Foundations Increasingly Using Investment Assets to Achieve Social Benefit

Grant makers holding a fifth of all U.S. foundation assets are investing endowment dollars to further their charitable missions, according to a Foundation Center report released last week.

The center’s new report, “Key Facts on Mission Investing,” finds that 14% of foundations it surveyed are directing their assets to either market-rate mission-related investments or to below-market-rate program-related investments, or to both.

Foundations that engage in some form of mission investing have $119 billion in assets, the report said.

The report noted that differences in terminology and methodology aside, mission investing has a singular goal: “to use foundation assets—as distinct from grants budgets—to achieve a public benefit while obtaining market- and below-market-rate returns in different asset classes.”

By law, foundations are allowed to make program-related investments—often loans, loan guarantees or equity investments—which are derived from their assets but count toward their charitable distribution requirement. These investments generally yield below-market-rate returns, according to the report.