KL Felicitas Foundation
About
The KL Felicitas Foundation (KLF) is a family foundation founded by Lisa and Charly Kleissner, global pioneers in impact investing for the past 20 years. In 2015, the Foundation transitioned its portfolio allocation to 100% impact while simultaneously seeking index-competitive, risk adjusted returns. This allowed the Foundation to invest in a way that aligns with the Founders’ values and charitable purposes while also ensuring its ability to meet financial obligations. KLF’s strategies include grant funding, advice, and advocacy to further their impact work. The Foundation’s investments span the entire impact investing spectrum, from responsible investing (using ESG risks while prioritising competitive returns) to impact first investing (emphasising environmental or social gains with a potential financial trade-off). Beyond activating all the Foundation’s investment assets, the KLF founders have been active ecosystem builders, co-creating accelerators for impact entrepreneurs and investors in India, Hawaii, and Austria as well as co-founding industry organisations, such as Toniic and Hawai‘i Investment Ready.
Type of actor
Foundation
Investment type
Impact investment, grant funding
Operates in
Globally
Sectors
Clean energy / Green affordable housing / Environmental infrastructure / Sustainable agriculture / Natural resources / Green technology / Financial inclusion / Micro, small and medium enterprises (MSME) financing
Approach
In 2022, KLF was in the process of restructuring its financial and impact objectives, as well as updating its mission statement. Part of this restructuring involved assessing the current portfolio and identifying which investments and grants were already aligned with the new mission objective. Going forward, the Foundation will drive asset allocation and return strategies based on a social justice investment and grant strategy with an integrated climate, gender and environmental lens. It will target geographies, individuals and communities who have historically been marginalised, including low-income people, people of color, indigenous populations, and women. This new focus acknowledges and addresses those who are disproportionally adversely affected by the negative effects of climate change. Any solution intending to address historical injustices must be environmentally sustainable and able to adapt to, or help mitigate, climate change.
In support of this new mission, working with its long-standing investment advisor, Sonen Capital, KLF established new guiding principles for its underwriting of the organisations it invests in and partners with. Each principle is broken down into a series of impact objectives and measurable IRIS+ indicators.
The seven guiding principles developed with the new mission statement are:
Invest in business ownership models that create opportunities for people whose options have historically been limited.
Advance a labour market system that creates meaningful, fairly compensated jobs and requires training that can support a family.
Work with communities and partners to create spaces for entrepreneurs who have systematically been left behind due to demographic, socioeconomic, and geographic barriers.
Support projects that increase access to affordable, adequate housing, ensuring that individuals and families have a stable place to live within their communities of choice.
Leverage policies and projects that ensure adequate land rights and resources to foster a sense of permanence and belonging in communities.
Prioritise investments that are engaged in movement building.
Select partners who demonstrate best practices in governance.
As demonstrated through the impact results generated by the portfolio, it is clear that gender, climate, and social justice considerations have been integral to the portfolio since its inception. Two recent investments, Aruwa and EWA Capital, demonstrate how the revised mission is taking root in the portfolio. Both funds are addressing the nexus between climate, social justice and gender.
Aruwa is a Lagos-based, female-founded, early-stage growth equity and gender lens fund. Aruwa addresses a capital gap in the African market by providing growth equity to fast growing small to medium sized businesses that are typically too big for traditional venture capital and too small for traditional private equity. The Fund invests across sectors with a commitment to climate justice.
An example of this is an investment in a company that creates solar enabled freezers for those without access to electricity.
EWA is a female-founded and led GP that invests in early-stage companies in Colombia and other countries in the LatAm region. EWA’s Fund II uses a gender lens to diligence companies with disruptive, innovative, and scalable business models using technology as an enabler to solve socioeconomic problems, including climate mitigation and adaptation. The Fund’s pipeline includes businesses with a climate focus such as a construction tech company that has created eco-friendly products to replace singleuse plastics in construction. One of the two C-suite leaders is a woman, and the company will work with EWA to increase gender diversity among its R&D staff as well as other initiatives to reduce the gender gap in a male-dominated field.
Impact
KLF’s original impact mission was two-fold: to enable social entrepreneurs and enterprises worldwide to develop and grow sustainably, and to advocate their impact investing strategy.
“Any solution intending to address historical injustices must be environmentally sustainable and able to adapt to, or help mitigate, climate change.”
The specific output goals based on these objectives were to invest in entrepreneurs, enterprises and support organisations fostering inclusive economic development, financial services, energy access and excellence in environmental stewardship. Measurable indicators based on the IRIS system were applied from the onset to show impact creation for each of these goals. As of 2020, clean energy investments in the portfolio have supported offsets of over 5 million tons of carbon dioxide annually and produced almost 15 million MWh of clean power. With respect to economic development, the portfolio investment created almost 250,000 jobs in developing countries and created over 122,000 affordable rental units. Investments in the portfolio targeting financial inclusion have served over 12 million active borrowers through microfinance, 50% of which were female. Investments in the portfolio targeting environmental impacts cumulatively protected 215,376 acres of land and stored over 4 million tons of carbon in forestlands. With respect to advocating the foundation’s impact investment strategy, the founders have shared their strategy globally through keynotes, webinars, workshops and publications as well as co-founding the global impact investor network, Toniic.
Key takeaways
The Foundation magnifies its potential for impact through finding intersectional investments that create solutions toward multiple issues. They complement their investment strategy with grant funding, advice, advocacy, and ecosystem building through co-creating accelerators and nonprofit organisations. Their field work with impact entrepreneurs and impact investors continues to inform their grantmaking and investment work. So it is no surprise that KLF is constantly reviewing, iterating and revising how they can best realise their mission in response to changes in the field of impact investing and the ever changing global challenges.
What’s next?
The impact marketplace has significantly evolved over the past two decades as it responds to pressing global challenges. And the Foundation too has evolved, informed by years of hands on learning and portfolio experimentation. The result is a novel impact investing approach, driven by a more enlightened understanding that portfolio returns (both financial and impact) are best targeted by impact opportunities while not constrained by traditional asset allocation and return metrics. This new approach has led the Foundation to work with its investment advisor to optimise for impact while not forcing portfolio allocations into traditional models of risk and return, benchmarks, and a single bottom line. While this new approach is still in its early days, by engaging with peers and networks with shared objectives, the Foundation has identified opportunities that are aligned with its new mission. By continuing to practice open and transparent collaboration within these likeminded communities, KLF intends to further learn, grow, and develop collaborative and open connections as it moves into this next phase of its journey.