September 02, 2009

A Different Kind of Donor-Advised Fund

The Calvert Giving Fund works much like other donor-advised funds, but with a twist –- the assets that donors contribute to set up their funds are invested in companies and other efforts that promote the social good.

“We believe that the philanthropic gifts that they’ve given to the donor-advised fund really need to go to work as soon as they are contributed,” says Shari Berenbach, chief executive of the Calvert Foundation, in Bethesda, Md., which runs the fund.

Started in 2001, the Calvert Giving Fund has always given donors the choice of investing money held in donor-advised funds in socially and environmentally responsible mutual funds run by the Calvert Group and in Community Investment Notes issued by the foundation.

The notes act like the program-related investments that foundations make. Money invested in the notes is lent to nonprofit organizations to build low-cost housing, provide small loans to entrepreneurs in developing countries, and for other charitable services. Investors receive their principal back, along with up to 3 percent interest.

Last year, the fund expanded the number of debt and equity investment products in which donor-advised assets can be held. Among the new investments are notes issued by:

  • Acumen Fund, a nonprofit organization that invests in companies that provide health, water, housing, and energy services to people living on less than $2 a day in developing countries.
  • Public Radio Capital, a nonprofit organization that makes low-interest loans for the purchase or expansion of public-broadcasting stations.
  • Root Capital, a nonprofit organization that provides capital and expertise to help farmers and rural craftspeople in developing countries build businesses,

The Calvert Giving Fund has 400 accounts totaling $26-million. The assets are split roughly half and half between Calvert Group mutual funds and the program-related investment-style vehicles.

In a difficult time for investments of all kinds, the Calvert Giving Fund has fared better than many investors have. Over all, the fund ended 2008 down less than 5 percent.

“We really outperformed our counterparts handsomely,” says Ms. Berenbach.

Listen to Ms. Berenbach’s explanation of why she thinks donor-advised funds are an ideal environment for people to start to experiment with mission investing.