What tools might help foundations further their mission — beyond grants? And, vice versa, how can a foundation's full range of existing financial tools and assets, including the endowment, come into greater alignment with mission and values?
As foundations begin to ask and answer these questions for themselves, a vast array of strategies unfold, with no single path for progress. For example, while some earmark specific pools of capital for below- or at-market impact investments, others have re-designed their entire portfolio of assets as values-aligned investments— including their endowment. Below, we share examples of strategies by foundations that have specifically dedicated time to develop and share their investing strategies with the field. If you have a story or strategy you would like to share with the field — or write for the first time — please contact us
If you are new to impact investing, we recommend you check out the key terms and resources featured in MIE's 101 Library
before viewing this page. There, you can also find a growing set of resources for foundations new to impact investing.
Heron Foundation was an early movement builder in impact investing and began conversations back in 1996 to explore how their traditional endowment investments were working for or against their mission. They also recognized that grants alone would not be enough to meet their mission of helping people and communities help themselves out of poverty. Heron integrates all of their assets into a single mission-aligned portfolio. Rather than considering their investments and grants purely in terms of the positive impact they make, Heron uses the term "net contribution" to articulate and examine the ways in which all assets have both positive and negative impact along multiple dimensions. As a movement builder, Heron also describes their journey, approach, and portfolio construction in great detail on their website.
In 2014, the McKnight Foundation committed to investing $200 million (10% of its $2 billion endowment) in strategies that align with their mission of fostering a vibrant culture and a healthy environment, from their home base in Minnesota. Since then, the foundation has evolved to consider mission and impact in over 30% of their endowment, including deep impact investments— in the form of over $50 million in PRIs— and ESG screens and other forms of values-aligned activities across various assets. McKnight's impact investing strategy examines the ways in which their foundation, as an asset owner, holds four "points of leverage" in capital markets: as an asset owner, shareholder, customer of financial products, and market participant. McKnight's approach also informs this resource on the MIE site exploring how foundations can map their roles as economic changemakers.
Like Heron, Mary Reynolds Babcock Foundation (MRBF) considers impact across all of their assets, including the endowment. In addition to using ESG as a criteria for all their investments, their PRIs directly support their mission in the South, while market-rate investments meet the standards determined by their Investment Policy, which includes environmental, social and governance factors. MRBF's investment policy establishes a goal of spend 5.5 % of a 12-quarter moving average of the market value of the endowment, exceeding the required 5% distribution. MRBF also discusses their approach
to racial equity in investing in a recent series in Stanford Social Innovation Review curated by Mission Investors Exchange
NWAF has earmarked 10% of the total endowment to both below-market and at-market-rate impact investments. NWAF’s impact investing strategy is unique in that all of its impact investments, including below-market investments, come from the endowment. In other words, NWAF does not draw any dollars from its grant budget to make impact investments, including those targeting below-market returns.
NWAF defines Program-Related Investments (PRI) as below-market investments and Mission-Related Investments (MRI) as market-rate investments. PRI is a term of art typically used to define investments that prioritize impact over return and are counted towards the minimum 5% distribution of assets that a foundation must put towards philanthropic goals. In NWAF's case, their PRIs are not counted towards their minimum philanthropic distribution. MRIs are typically impact investments made with the remaining 95% of endowment assets; legally, there is no requirement that foundations consider mission or impact in their endowment investments.
As of 2018, NWAF has made $10 million in "PRIs," or below-market investments, and $30 million in market rate impact investments. They have also have measured the impact of their investments for over 10 years and search for investment managers whose values align with their own, including rural community investment and funding opportunities not ordinarily considered for mission investing. NWAF is deeply committed to supporting Native communities in the Northwestern United States, earmarking 40% of their grant dollars to organizations and services that are led by and for Native Americans. Read more about this commitment
in this Stanford Social Innovation Review series curated by Mission Investors Exchange
Incourage began local investing almost a decade ago with insured deposits in local banks and credit unions. They then allocated a portion of fixed-income portfolio to regional high-performing Community Development Financial Institutions (CDFIs) that provide financing to local affordable housing, health and human service organizations as well as businesses. Next, Incourage acquired their downtown’s underutilized Tribune building, which will be the site for a regional accelerator to fuel local entrepreneurialism. They are also allocating alternative investments to private equity holdings that promote the long-term ownership of local companies in local hands, particularly among experienced women entrepreneurs and entrepreneurs of color.
InFaith Community Foundation's activities include the WomenInvest inFaith Portfolio, which invests in companies that do well when women do well. The portfolio invests in economic opportunity, access to education, affordable housing and other opportunities that promote the overall well-being of women within their community.
Based on its previous impact investment experience in both the U.S. and India, the Michael & Susan Dell Foundation uses several filters to evaluate the most appropriate funding tool when presented with a new investment opportunity. These considerations can be categorized into a MISSION framework that includes the following dimensions: Market, Impact, Scale, Sustainability, Incrementality, Organization, and Next. The MISSION framework was developed in partnership with the NYU Wagner Social Innovation & Investment Initiative, and is a helpful tool for other family foundations and philanthropic organizations looking to begin or expand their impact investing activity.
RBF has set a portfolio allocation target of 20% for impact investments. The Fund’s priorities for investments from this 20% pool are focused on opportunities that align with the Fund’s grantmaking programs, including those targeted at clean energy development. In 2014, the Fund committed to a two-step process to divest from fossil fuels companies. The immediate focus was on coal and tar sands, two of the most intensive sources of carbon emissions.
Sierra Club Foundation promotes efforts to educate and empower people to protect and improve the natural and human environment. They transitioned the organization's equity holdings in the operating and endowment portfolios to funds that met ESG criteria in 2010. In 2013, the foundation divested from holdings in fossil fuel companies and reinvested those assets in companies promoting climate and clean energy solutions. They were an early participant in the Divest-Invest
movement, a coalition of foundations committed to leveraging their assets to support climate solutions.
SIF is dedicated to investing in innovative, scalable solutions to the world’s most pressing needs. With portfolio companies in nine countries and across three continents, they provide grants and a spectrum of impact investments, including at-and below-market-rate. The foundation is also on a journey to achieve 100% alignment of their endowment with their mission and values and released a detailed report in 2019 mapping there their portfolio and journey for other foundations considering this decision.
Last year, the Surdna Foundation announced that it would earmark $100 million to impact investing. Coinciding with their announcement, they published a report titled Mapping the Journey to Impact Investing, which lays out its experience and provides a “road atlas” to help others engage in impact investing. See the documents section of this page for the full report. In a recent series in Stanford Social Innovation Review curated by Mission Investors Exchange, Surdna also discusses the role that racial equity plays in the foundation's impact investing strategy here
In late 2004, The Russell Family Foundation (TRFF) allocated $1 million from the Foundation’s endowment to pilot mission-aligned investments, in an effort to imagine how they might look beyond traditional grantmaking to achieve their mission. Since that initial exploratory phase, TRFF has reached nearly 75% in mission and/or values alignment across their portfolio. In addition, over the past five years of their transition, TRFF's portfolio outperformed its blended benchmark, proving that it is possible for foundations to achieve solid returns while striving for mission alignment. Read more about TRFF's journey in the blog series referenced above on Mission Investors Exchange, featuring findings from their recent case study. Mission Investors Exchange members can also view the recording of a recent webinar with TRFF here
Wallace Global Fund (WGF) is dedicated to supporting social movements that promote an informed and engaged citizenry, fight injustice, and protect the natural systems upon which all life depends. In addition to providing grants, the foundation's investments are 100% mission aligned, 100% free from fossil fuels, and 15% invested in climate solutions. Also, 5% of the Fund’s endowment is directed to high impact investments related to energy access and energy justice, community regeneration, and women’s rights and empowerment. WGF is also actively involved in the Divest-Invest
movement, a coalition of foundations committed to leveraging their assets to support climate solutions. Visit the website links above for detailed resources exploring how the foundation achieved these transitions between 2010 and 2015.
Although not a foundation, WRI demonstrates the ways in which endowed organizations are also exploring mission alignment. In 2014 the World Resources Institute Board of Directors committed to aligning their investments with their vision for a sustainable future. As of summer 2018, they have aligned the bulk of their portfolio with mission, having transitioned 70.9% of their assets to ESG integrated investments. Read about their journey here