Learning from Peers: A Collection Of Impact Investing Strategies
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 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.
Ceniarth
Strategies, Resource Collection
Ceniarth is a single family office established by Diane Isenberg in 2013 in collaboration with the Isenberg Family Charitable Foundation. The Office manages assets of $400 million. Their goal is to deploy the vast majority of capital in pursuit of mission. Historically, the foundation segmented their assets into 3 pools. The responsible asset management pool seeks values-alignment and returns comparable with traditional investment portfolios. The second is a pool of programmatic funds, deployed primarily as PRIs (program-related investments) with higher risk, such as early-stage pilots or entry into new, high-risk markets. The third capital preservation pool seeks to have a measurable impact while maintaining a risk standard of returning capital. Ceniarth plans to divest from the responsible asset management pool and expand their impact-first and programmatic initiatives, with the largest allocation in the capital preservation strategy.
Heron
Investment Policy
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.
Incourage Community Foundation
Investment Policy
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
Investment Policy (Members Only Resource)
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.
KL Felicitas Foundation
Investment Policy Statement, Roadmap to Impact Investing
The K.L. Felicitas Foundation aims to align 100% of their foundation’s assets with positive impact and achieving market rate returns for the portfolio. They also are committed to building the impact investment field, by making transparent the contents and performance of their portfolio and supporting change among other foundstions and investors. There are two general investment types in the foundation's portfolio: Impact First investments seek to optimize impact returns and may accept a range of financial returns, from principal to market-rate. Financial First investments seek to optimize financial returns that simultaneously yield some social or environmental good.
Mary Reynolds Babcock Foundation
Investment Policy, PRI Policy, and ESG Guidelines
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.
McKnight Foundation
Investment Policy, Frequently Asked Questions
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.
Michael & Susan Dell Foundation
Mission Investing: A Framework for Family Foundations
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.
Northwest Area Foundation
Impact Evaluation
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. 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. NWAF does not draw any dollars from its grant budget to make impact investments, including those targeting below-market returns. 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 measured the impact of their investments for over 10 years and search for investment managers whose values align with their own. 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.
Rockefeller Brothers Fund
Investment Policy, Divestment Statement, Proxy Voting
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
Investment Policy Statement, Investment Strategy, Essay by Henry Holmes
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.
Sorenson Impact Foundation (SIF)
Path to Mission Alignment
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 their portfolio and journey for other foundations considering this decision.
Surdna Foundation
Mapping the Journey to Impact investing
In 2018, 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.
The Russell Family Foundation
TRFF Case Study and Blog Series
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
Investment Policy + Financials, White Paper on Endowment Re-Design
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.
World Resources Institute
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.
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