Bay Area Impact Investing Initiative 5 year Summary: 2013-2017 Lauryn Agnew January 2017

Bay Area Impact Investing Initiative Investing for sustainable economic prosperity and community resilience in the San Francisco Bay Area The Bay Area is a special place: the highest GDP per capita in the US, we are innovative, we are risk takers, and we have stunning vistas and a diverse population. We also need to continue to invest in our own backyard to keep it special and prosperous. This center of innovation, academia, finance and technology needs investments in sustainable long term economic development to retain its strength and leadership.

Impact Investing Impact Investing Financial First Impact First Fiduciary standards of expected risk and returns Rigorous due diligence processes Seeking to optimize community impact Many different measurements for impact Impact Investing Investments that have strong financial returns and a positive impact on the mission

Aligning Investments with Mission UWBA Mission: To cut poverty in the Bay Area by ½ by 2020 Themes: Good Employment and Affordable Housing BAIII Mission: To create a blueprint to increase the quantity and effectiveness of impact investing in the Bay Area To promote sustainable economic prosperity and resilient communities in the Bay Area

Impact Investing Continuum All financial structures have impact

Impact Investing Themes

Each asset class has a unique combination of risk, return and impact Intentional Impacts Each asset class has a unique combination of risk, return and impact

BAIII Custom ESG Factors Positive Scoring: based on objective data Job Creation (High): defined by Universe of Bay Area employers Criteria Data Elements Importance Weighting % of Total Labor Relations Evaluation of relationships with organized labor High 4 22% Recognition Workplace and Diversity Diversity Total Workforce and Management Medium 2 11% Sexual Orientation Non-discrimination Statement Same Sex Benefits Environmental Toxic Release Information and Spills Human Rights Global Sullivan and Global Compact Corporate Governance Governance Metrics Grades.

Modeling the Equity Portfolios Custom ESG Scores, Tracking Error, Geographic Focus Model UWBA Custom ESG Score Tracking Error vs. Russell 3000

Investment Policies & Impact Goals BAIII Custom Equity model portfolio: Investment Policy: Expect market-like risk and return- Benchmark R3000 75% Bay Area headquartered companies vs. 19% ESG criteria scores improve 30%: 46 ---> 60 Good employers, good jobs, good environmental stewards Diversity policies, management and boards Impact: Influence and change corporate behavior Support employment, regional economic prosperity

UWBA Model Equity Portfolio 7 years: January 1, 2011 – December 31, 2017 annualized cumulative Bay Area/UWBA Equity Model 15.79% 179.04% Russell 3000 13.45% 141.90% BBACAX (+div reinvested, cap wtd) 15.01% 167.40 % Changes to the Investment Policy Statement requires Finance Committee and Board approval. We can implement the fixed income portion without needing to change the policies. Developing the language and understanding the issues facing the board will hold off the implementation of the equity portfolio but we can track the results on paper and share the information in a public discussion going forward.

Annual Performance: 2011-2017 Year BAIII - UWBA Model Russell 3000 1.56% 1.01% 2012 20.95% 16.37% 2013 33.38% 33.46% 2014 16.29% 12.54% 2015 0.82% 0.47% 2016 13.99% 12.64% 2017 27.43% 21.97% Inception Cumulative 179.04% 141.90% Inception Annualized 15.79% 13.45%

BAIII Public Equity Multi-Manager Fund

BAIII Fixed Income Multi-Manager Fund

BAIII Real Estate Multi-Manager Fund

BAIII Private Equity Multi-Manager Fund Bay Area Council Equity Fund/DBL Investors Double-bottom-line venture investing in Bay Area 2004-2014 example Pacific Community Ventures Venture and social enterprise loan fund, low-moderate income areas Bay Area Centric Incubators Green tech, impact start-ups, local focus

BAIII Infrastructure Multi-Manager Fund Bay Area TOAHD www.bayareatod.org Bay Area Transit-Oriented Affordable Housing Fund Solar Mosaic CalCEF: California Clean Energy Fund California Infrastructure Bank “The I-Bank” Public Private Partnerships Hunters Point, Bay Meadows, Presidio, GBI

Super CD: The Bay Area C-Note CDFIs offer local impact, safety in savings New Resource Bank Community Bank of the Bay Northern California Community Loan Fund Bay Area Transit Oriented Affordable Housing Devel. Fund Beneficial State Bank & Foundation Low Income Investment Fund Pacific Community Ventures

Target Asset Owners Community Foundations Community Foundations Quasi-Public & Private Foundations Quasi-Public & Private Foundations Endowments Endowments Public Retirement Plans Public Retirement Plans Private & Corporate Retirement Accounts Private & Corporate Retirement Accounts IRA, 401(k), defined contribution plans, private trusts, family offices IRA, 401(k), defined contribution plans, private trusts, family offices Our Goal: Channel 1-2% of this >$100 billion market into impact investments in the Bay Area

The Impact Investing Intermediary Increased Services Integrate ESG factors and corporate activism Community Foundations Stocks Allocate portion for place-based mission aligned bonds Quasi-Public & Private Foundations Bonds Seek and prioritize sustainable local impact Increased SF Bay Economic Prosperity Endowments Real Estate Target regional co-investing in public / private partnerships Public Retirement Funds Infrastructure Expect long term local company formation and job creation Private & Corporate Retirement Accounts Private Equity / Venture Capital Enhanced Wealth Creation Investment Centralizing and Collaborating

Regional Impact Investing Collaboration Sharing due diligence cost and specialization Acting as a clearinghouse for investment opportunities Providing diversification of capital sources and investments Speaking with a common voice and concentrated impact Sharing performance and impact monitoring It makes sense to work together on our regional investments

Benefits of Regional Impact Investing Brings together capitalism, entrepreneurship and innovation for regional interests Upgrades transit and housing sooner Provides prudent market-like returns and ancillary positive impacts Connects asset owners to better outcomes for our community in the long term Builds resilient, sustainable prosperity into our communities Investing in our own backyard

P3 and the Complex Capital Stack Equity Risk, Grants Pay-For-Success notes Low interest rate loans/guarantees MRIs and PRIs Public resources and subsidies Tax credits & incentives Senior/fiduciary capital Public Resources Tax credits and incentives Risk Capital Grants, PFS notes MRIs & PRIs Low interest rate loans Senior / CDFI Capital Private/Fiduciary Capital Getting out of Silos and into Public Private Partnerships

Place-based Investing/Place-making When Place is your mission, collaborate.

Resources on Impact Investing Bay Area Impact Investing Initiative www.baiii.org UK Taskforce Social Impact Investing: www.socialimpactinvestment.org Mission Investors Exchange www.missioninvestors.org ImpactBase www.impactbase.org ImpactAssets www.impactassets.org/impactassets-50 KL Felicitas Foundation www.klfelicitasfoundation.org Global Impact Investing Network www.giin.org Creative Place-making: www.artsbuildscommunities.org Seal Cove Financial research : www.sealcovefinancial.com