Praxis receives $1.5 million allocation of inaugural MacArthur bond deal

Impact bonds |

Bond proceeds to support vulnerable communities hardest hit by COVID-19

Earlier this year, the John D. and Catherine T. MacArthur Foundation tapped the bond market to raise $125 million for grants intended for nonprofits and communities affected by the COVID-19 pandemic and social injustice, representing the Foundation's first-ever bond issue. Praxis Mutual Funds’ Impact Bond Fund received a $1.5 million allocation of the 10-year taxable social bond issue. MacArthur’s 1.299% of 2030 was rated Aaa by Moody’s. The Fund's positive impact bond holdings now stand at 33% of fund assets. 

“The COVID-19 pandemic presents a threat to the global economy, global health, and our well-being,” noted the foundation in a statement. “The confluence of historic crises have exposed deep racial and socioeconomic disparities and inequities that take a disproportionate toll on people of color and other historically marginalized communities, in particular African Americans. Though the pandemic is wreaking tragedy across the world, an opportunity is emerging to reinvent the critical systems that people and places need to thrive. Our systems and structures must be reinvented and rebuilt.”

MacArthur took the unprecedented step of issuing a bond, underwritten by Morgan Stanley, reflecting its commitment to responding to the crisis while avoiding permanent reduction of spending power of the Foundation’s endowment. This is considered a fresh approach to philanthropy. While foundations have frequently issued debt for construction and building projects, it is uncommon for foundations to issue debt for grant-making purposes. MacArthur sees this crisis as an opportunity to reimagine a more equitable and higher impact approach to grant-making.

MacArthur took this new approach in order to play a leading role in a post-COVID-19 transformation of the nonprofit sector. As providers of critical services to vulnerable communities and employer to more than 10 percent of the private workforce, or about 12.3 million people, the economic impact on the nonprofit sector during the pandemic has been catastrophic.

The Chicago-based foundation’s commitment is part of a larger new funding pledge of $1.7 billion over three years announced in June by a group of foundations, including the Doris Duke Charitable Foundation, Ford Foundation, W.K. Kellogg Foundation and the Andrew W. Mellon Foundation, in response to the pandemic.

MacArthur hopes the infusion of capital will help nonprofit recipients be more resilient, durable, and able to proactively address the economic and health impacts of the pandemic to build a more sustainable post-coronavirus future. In September, the Foundation announced the first set of grants made from the $125 million social bond proceeds.

Benjamin Bailey, CFA, Vice President of Investments, Co-portfolio Manager of Praxis Impact Bond Fund | Praxis Mutual Funds

Benjamin Bailey

“2020 has been a year of reckoning in many respects,” said Benjamin Bailey, CFA®, Vice President of Investments and Senior Fixed Income Investment Manager for Praxis Mutual Funds. “We are proud to be involved with MacArthur’s innovative approach to addressing the many crises that we are facing as a global community.”

The Praxis Impact Bond Fund seeks to make a positive impact through stewardship investing, a values-based approach to socially responsible investing that incorporates:

  • Values-based restrictive screens and active ESG data integration.
  • Change-oriented corporate engagement.
  • Positive impact bond investments benefiting the climate and communities.
  • One percent of the fund assets committed to community development investing.

Learn more about the Praxis Impact Bond Fund here.

Praxis Impact Bond Fund

At Praxis, our investments generate a competitive financial return and deliver a clear and direct benefit to people and our planet.

 

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Disclosure

As of Oct. 31, 2020, the Praxis Impact Bond Fund has invested 0.21% of its assets in the MacArthur Foundation social bond. Fund holdings are subject to change. To obtain holdings as of the most previous quarter, visit praxismutualfunds.com.