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As president of the Heron Foundation, Clara Miller in 2012 set a goal to invest 100% percent of the foundation’s then-$250 million in assets to fight poverty within five years. Heron beat the deadline by a year to become one of the first foundations to align its full endowment with its mission.
For the latest episode of the podcast series Finding Alpha, ImpactAlpha contributing editor Rob Brown sat down with Miller for a wide-ranging discussion about the innovations she fostered in impact lending, the value of starting your career at the bottom, and her favorite Beatle, Paul McCartney.
Now Heron’s president emerita, Clara is a visiting scholar at the Federal Reserve Bank of New York, where she is passing on wisdom gained from 40 years as a leader in impact investing. Before leading Heron, Miller founded the Nonprofit Finance Fund.
Aligning investments
To have a positive impact on people in need, Miller says investors need to support both the entrepreneurs building a social enterprise and the beneficiaries of the enterprise.
“I think our duty of care, our fiduciary duty are the people we want to help… whether the folks are starting the business, whether they’re beneficiaries of the business.”
Managing capital in alignment with mission means combining impact decisions with investments decisions.
“Why not just have one staff? People have skills in both areas,” she said. At Heron, conversations about missions crossed from the program side to the investment side and back. “Each side benefits from the expertise of the other, and each side also benefits from the information of the other.”
Cash is king
“If the revenue is flowing, the capital will come,” Miller says. As a lender, her mantra at both the Nonprofit Finance Fund and the Heron Foundation was “cash is king.”
When assessing an opportunity to loan money to a social enterprise, understanding the people running the enterprise is critical, she says. “You say to yourself, do I want to do business with these people? Are they trustworthy? You’re dealing with a person, with people. We’d be looking at the people first.”
“In a way, they’re all story loans,” she says. “So you want to be comfortable with the people you’re doing business with.”
Valuing humility
Miller tells Brown that some of the most important lessons she learned were in the earliest portion of her career, when she was a typist, library assistant and receptionist.
“Listening to people and paying attention to organizational dynamics, seeing how enterprises of all types and sizes do and don’t work—that’s what one gets to observe if you’re in the bottom of the engine room as a junior chipmunk.”
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