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Roy Swan, project investment director at the Ford Foundation, joins Akiko Fujita of Yahoo Finance to talk about non-profit clients in the coronavirus environment and how the organization is extending its annual payment to 10% with $1 billion in social bonds.
AKIKO FUJITA: The coronavirus pandemic has widened the socioeconomic gap in the United States. In particular, communities of color have been mainly affected by the virus, as well as by the economic recession. The Ford Foundation is stepping up its efforts towards those in need by issuing the first $1 billion social bonds so the base can donate even more cash whenever it wants.
Let’s get Roy Swan in. He is the Director of Mission Investments at the Ford Foundation. And Roy, it’s wonderful to welcome you, a very timely discussion to have. Let’s start with this social link now. Why did the base go down this road?
ROY SWAN: Okay, well, thanks for inviting me. So, the Ford Foundation is about other people. And other people around the world face inequality. And it’s about the here and now. All we do at the Ford Foundation is combat inequality.
So what issues the $1 billion social bonus, the first of its kind in American history, is that we don’t need things back to normal. We need to rebuild better. And it’s remarkable to me that money markets have followed our $1 billion bond in such a way, with such a voracious appetite, offering $1 billion of capital for the first time in public procurement to a nonprofit to give $1 billion over the next. . Two years.
This allows us to double our subsidies. Normally, we give about $500 million a year. Over the next two years, in 20 and 2021, we will give $1 billion a year. And that allows us to solve some of the massive disorders that have been discovered here.
AKIKO FUJITA: Let’s communicate some of those issues you’ve analyzed. Affordable housing is a big problem. How vital is desire now? When you think about how to deploy that capital, a billion dollars, where is the greatest desire?
ROY SWAN: It’s very difficult to identify. And I separated – so the billions of dollars we raise in public procurement capital on this social bond, they’re all donations. We literally gave that away.
In terms of our paintings on affordable housing, much of that investment is our donation. As a result, my team manages a mission-related staffing. We are investing in affordable housing that provides quality housing for others who want them.
Millions and millions of others are suffering to keep a roof over their heads. And it’s only getting worse. The number of affordable housing units is shrinking year after year. Today, there is a shortage of about 7 and a half million games.
So we can invest cash in the budget that maintains and builds affordable housing. And the wonderful thing about that is that the returns we generate, we will be able to turn around and give that cash to our beneficiaries. So we’re making an investment capital, a double net return. We help other people who want housing. We generate monetary returns. And the money we make, we give it to our beneficiaries.
AKIKO FUJITA: We’re talking about the virus. But, of course, it also comes at a time when we’ve been in this national verbal exchange about racial inequality. The Ford Foundation, of course, social injustice or social justice as well. What do you think is now the role of the base? Or how vital is the basis for this verbal exchange that is taking hold at the national level lately?
ROY SWAN: Yes, so one of the spaces in which we concentrate with our heritage capital is the devastating imbalance of access to capital for other people of color and women. One of our investment methods is to contribute more capital to the investment budget made by women and others of color. This has huge benefits, basically because women and other people of color tend to invest in more varied businesses. These diversified corporations tend to have a more varied workforce. And those investment fund managers, those women and those other people of color, have a tendency to give their money, the wealth they make, to communities that are varied, needy, other people of color.
And again, we take the monetary returns we get while generating the positive social effect we generate, take monetary returns, and give them to our beneficiaries. So we play, we think we play a vital role. We need to be a symbol for others. And we review to provide data on how we do it in the market.