Private foundations, in an effort to maximize their social impact, are increasingly striving to align their investments with their missions, according to Page Eberstadt Snow, chief philanthropic officer of Foundation Source, the private foundation outsourcing firm, and president of Foundation Source Advisors. This trend, in turn, has important implications for advisors to high-net-worth individuals and families with foundations.
In a recent telephone interview with AdvisorOne, Snow (left) said her firm’s clients historically have focused their philanthropy on giving away 5% a year as required by the IRS.
Now, she said, “there’s a new trend, where people who have foundations are looking at all the assets in the foundation and thinking, ‘How are we going to exploit those assets toward our mission?’ So if they’re focused on the environment or something to do with policy, they may very often fund something on the investment side, which is called “impact investing.”
Foundation Source manages the administrative and compliance aspects of private foundations for high-net-worth individuals, often working with the advisors to these people.
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Snow said the firm has clients who may be interested in disease or health issues for which their foundations provide not-for-profit funding. At the same time, the foundation is investing in a pharmaceutical endeavor where there is a drug in development to treat a disease on which large pharmaceutical companies are not focused. “They use the investment side of the foundation to focus on things that they might not be able to fund through their charitable side,” she said.