Mission Investing: A look at foundations in the USA

"Unleashing the Power of Endowments: The Next Great Challenge for Philanthropy" – this was the headline of an article in the Stanford Social Innovation Review a year ago written by the President of the Ford Foundation, Darren Walker. In April 2017, the Ford Foundation announced its intention to use 1 billion US dollars of the foundation's endowment – which totals 12 billion US dollars – for investments in connection with the foundation’s mission over the next 10 years. The initial focus will be on investments in “affordable housing in the United States” and “access to financial services in emerging markets”. In doing this, the foundation would also like to promote the field of mission investing as a whole, and to share its experience in this area.

Longstanding experience of some foundations

Other foundations in the United States, including the Kresge Foundation, Rockefeller Brothers Fund and Wallace Global Fund, also decided to implement mission investing in the early days of this investment approach. The report "Compounding Impact, Mission Investing by U.S. Foundations", published by FSG Social Impact Advisors in 2007, analysed 92 US foundations that were already engaged in mission investing at the time, and provided an overview of the origins of mission investing. The report concluded that foundations are interested in mission investing for three reasons:

1. aligning the foundation's endowment with the foundation's mission
2. achieving social benefits in a way that could not be achieved with grants
3. recovering the foundation’s funds for future use

The 2011 study "Key Facts on Mission Investing" by the Foundation Center provided a first, more comprehensive look at the scope of mission investing in the United States. Nearly 1,200 foundations with accumulated assets of around 215 billion US dollars responded to the survey. Only about 14 percent of these foundations were involved in mission investing. Most of the foundations – 55 percent – had only been involved in mission investing for five years or less, and only nine percent of the foundations stated that they had been involved for more than 20 years.

Mission Investing – Mission Possible

We are now in 2018 and thus we are a few years further on. What is the market like today? Increasing numbers of foundations in the USA are coming to the conclusion that they want to use their foundation endowment to achieve the aims of the foundation and consequently respond to the social and environmental challenges of our time. The series "Mission Possible: How Foundations Are Shaping the Future of Impact Investing" shows, in contributions by representatives from different foundations, how mission investing can work and how to addresses risks and limits of mission investing. It also clearly explains to what extent mission investing can be of interest to foundations of different sizes.

If more and more foundations are interested in mission investing now, appropriate investment opportunities need to be available. After much thought and preparation, the Nathan Cummings Foundation has decided this year to use its entire endowment of approximately $443 million for mission investing in the areas of climate and engagement against growing injustice. The president and CEO of the foundation, Sharon Alpert, sees this as the future of philanthropy. She is confident that the appropriate investment instruments will be available and stresses that the major challenges of global society cannot be solved by grants alone: for this, it needs a market.