Getting Started: Mapping Your Role as an Economic Changemaker
How do foundations impact global markets, and what tools might help further mission — beyond grants?
This page begins to map out how foundations and other philanthropic asset owners are thinking holistically about money and mission across their activities. It draws on McKnight Foundation's impact investing framework to build a cohesive model that offers investors pathways to reflect on their roles as economic influencers — or changemakers. If you are new to impact investing, we welcome you to view MIE's 101 Library for key concepts in impact investing, as well as resources and tools to get started. If you have any questions or thoughts, please reach out to us!
How Do We Influence Financial Markets?
In its impact investing journey, the McKnight Foundation developed a four-point framework to help investors shape a more resilient economy. Here, MIE provides examples of how foundation activities map in various ways to this framework. We have also included certain activities that extend beyond investing to demonstrate the diversity of practice.
| Asset Owner | Customer | Shareholder | Movement Builder |
|---|---|---|---|
| How do investors use the balance sheet for good? | Where and how do investors bank, invest, and purchase products/services? | How do investors leverage their influence as shareholders? | How do activities support economic systems change or the impact investing movement? |
Role 1: Asset Owners Leveraging the Balance Sheet
Philanthropic asset owners leverage their balance sheet in many ways to support projects they care about. These investments span grants, recoverable grants, Program Related Investments, Mission Related Investments, and a spectrum of activities that don't fall into these categories. Indeed, foundations and mission-driven investors play a highly unique role in bridging the capital gap between grants and traditional forms of investment capital that organizations often value. Below are examples of some of the tools and techniques that can be used.
Recoverable Grants; Debt (subordinated, senior); Loan Funds; Guarantee/ Liquidity Facilities; Bonds
- Loans to Credit Unions
- Loans to Funds
- Running a Revolving Loan Fund
- Providing Recoverable Grants or Zero-Interest Loans
- Providing Guarantees & Liquidity Facilities to Attract Further Investments
- Investing in Socially Responsible Bonds
Public or Private Equity (including screening, divesting, weighting portfolios, and more)
- Private Equity + Debt Financing in Sixup
- McKnight Foundation Strategies
- The California Endowment Takes Private Prisons out of Portolio
Real Assets (Agriculture, Infastructure, Timber, Real Estate)
-
Two foundation investments (Packard Foundation and Lora L. & Martin N. Kelley Family Foundation Trust) in a forestland investment management and advisory services company
Role 2: Customer of Services and Products
As a customer of services and products you have control over decisions you make in regards to how your spend your dollars, how you bank, and how you invest. Below are some examples of the tools and techniques that can be applied in this context. To provide more inclusive examples, we have extended beyond investing activities to explore foundation practices as customers
Placing Deposits with a CDFI
Evaluating and Selecting Mission Aligned Fund Managers or Vendors and Suppliers
Role 3: Leveraging Your Voice as a Shareholder
As a shareholder, investors with a large number of shares in a company can exercise significant influence over a company’s practices. Below are some techniques used by members of Mission Investors Exchange to leverage their rights as shareholders.
Shareholder Engagement and Proxy Voting
Role 4: Serving as a Movement Builder
Field builders support system-level change in a number of ways — beyond their investments. Supporting values aligned policy organizations, data transparency efforts, understanding the various stakeholders and actors in the overall impact investing movement, or joining a field building organization such as Mission Investors Exchange are a few of the strategies foundations have pursued. Below are some examples from the impact investing community.
