Building on the last one and two posts, one final piece of research and a closing thought.
Digging a little deeper into the topic of philanthropic asset management for impact, in 2024, The Bridgespan Group, together with Capricorn Investment Group, published an assessment of foundation investment in impact and sustainable finance strategies.
The paper investigates the under utilization of foundation endowments in impact investing. Despite the growing recognition of the need for philanthropic capital to address urgent societal issues in these turbulent times, most foundations continue to invest the vast majority of their assets in traditional financial instruments. The study found that the median allocation to impact investments is only 5% of endowment assets, even among foundations actively engaged in impact-oriented networks such as GIIN and MIE.
However, a smaller group of pioneering foundations has achieved allocations of over 50%, (not to mention the many family offices now investing upwards of 100% of their portfolios in the previously discussed total portfolio management and impact investing strategies). This suggests transformative impact alignment is feasible and fully within reach for all foundations—regardless of the specific course one chooses.
Persistent barriers continue to slow progress. These include:
A “beginner’s dilemma” around pipeline development (i.e. who goes first?),
Limited internal capacity of foundations to execute these strategies or instruct their advisors to do so,
Concerns regarding volatility of financial returns, and
General market noise, including such time honored and tired debates as the question of whether “impact first” is better than “finance first” investing. (Spoiler Alert: Guess what? They are both wrong; jump off the horns of your bifurcated dilemma and move to the previously discussed Total Portfolio Management: All capital and companies have impact, so move your assets and deploy all your capital for intentional impact, however you define it!).
Interestingly, one barrier that is not in place is a lack of product or investible opportunity. Today, asset owners can deploy their capital across a wide array of asset classes and impact themes at a level impact investors from 25 years ago could have only dreamed.
It isn’t opportunity we lack but rather will and commitment to change. If you don’t know where to even begin your due diligence, try the IA-50, a landscape overview of quality impact managers covering a wide array of themes and categories!
Alas, many large foundations still view impact investing as niche or concessionary, failing to recognize the success institutions may have pursuing financial performance together with societal and environmental outcomes. Only 11% of foundations invest beyond their core mission areas, signaling missed opportunities for broader impact, financial returns and blended value creation.
Notably, as discussed in the above report, foundations with endowments over $1 billion tend to exhibit the lowest levels of impact alignment, with a median of just 2.6% allocated to impact investments.
To overcome these challenges, the paper’s authors advocate a shift from cautious experimentation to bold, systemic realignment. This includes:
Setting ambitious allocation goals
Integrating impact into investment policy statements
Adopting a full-portfolio impact strategy
Leveraging peer collaboration and
Exploring investments beyond mission-related constraints.
The Skoll Foundation serves as one case study, showing how 70% of its endowment is now impact-aligned across four key areas: climate mitigation, inclusive capitalism, health and wellness, and sustainable markets; a good start.
And RS Group Asia offers an additional example of how one family office executed a 100% impact investment approach.
As your humble scribe together with a generation of others have done for decades now, the Bridgespan/Capricorn report concludes with a call for all foundations to measure, report and increase their impact investment allocation—framing this not as an optional initiative, but as core to fiduciary responsibility.
In closing out this discussion, one current and inspiring example of these ideas in action is offered by Gary Community Ventures in Denver, Colorado. I had the pleasure of serving as strategic advisor to the firm and family for a number of years back in the day when, with the late Sam Gary and the GCI team, we began outlining a powerful vision for its future:
“Transferring the assets of Sam Gary from his balance sheet to the balance sheets of
low-income and working families in the State of Colorado.”
It is truly incredible to see the significant action they have taken to bring that vision into practice and become fully invested in their approach. As the GCIC team says
“We’re not spending down, we’re raising the bar for how every dollar is invested to catalyze systemic change and family owned wealth.”
Couldn’t have said it better myself!! 😎
Now, get out there, put your money where your vision is and then move your mouth to speak up and out in this current moment!
The water’s fine!
Author’s Note: While the final writing and analysis are my own, please know I did make use of various AI tools in research and drafts conducted for this project. For a fuller discussion, please see the closing Note in the first post of the Antidote to Autocracy series. Thanks!
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