Impact Investing Conference

ESG InvestingESG Investing

University Hospitals rolls out mission-related investment strategy  Crain’s Cleveland Business

Impact Investing Forum 2024

London. April 24-25, 2023.

Book Now! 

Read More

In a new community benefit strategy, University Hospitals has committed to shifting some assets it would otherwise invest in vehicles like stocks and bonds to make them available for mission-related investing in under-resourced areas of Greater Cleveland.

As its first investment under this model, UH committed $1.2 million to the Lead Safe Cleveland Coalition, a public-private partnership formed to address and prevent lead poisoning.

Mission-related investments (MRIs) are “a mechanism that allows us to use our endowment funds to invest for good purposes like this, and receive a return on investment that may not be interest, dividends or stock price appreciation,” said Bradley Bond, vice president of treasury for UH. “The return might be better health for our community, and we count that amongst our investment returns.”

The UH funds will go to the Lead Safe Home Fund, a pool of resources to help property owners make their homes lead safe. It stands at $47.3 million.

Of UH’s commitment, $200,000 is a grant that will support property owners, lead safe worker training and/or community engagement. The rest represents the new strategy: a $1 million investment into the coalition’s loan fund that finances low-interest loans to qualifying landlords and homeowners.

MRIs (also known as impact investing, place-based investing or social impact investing) is an opportunity to provide flexible, low-cost capital to help solve a social need within a community, said David Zuckerman, president and founder of Healthcare Anchor Network (HAN). The nonprofit promotes a framework for health systems, as mission-driven anchor institutions, to leverage their everyday business practices — from hiring to purchasing to investing — to complement their efforts to improve community health.

“Grant dollars are few and far between,” he said. “So having the ability to bring other dollars into these much-needed investments in the community, it allows these dollars to go father because they can be recycled into new projects.”

UH’s contribution will cap the coalition’s initial $20 million target for the loan portion of its Home Fund. In September, Cleveland Clinic contributed $2.5 million to the Lead Safe Home Fund, $1 million of which was directed into the loan portion of the fund as well.

Though the Clinic’s loan contribution to the Lead Safe Home Fund is an example of this investing mechanism, the system doesn’t currently have a specific policy around shifting funds from traditional investments to MRIs. Rather, its community support model is focused more on community benefit, where traditional grant dollars or funds don’t earn direct financial returns, as well as using its purchasing power to support its mission.

The Lead Safe Cleveland commitment represents just the first initiative under UH’s new community benefit strategy. It will use data on social determinants of health and community needs to guide future investments.

MRIs are a new way to partner with the community on health and economic development opportunities, said Heidi Gartland, UH chief government and community relations officer. It helps the system impact health further upstream outside the walls of the hospital, she said.

“We know that preventing lead exposure is so much more important than testing,” she said, “and of course testing is important, but we would much prefer the kids to not have exposure to begin with.”

Historically, the model has been largely used by Catholic health systems, but it’s gained traction among other health systems in the past couple of years, Zuckerman said.

The Sisters of Charity Foundation of Cleveland, a ministry of the Sisters of Charity Health System, in 2020 finished a five-year social impact investment in the Cuyahoga Partnering for Family Success initiative. Although the investment didn’t generate returns, it achieved housing stability, reunification of children with their parents and other mission-aligned initiatives, according to the foundation’s president Susanna Krey.

HAN encourages systems to consider allocating at least 1% of their investment portfolio for MRIs over a five-year period to build it into their policy in a sustainable way, Zuckerman said.

UH declined to share specifics, but a spokesperson said it is committing “well over” 1% of its endowment for its MRI strategy overall. Lead Safe is just the first step.

UH developed the MRI portion of its investment policy in 2016, and it was formally adopted by the board the following year, Bond said. So far, UH has used the tool in the biopharma space through its Harrington Discovery Institute, which partnered with Morgan Stanley and venture investor Advent Life Sciences to launch the Advent-Harrington Impact Fund, profits from which are shared with Harrington.

The biopharma investments aim to help bridge the “valley of death,” where discoveries often meet their demise during the time-consuming, costly path to commercialization. By nature of that goal, these investments are riskier and can take more than a decade to generate returns, Bond said.

Now, the health system is deploying the investing approach within its community benefit work to address social determinants of health, which he said was part of the vision when initially developing the policy in 2016. The investment into the Lead Safe Fund however holds less risk and will generate a faster return, which Bond said he expects to be up to 3%, although that is tangential to the health of the community, he said.

“I would rather have homes remediated and a lower investment return than the opposite,” Bond said.

Lead exposure is a completely preventable, incredibly important environmental health problem for children with effects that can last well into adulthood, said Dr. Aparna Bole, associate professor of pediatrics at UH Rainbow Babies and Children’s Hospital and Case Western Reserve University.

A return on investment can come in the form of the potential benefits of preventing lead exposure, like avoided educational interventions, higher academic performance and productivity, and decreased risk for interaction with the criminal justice system, she said. Depending on how broad they cast this net, studies have calculated from primary prevention of lead (preventing exposure before it happens) as anywhere from $17 to more than $200 for every dollar invested.

“Even at the lower end, the most conservative estimate, that’s a pretty impressive return,” Bole said. “It benefits our society, not to mention, of course, that it’s the right thing to do.”


Leave a Reply

Your email address will not be published. Required fields are marked *

ESG Investing Conference