As you know, the Office of Hawaiian Affairs is tasked with stewarding the Native Hawaiian Trust Fund (NHTF). This public trust invests primarily in national and global assets in hopes that its value will grow. This means that we take money generated through revenues from Public Land Trust lands here in Hawaii and invest it outside of Hawaii. This is generally how foundations and trusts ensure that the money in their funds can find the best deals globally to increase the value of their investment portfolios while minimizing the risk of decreasing the value of their portfolio. Foundations and trusts then turn around and withdraw a percentage of the total worth of the portfolio annually (usually around 5%) to spend on community programs and administrative costs. For many years this approach has been accepted as a viable way to enhance the future spending power of the NHTF while supporting our mission of uplifting Native Hawaiians locally.
The catch is, when we invest globally we may end up growing our trust fund but we also end up sending our money (investment capital) outside Hawaii. This poses a conundrum for us as on one hand we must grow the NHTF but on the other hand we have a local mission focused on Native Hawaiians. Therefore, as we deploy our capital, most of it does not remain in Hawaii. It has long been the assumption that investing locally is highly risky and therefore, it is better to make more money outside Hawaii and then siphon off a percentage back into Hawaii to align to our mission. Well, the fact is that no percentage of money siphoned back to Hawaii will be enough to address the issues our people face. The good news is that there are investment trends in the field of philanthropy that is changing the way we grow our trust fund and align to our mission. These trends are the development of Mission Related Investments (MRI) and Project Related Investments (PRI). In this article, I would like to talk about MRI’s.
MRI’s are investments made directly from the portfolio to sustain or grow the value of the portfolio that are aligned with the mission of the organization. A hypothetical example of a MRI for OHA would be an equity investment in a local business that empowers Native Hawaiians or perpetuates the indigenous culture of productivity, while simultaneously generating a market rate of return comparable to the global markets. Currently, OHA does not have the infrastructure to allocate our investment capital for MRI’s. However, the trends in intentional investing through MRI’s are increasing in the world of philanthropy and we are gaining confidence that we too can implement these into our portfolio and align them to our mission.
The value of MRI’s to any foundation or socially minded trust fund is its ability to align our core resource, which is money, to our social mission, which is to empower Native Hawaiians. Issues such as education, housing, financing, and cultural perpetuation that our people face are infinitely scaled, meaning there is no end to these issues. There will always be a need to facilitate resources so that our people have what they need to thrive. Therefore, since the resources we need are needed in perpetuity and therefore are infinitely scaled into the future, the sources of these resources must also be infinitely scaled into the future. By using the concept of MRI’s we can bring more of our money back home into the Hawaii capital markets and target market rate investments that are aligned to our mission. Year after year there are increasingly more high quality investments locally that empower Native Hawaiians and perpetuate indigenous productivity, and we look forward to playing a larger role in the financing of these.
It is our priority at OHA to leave no stone unturned in supporting our beneficiaries to thrive. We look forward to keeping you updated on our journey towards excellence.