Year in Review 2015

A LETTER FROM OUR CEO AND PRESIDENT Reflections on 2015

Focus: That is the word that best summarizes our 2015 efforts here at the Irvine Foundation.

In 2015, we continued a focused commitment to our three existing grantmaking programs, while also setting a new foundation-wide focus for our grantmaking in 2016 and beyond.

In my first full year as CEO, I went on a statewide listening tour, meeting with leaders from across our state from the social, commercial, and public sectors. During these meetings, I heard great hopes, deep reflections, and serious concerns for California. These leaders also shared their advice for how Irvine could use our resources to more effectively expand opportunity for Californians.

Here are some of the themes from those meetings that struck me as most important:

  • California is a tale of two (or more) states, with vastly divergent opportunities and growing disparities between the haves and have nots.
  • All too often, California’s young people grow up insufficiently prepared for success in life, with many unready for college, career, or both.
  • Early childhood education can result in an enormous payoff, yet it is not readily available.
  • Jobs that pay a real living wage remain elusive for too many Californians.
  • Many of the same Californians who face economic challenges are also less likely to be civically engaged, often because they feel powerless or fail to see the relevance of government to their lives.

These listening sessions were eye-opening, and they served as a springboard for additional discussions and research. Informed by what we learned, and by our history and experience, we decided a change was in order.

Going forward, the Foundation will invest our resources to expand economic and political opportunity for young adults and families who are working but struggling with poverty. You can read more about this new direction – which we announced in January 2016 – here.

To prepare for our new direction, we developed long-term plans in 2015 for each of our current areas of grantmaking. We worked with our grantees to identify the outcomes, priorities, and resources needed to guide these current bodies of work through to completion.

We continue with that work today, committed to investing in our grantees to achieve impact and sustain their work. You can read about one of those plans here.

In addition to developing future plans in 2015, we also invested more grant dollars in 2015 than the year prior — and were proud see our grantees achieve important gains in their respective fields. Details on these gains can be found in this Year in Review. Some of the most notable, include:

  • Expanding democratic and civic participation, through new tools and approaches to engage underrepresented voters (including automatic voter registration when Californians get driver licenses or IDs), protecting voter engagement funding (through the Future of California Elections collaborative), and supporting integration of immigrants into our communities.
  • Enabling more California youth to graduate high school ready for college and career, by strengthening and expanding Linked Learning efforts statewide. Leaders – in schools, districts, counties, state offices, and nonprofits – took on even greater ownership and expanded their collective ability to (sustainably) provide California’s young people an education focused on career pathways. Findings from a six-year evaluation showed that students participating in Linked Learning schools earn more credits during high school, are more likely to graduate, and are more likely to be college eligible than their peers.
  • Building community through the arts by investing deeply in 16 nonprofit arts organizations committed to engaging low-income and diverse Californians, as well as by commissioning a report that offers lessons on how these and other arts organizations engage their communities. We also published a groundbreaking study, The Cultural Lives of Californians, which found surprisingly high levels of creative expression in practice throughout the state.
  • Celebrating leadership by recognizing and supporting the great work of the 2015 James Irvine Foundation Leadership Award recipients —leaders who offer innovative approaches to some of our state’s greatest challenges.

I am inspired by this progress and the opportunities ahead. To deliver on our new focus, we have made great additions to our team and have reoriented the way we work to be more agile and responsive. Our staff has worked incredibly hard to both fulfill the goals of our current commitments and create a more focused, integrated approach to our future grantmaking.

Our board of directors was likewise focused on the work to come. In 2015, the board conducted a Governance Review to clarify its processes and leadership structure, as well as adding two stellar new members: Kafi D. Blumenfield, the executive director of Discovery Cube in Los Angeles, and Maria Anguiano, the Vice Chancellor for Planning and Budget at the University of California, Riverside.

The combination of new talent and new plans – for our current work and our future initiatives – set the foundation in 2015 for the Irvine of the future. It was a year of focus and planning, positioning us to begin in 2016 the exciting work of living into our new direction.

With appreciation to all,

CEO signiture

Don Howard
President and CEO
The James Irvine Foundation

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As we reflect on 2015, we are inspired by our grantees’ impact and have learned from their perspectives as we seek to more effectively expand opportunity for the people of California.

Read our 2015 annual performance report
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A six-year evaluation revealed that Linked Learning students earn more credits in high school, are less likely to drop out, and are more likely to graduate.

See the evaluation

We saw significant gains in civic engagement and in reforms to California’s election system through innovative technologies and common-sense policy changes.

Learn about the motor voter law

600,000 more Californians had the opportunity to get driver's licenses.

Our grantees helped to implement Assembly Bill 60, a life-changing new California law that led to more than 600,000 Californians applying for driver’s licenses in 2015. Regardless of immigration status, Californians who need to drive to work or take their children to school can now do so legally and without fear.

Learn more about Drive CA

We continued support of our existing grantee-partners in the New California Arts Fund for our strategy to sustain arts engagement, and we gathered lessons – and candid feedback – as part of our Exploring Engagement Fund.

Read those lessons

We also gained deeper insights into how arts organizations can engage more Californians in ways that benefit individuals, communities, and the arts field at large.

See our takeaways

We celebrated five leaders championing innovative solutions to California challenges.

Meet our 2015 Leadership Award recipients

Based on some candid grantee feedback, we increased:

  • Support for our grantees' core operations
  • The flexibility in how grantees use grant funds
  • The time grantees have to complete grant reports
More on how we're responding to your feedback

In response to grantees, we expanded funding in our priority regions. We hired a senior program officer to deepen our relationships and to develop new partnerships across sectors in those regions.

Meet the senior program officer
Pay for success
A LETTER FROM CIO AND TREASURER JOHN R. JENKS Change and patience

These were two themes I saw in 2015 as the Irvine Foundation’s Chief Investment Officer. Change came in the form of new and exciting leadership at the Foundation. After a thorough, national search, Don Howard started 2015 as Irvine’s new president and CEO. He brought new energy and a new focus to Irvine’s mission of expanding opportunity for the people of California.

Change also came to the investment team, whose members are the heart of what has made Irvine’s portfolio so productive. A great team member departed for an extraordinary professional growth opportunity in 2015, and I could not be happier for her. The rest of the team helped to actively recruit the right person to fill that void. As a result, the team is set to deal with the current challenges and another significant change.

After almost 15 years managing Irvine’s portfolio – and pushing for great impact in all phases of the Foundation’s work – I will be retiring in early 2017. Irvine’s leadership will use 2016 to thoughtfully select the next leader for this important role at the Foundation.

While there were also changes in 2015 to our investment portfolio, it was another great year of returns. For that I thank Irvine’s many investment partners and their staffs. Irvine achieved an 11.28 percent rate of return in 2015, ranking in the top one percent of all large endowments and foundations (and exceeding our own benchmark by almost eight percent).

We made a number of small changes to how our portfolio was allocated, which resulted in improved returns. Sometimes these changes reflected patience in action, meaning that we believed in a manager and/or their market focus and were willing to commit more capital to that investment when it was down. Other changes were driven by a clear view that nothing goes perfectly forever and reducing exposure to overhyped areas is just as important to long-term success. Those are some of the toughest calls to make.

Patience was also on display in 2015 with the Irvine board’s Investment Committee. The committee brought new members up-to-speed on our overall strategy and exhibited patience with our portfolio plans. This was especially clear in the private investment portion of the portfolio. After years of very strong performance, the private investment portfolio grew beyond its target percentage of our overall investments, yet the committee and staff stayed focused on this area of relative advantage.

That patience was rewarded in two critical ways. First, as the cash flow from that part of the portfolio funded all of Irvine’s grants and operations in 2015. During a year in which we did not want to be forced to sell some of our investments, this was a great advantage.

The second contribution from the private investments was their continued increase in reported values. However, with that contribution comes a risk: some of these investments are near fully valued, and Irvine cannot sell them at our discretion. The risk is that they go down in value before Irvine can realize that value. This is the biggest risk in the overall portfolio at this time.

Patience also came in the form of waiting. Having committed to gradually reducing the risk profile of the overall investment portfolio, especially as it relates to exposure to credit and developed market equities, it would have been easy to chase the strong rally in the fourth quarter of 2015. Instead, we waited for more attractive opportunities to buy lower-risk investments in early 2016.

What this all adds up to is a strong foundation – our team, our strategy, and our portfolio – for positioning Irvine to take on our new focus: expanding economic and political opportunity for California families and young adults who are working but struggling with poverty. All these investment gains serve only to empower thoughtful, driven people within, and more importantly, outside the Foundation to make a difference in the lives of so many that struggle at the edge of success.

For example, the grants budget for 2016 is $85 million. This is a record high, the sixth straight year of increase, and an $11 million increase from 2015. Turning financial investments into investments in grantees and social change is what this work has always been about for me. It has been my privilege and an honor to serve at the Foundation, and I look forward to its continued success and impact in the years to come.

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Thanks to all our grantees and other partners for your work to expand opportunity for the people of California.

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