The Minderoo Foundation is a registered charity and one of Australia’s largest grant-giving organisations. It was founded by Andrew and Nicola Forrest, and it is estimated to have contributed $109.6 million (in 2021) to projects across a diverse mix of projects that fall under the organisation’s 11 core ‘initiatives’.
In a bid to boost their impact, the Foundation has now launched an impact investment fund that will leverage this deep pool of project insight and subject-matter-expertise to identify investable business opportunities.
While many foundations have struggled to wrangle the investment of their corpus away from traditional investment structures, and direct it towards impact investments that are aligned with their mission, Minderoo has deftly shifted a $100 million allocation to a dedicated team that is investing in enterprises, funds and impact bond deals.
The Strategic Impact Fund team is led by Jenna Palumbo who took on the role of Head of Impact Investing 6 months ago. OnImpact spoke to Jenna about the mandate, how they identify opportunities, and what gender-lens investing means to her and her team.
The Minderoo Approach to Investing
The Minderoo Foundation is endowed with assets totalling $2.6 billion (according to the 2021 annual report). It has a significant holding in Fortescue Metals (the iron ore company founded and run by Minderoo benefactor Andrew Forrest), and while this and other investments offer a financial return, which is vital to fund grant-giving, they’ve now added an allocation to impact investments. A model which offers the potential for both a financial return, while also contributing to the mission of the organisation.
“We have a mandate to invest that $100 million in a way that scales and accelerates the goals of the foundation, that’s the impact goal. We can invest along any of the 11 thematics that form the core of the organisation.” Jenna says.
“Our investment thesis is to scale and accelerate the impact at the heart of those initiatives, whilst demonstrating financial returns. Minderoo is a very progressive organisation, it’s very forward thinking, and it’s very familiar with the idea of using business as a force for good. So I think it’s really a natural extension of their approach.”
The impact investing team is only small, but its power comes from having the resources, knowledge, and relationships developed by the breadth of the Minderoo Foundation’s broader project work.
“They cover a huge range of issues, from global environmental issues like eliminating plastic waste, and returning oceans to a state of flourishing, all the way through to more domestic social policy issues, like indigenous employment parity.” Jenna says.
“We have a relatively small strategic impact fund team. But our little team is augmented by having these incredibly deep thematic expertise for each of our initiatives. So we’re not solely responsible for going out and originating and doing the due diligence, we are sort of a specialist function that complement these incredibly deep thematic experts.”
Impact investment is rarely in competition with charitable giving structures, but there are certainly opportunities where a well-targeted investment can boost the impact of an organisation more effectively than a grant.
“We accumulate lots of great ideas, the pipeline builds from the initiatives, and then we work in partnership with the initiatives to do the due diligence, and to understand both the commercial and the policy context for those opportunities. We work with them all the way through to execution, but then really, the value add for the enterprises comes through working closely in partnership with the initiatives.” Jenna says.
Companies, Funds & Bonds
A diversified portfolio needs more than just companies, and the Strategic Impact Fund targets impact funds and bond strategies as well. Assessing a fund structure requires a different approach to identifying companies, but for Minderoo, it comes back to impact alignment.
“When we’re investing in a fund, they have to be very tightly and clearly aligned to one or more of the foundation’s existing initiatives. We want to see a really clear strategic rationale for investing into them.” Jenna says.
“A good example is a fund called Working Capital Fund, which is a US based group looking at ethical supply chains. The strategic element there is they are not only incredibly deep thematic experts in supply chains, but they also have a really important investor base, which includes some of these big global brands.”
Identifying Impact Companies
It’s one thing to identify, analyse and invest in a company that you view as having an effective impact thesis. It’s another thing to then work with them to both ingrain the impact approach, and build systems to report on it.
While you could assume that a company that fits the description will be open to the reporting demands of an impact investor, it can be a shift and an imposition. Essentially, they need to view you as a partner that will add value beyond your capital.
“So far they’ve been receptive. The organisations that we’re investing into, their reason for being is to have impact. So when it comes to impact measurement, they are either well advanced in their thinking on that front, or they welcome the conversation about how they could better measure the impact. So those conversations have all been really positive.” Jenna says.
To bring a company on-board, Jenna and her broader team are looking for clear alignment with the mission and existing projects, but they also want to see how they fit together as a whole. It’s a system-wide approach to Minderoo’s impact.
“We’ve obviously got the considerations around their social or environmental impact. So we look for strong alignment with the initiative’s theory of change, because we want to see that really strong complementarity between our investees and the work of the initiatives. We will then go through all of the normal financial modelling and commercial checks and understand and check and challenge their growth assumptions and their plans for growth.” Jenna says.
“Other criteria that we really focus on through the diligence process are scalability, and systemic relevance. So an opportunity that is impactful in itself might be of interest, but what we’re really looking for are things where we can take those learnings and share them or distribute them through the Minderoo portfolio, or outside of the Minderoo portfolio, to have impact at scale.”
Gender Lens Opportunity
Prioritising gender equality is an increasing priority for Minderoo. While the impact fund itself is run by women, and it has a focus on funding solutions for problems that tend to disadvantage women, they want the lens to grow wider, to be a standalone impact metric that assesses how a business views their approach to gender issues.
“We have multiple opportunities to consider gender through our investment strategy. One is to think about opportunities for investing into businesses that have a product or service that is specifically targeting an improvement in gender equality.” Jenna says.
“The other is to support female founders, and we have a number of female founders within our portfolio. But then there’s also understanding, through any of our investments, what the differential impact on gender is through the product and service. It’s asking questions, through the diligence process, to make sure that the business is considering those things, irrespective of what their product or service is, just to have that awareness built into their business.”