Study: Foundations Use Investments to Promote Mission

(October 27, 2011) — An increasing number of foundations in the United States are making investments that further their missions, a new report from a worldwide philanthropy data and research center shows.

“Foundations are striving for greater impact,” said Steven Lawrence, director of research at the Foundation Center and the report’s principal author, in a statement. “Mission investing puts foundation asset dollars to work in ways that have the potential to go far beyond the social impact of their grantmaking dollars.”

The report stated: “By investing endowment dollars to further their charitable missions, these grantmakers — which hold 20 percent of all US foundation assets — are extending the public benefit of their resources.”

The report — titled “Key Facts on Mission Investing” — revealed that more than 50% of respondents began making those types of investments in the past five years and 28% within the past two years. Meanwhile, the report found 50% of mission-investing foundations making program-related investments only; 22%, mission-related investments only; and 28% investing through both.

Furthermore, the study showed that larger foundations are more likely to hold mission investments.

The report offered perspective from Stephen Viederman, former president of the Jessie Smith Noyes Foundation and a proponent of mission investing, who argued that foundations’ investment strategies should be guided by their broader purpose to benefit the public and that social investing equating to financial underperformance is a myth. “Fiduciaries have an obligation to seek competitive returns that also complement the foundation’s purpose and/or mission,” he said.