By Stacey Faella & Margaret Gifford
Impact investing, or the idea of making money and doing good, is going mainstream and investors of all types are jumping into the marketplace—including foundations. But while some of the largest foundations have led the charge on impact investing, the movement is leaving many behind.
Earlier this year, the Ford Foundation committed one billion dollars from its endowment to mission-related investments, opening up a substantial line of potential investment for impact-driven enterprises. Despite the media coverage of this big move, the reality is that the vast majority of U.S. foundations are not yet actively making impact investments. There is opportunity for private family foundations of all sizes, including small and mid-size foundations, to bring impact investing—particularly through program-related investments—more fully into their portfolios.
According to data from The Foundation Center, more than 98 percent of all foundations have assets less than $100 million. These foundations accounted for more than 50 percent of all grants made in the United States in 2014. Yet this influential group has lagged in adopting impact investing practices due to real and perceived barriers to entry. Research from the Foundation Center’s GrantSpace found that of the thousands of grantmaking foundations in the United States, just a few hundred made PRIs in 2016—only about one in three.
Given the benefits of PRIs as a unique tool for advancing impact and that larger foundations have demonstrated their use, why do so few family foundations use them? To find out more about how to access the opportunities of PRI investing and address the barriers, please see the full article.
Excerpted from the Stanford Social Innovation Review Online on Nov 2, 2017.