies.
• Decrease the gulf between capital holders and recipients by involving the beneficiary throughout the investment process.
  • CDFI’s are often regarded as the gold standard here, because they are required by law to incorporate beneficiary perspectives onto their boards. However, Antony Bugg-Levine, president of Nonprofit Finance Fund, points out that the composition and structure of CDFI’s don’t often foster true community engagement:

“The CDFI community has largely been led by a technocracy, not by the communities affected. We are much whiter, more educated, more male – and that’ been a fundamentally patronizing power dynamic that doesn’t instinctively act towards aspects of social equity.”

• It is essential to engage true beneficiaries because they are the experts on issues in their community, challenges faced, factors for success, and desired solutions. There are many opportunities to engage beneficiaries throughout the investment process:
  • “Developing the investment thesis or theory of change;
  • Assessing opportunities and gaps within communities;
  • Creating investment strategies;
  • Determining benchmarks for assessing success and impact;
  • Evaluating individual investment opportunities”