Impact Investing

As needs in our communities grow faster than dollars, the Council is joining the conversation about unlocking new capital for social good. For decades, foundations have made impact investments that intend to generate financial and social returns to complement grants, partnerships, advocacy, and other tools in the philanthropic toolbox.

What is impact investing?

We define impact investing as any investment activity that intends to generate positive social and financial returns.

How is the Council involved?

In 2013, the Council is joining the impact investing conversation happening among foundations and other types of investors. As a connector, the Council is:

  • Listening to our members and making connections.
  • Organizing provocative conversations among foundations and other partners.
  • Aggregating resources to demystify the process.
  • Building relationships with thought leaders and intermediaries
  • Hosting an ongoing blog series on RE: Philanthropy.

How can you get involved?

  • Read and comment on the impact investing blog series.
  • E-mail us or take this survey to let us know what your foundation thinks about impact investing.
  • Follow the hashtag #impinv on Twitter.

Data gathered in the 2015 Council on Foundations–Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF) show that participating private foundations reported an average return of 0.0 percent for the 2015 fiscal year (January 1 – December 31, 2015), down from the 6.1 percent return reported for FY2014, while participating community foundations reported an average annual return of -1.8 percent compared with 4.8 percent for FY2014.

The Council on Foundations’ 2016 Endowments and Finance Summit is just around the corner – Sept. 28-30 – and as co-chair of the convening, I strongly encourage you to register for it! I personally look forward to the summit each year because it’s the preeminent venue for foundation executives to share information about investment trends, challenges, solutions and best practices. It also provides unrivaled opportunities to meet and collaborate with some of the top finance leaders in philanthropy. This is why my organization, the TIAA Institute, is thrilled to once again serve as the summit’s Education Partner and co-sponsor.

Leadership attracts assets and each day community foundations are maximizing opportunities in the community for growth and impact. Yet, community foundations are still grappling with ways to prioritize and balance community leadership and donor engagement, as well as how to finance and measure their work inclusive of all organizational investments beyond traditional grantmaking and convening. And, to do this work with even greater speed, sophistication, and coordinated effort across the organization and community.

How can you do the most good, with limited resources, when facing enormous problems? That question lies at or near the heart of every decision at a foundation. This is true of the grant dollars which support community institutions and provide for social services, and it is true of the endowed dollars which are invested to in order to fund future grantmaking – providing for generations to come and needs unforeseen. By carefully stewarding money held in the public’s trust, a foundation’s board can ensure that an initial philanthropic gift can grow over time, multiplying – many times over – and providing a strong financial base to advance the foundation’s mission. And many today are asking if those investments can be invested in other ways, beyond traditional grantmaking, to deliver benefits to the communities and complement the efforts central to the foundation’s mission.

On April 25, 2016, the Treasury Department officially published final regulations providing nine new examples of permissible program-related investments (PRIs). The new examples were first drafted as foundations came to sense that the existing regulations were too narrow and did not adequately address the full range of investment opportunities available to foundations.

Last summer, the Treasury Department announced their intention to finalize new regulations for program-related investments (PRIs). This week, it published nine new examples of permissible PRIs. Treasury responded to continued requests of the philanthropic community, which recognized that the existing regulations did not represent the full diversity of investment opportunities available to foundations. The Council on Foundations, with the Council of Michigan Foundations, Mission Investors Exchange, the National Advisory Board on Impact Investing, and others, provided input on the new regulations.

For decades, foundations have made impact investments to complement grants, partnerships, advocacy, and other tools in the philanthropic toolbox. But how do you start your foundation down a path to use this emerging tactic? Incorporating impact investing into your foundation’s philanthropic strategy requires thoughtful planning among foundation leaders and trustees. This interactive, one-day workshop will explore whether impact investing is right for your foundation, what you need to consider, and what steps you need to take to begin incorporating impact investing into your foundation’s philanthropic strategy.