About > Investment Strategies
Investment Strategies
The St. Louis Mental Health Board approaches its responsibilities to levy, manage and distribute public funds as an investor. Its primary concern is for the safety of the principal, but in order to achieve a steady return, it diversifies its portfolio among large, medium and small organizations. It invests in established organizations where gain is expected, as well as those where expectations are less certain.
But, the St. Louis Mental Health Board is not an investor in the usual sense of the word. It is committed to using the funds entrusted to it to improve the lives of residents, especially those whose lives are compromised by mental disorders and drug addiction. It is committed, as well, to helping children grow up safe and have opportunities to succeed.
MHB utilizes a variety of approaches to distribute funds. Each of the five approaches is described below.
Calls for Co-Investors
Calls for Co-Investors (CFC) is a 2-step competitive process in which concept papers are sought that describe promising approaches to attain the identified Investment Goals. Some agencies that submit concept papers may then be invited to submit a full proposal for their project. The screening is rigorous, resulting in only the most promising proposals considered for 3-year grant funding. This strategic approach to funding prioritizes return on investment, i.e. overall improvement in the conditions of people in St. Louis. In order to maximize benefits for these citizens, decisions on which projects to fund are anchored in judgments about the relative positive return, rather than other considerations. Best practices programs conducted by organizations with good track records offer the highest assurances that outcomes will be achieved. In certain situations, grants will be awarded to encourage innovative programs if data or evidence exists that a proposed approach has a reasonable likelihood of success.
Funding Partnerships
Another approach to the distribution of funds is through funding partnerships with other leadership organizations that have the capacity to match MHB dollars. This is an effective way to increase the dollar amount available for projects or services. It has the added benefit of concentrating attention on a particular need or condition in the community, which may go less noticed. Frequently, when funders pool resources, more comprehensive services are made available due to the differing priorities among funders. MHB encourages such partnerships.
For MHB, funding partners are other leadership organizations that, for the most part, don't deliver services, but contract with recipient organizations who do and who have their own funds to invest in a project of mutual interest. Partners do not compete for funds. Rather, the partners determine the parameters of their relationship, as it relates to the jointly funded project, by consensus.
MHB considers partnerships to be of equal value as the competitive CFC process and will appropriate funds sufficient to meet its commitments to the partners.
Initiatives
MHB has, in the past, found it necessary to invest significant staff resources and small amounts of seed money in certain community problems in order to bring about change in conditions which impede people getting needed services. Barriers such as lack of cultural competence or other access issues are frequent causes for preventing people from receiving the services. Sometimes the services people need don't exist in St. Louis. MHB creates “initiatives" when solving such problems require MHB leadership, collaboration and funding from more than one source. MHB will continue to devote staff resources to identify, coordinate and seek solutions to such problems, as well as make seed money available, when necessary, to promote and encourage innovation among organizations
Investment Management Partnerships through Intermediaries
MHB’s newest investment strategy utilizes intermediaries to serve as investment managers of MHB funds. The intermediaries are uniquely qualified to achieve greater impact in a particular sector or service area because they have existing relationships with service providers through a membership structure or affiliation. Examples of such service areas are after school programming and maternal, child and family health services. In the investment management relationship with MHB, the intermediary serves as a fiscal agent of MHB funds, overseeing the selection of recipients, transmittal of grants, and monitoring compliance and effectiveness of service and outcome achievement. Concurrently, MHB provides monitoring and oversight of the intermediary’s performance by requiring monthly reports and fiscal accountability. This unique relationship allows MHB to extend its reach through focused investments while utilizing the expertise of the intermediaries.
Matching Federal Dollars
MHB has avoided using local tax dollars as a match for federal funds, since most federal grants require increasing amounts of match each year. More importantly, there is the expectation that MHB will continue to fully fund the federal grant program after the 3 or 5 year federal commitment ends. Without tight controls on the use of matching funds, this arrangement, over time, has the potential of locking in local funds. Such a practice advances federal priorities with local revenue at the expense of local and immediate priorities.
There are, however, occasions where matching federal dollars is a wise investment, especially if the use of this method will result in the establishment of a new needed service, which otherwise would not be established.