Mission Possible: How Foundations Are Shaping the Future of Impact Investing
Mission Possible: How Foundations Are Shaping the Future of Impact Investing
This series, produced in partnership with Mission Investors Exchange, will explore what’s next in impact investing and what we can learn from some of the most innovative foundations.

Since the launch of this SSIR series, Mission Possible: How Foundations Are Shaping the Future of Impact Investing, in January, several foundations have made major announcements about their impact investing portfolios. The Ford Foundation—the pioneer in program-related investing nearly 50 years ago—announced its first foray into mission-related investing out of its endowment, with a commitment of up to $1 billion over 10 years. The Heron Foundation meanwhile announced it has met its commitment to invest 100 percent of its $300 million endowment to its antipoverty mission earlier than expected.

These are major developments for the field and should be a call to action for all members of the philanthropic community. You don’t have to be one of the nation’s largest foundations or committed to 100 percent for mission to have a major impact. For those who haven’t engaged in impact investing, now is the time to get started. For those already actively investing, now is the time to get even more creative, take greater risks, and ultimately commit more funding to address the great social and environmental challenges of our time.

All foundations can be impact investors

This series has shown that foundations of any size can utilize a range of impact investing approaches to drive change. While larger national foundations often dominate the news in this arena, smaller foundations like Fink Family and Incourage (along with many others) are demonstrating deep impact every day. They are making significant progress on issues such as food insecurity and economic revitalization by collaborating with foundation peers, governments, the private sector, and others to catalyze powerful investments in their communities.

Foundations also can deploy impact investments across nearly all social impact sectors, and in support of a wide range of missions. For example, several contributors to this series are continuing the long-standing commitment to housing and community development investing. The David and Lucile Packard Foundation meanwhile is focused on investments in climate change and reproductive health, and Omidyar Network is moving toward greater investment in education and civic engagement in the United States.

Impact investing is also less daunting and more accessible than ever before. Relatively low-risk ways to get started include:

  • Providing a low-interest loan to a long-standing grantee
  • Putting cash in a mission-oriented bank
  • Investing in a well-established intermediary like a community development financial institution (CDFI)
  • Asking your investment advisor and fund managers how environmental, social, and governance (ESG) factors play into your investment portfolio
  • Taking equity in one of the now-proven impact investing funds

With this broad range of onramps, every foundation should at least consider how to use impact investing to drive the change at the heart of their missions.

Existing impact investors can do more

Given the magnitude of today’s social and environmental challenges, we also need foundations already engaged in impact investing to expand their efforts. Be bold. Take greater risks. Drive more innovation.

This series highlighted two paths for these foundations: creating more innovative investment vehicles and partnerships, and putting more capital to work. The Annie E. Casey and Kresge Foundations, for example, have used off-balance-sheet guarantees to entice government and private sector investors into deals that otherwise wouldn’t happen. Incourage and The McKnight Foundation have filled major market gaps by helping to create new public equity funds that otherwise wouldn’t exist, flexing their muscles as institutional investors. Meanwhile, the MacArthur Foundation has moved to a more sector- and mission-agnostic approach to its impact investing, focusing instead on new investment structures and tools that open up the field to more participants. And the Case Foundation is actively cultivating new partnerships with women and millennials, who consistently proclaim their desire to align assets with mission. In each of these examples, foundations moved out of their comfort zones, tested new ideas, and joined with new partners outside philanthropy.

At the same time, foundations must commit substantially more of their assets to mission. Some foundations may do this through deeper commitments to program-related investing. Others, like Ford, may start investing out of their endowment. And still others—like Heron, Incourage, and Fink Family—may go “all in,” with the goal of aligning 100 percent of their assets to mission. The amount of funding, types of investments, and risk profile will vary dramatically, but the need to put more capital to work is undeniable. Our quest for economic sustainability, a healthy planet, an educated generation, and a just society demands it.

Activating the next wave of impact investing

Regardless of their specific approach to impact investing, the 11 foundation leaders featured in this series share the same refrain: We can’t make meaningful progress against the most important social and environmental challenges of our time without taking risks, and foundations are uniquely positioned to take such risks. While each individual foundation has its own risk tolerance, all foundations should be able to find a comfortable spot along the risk spectrum to commit more of their capital toward mission.

As we consider the work ahead, we cannot let the perfect be the enemy of the good. Every day we have the opportunity to invest in innovative solutions that can dramatically improve our economy, environment, and communities. The time to act is now. For our part, Mission Investors Exchange will continue to support and accelerate these efforts through in-person convenings, practitioner-led learning opportunities, and access to tools, resources, and networks that help foundations actively deploy their capital for mission. Together we can leverage impact investing to more effectively drive social and environmental change for the current and future generations.