Survey: Impact Investing and Private Foundations


Categories: Supporting Your Foundation Advisors

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“Impact investing” is a broad, umbrella term for creating social or environmental impact while also generating a financial return. It’s a popular topic in the private foundation sector because donors increasingly want both their charitable grants and their investment assets to contribute to positive change

Examples of impact investing include:

  • Community Investing: Opening checking/savings accounts at a nonprofit credit union or community development financial institution (CDFI) that lends its deposits to disadvantaged communities.
  • Negative Screens: Screening out companies with objectionable practices from an investment portfolio, such as those that have interests in gambling, alcohol, tobacco, or firearms.
  • Positive Screens: Actively seeking out companies with responsible Environmental, Social, and Governance practices, broadly referred to as ESG Screening or Socially Responsible Investing.
  • Program-Related Investments: Providing loans or loan guarantees to charitable organizations.Mission-Related Investing: Investing in profit-making ventures that advance the foundation’s mission.

Given the potential of impact investments to “do well by doing good,” it isn’t surprising that interest in this topic has been increasing. However, beyond anecdotal evidence attesting to this interest, little is known about how private foundations are (or are not) putting impact investing into practice.

To address this dearth of data, Foundation Source, the nation’s leading provider of support services for private foundations, surveyed its private foundation clients about their interest in and experience with impact investing. Their answers provide valuable insight into the promise and potential of this emerging field for both private foundations and their advisors.

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