Dealflow | October 16, 2024

Kataly Foundation charts an equitable bond strategy as it looks to spend out its reserves

Amy Cortese
ImpactAlpha Editor

Amy Cortese

“Is it possible to fully divest from Wall Street and invest in community with hundreds of millions of dollars?” Kataly Foundation’s Lynne Hoey began her recent series for ImpactAlpha detailing Kataly’s journey to align its investments with its values. The San Francisco-based foundation, co-founded by Regan Pritzker and committed to spending down, or spending out, its reserves by 2030, is now executing on the strategy it devised.

A key component: corporate and municipal bonds. 

Xponance, a Black female-founded, employee-owned investment firm, will manage a $117 million corporate bond portfolio for Kataly. The Philadelphia-based company has the exclusive license to develop products for pensions, endowments, foundations and other investors using As You Sow’s racial justice and diversity, equity and inclusion data. The bonds are screened for involvement with “surveillance, prisons, the Occupied Territories, and militarization industries,” as well as more conventional environmental, social and governance factors. 

Xponance is focused on “transforming access to alpha,” says founder Tina Byles Williams, and helping clients “in the expression of their portfolio priorities, which include religious, environmental and racial justice, and workplace equity factors.” The firm has more than $16.6 in assets under management. 

Muni impact

For its municipal bond strategy, Kataly is looking to Next World Assets, a registered investment advisor unit of Activest, to invest $50 million in muni bonds  that aim to improve conditions in predominantly Black US communities. 

The foundation is also parking $65 million in cash with Inclusiv, which will invest the money in term deposits with credit unions and cooperativas in the US and Puerto Rico. Still in the works: a partner to manage a loan portfolio comprised of Native American community development financial institutions.  

“The commitment of these asset managers to equity and justice allows us to more effectively meet our mission of redistributing wealth to Black, Indigenous, and all communities of color to build political, economic, and cultural power,” writes Kataly.