Giving Compass' Take:

• Clara Miller describes what the Heron Foundation learned from spending 100 percent of its endowment towards mission-aligned investments. 

• What are the challenges for other foundations to implement mission-aligned investing for social good?

• Read about other foundations that moved almost entirely to impact investing.


Our mission at the Heron Foundation is to help people and communities help themselves out of poverty. Our strategy calls for us to address root causes and invest in organizations poised to help us achieve our mission, regardless of sector or tax status. Back in 2012, we determined that the challenges we were trying to address demanded every resource we could muster. So we decided to invest 100 percent of our endowment towards fulfilling our mission, by fiscal year end 2017.

Here’s what we wrote at the time, in our strategy document, “The World Has Changed and So Must We.”

The urgency and size of the problems we face require that we work differently. Everything at our disposal is now a mission-critical resource ... Philanthropy’s financial tool kit should include every investment instrument, all asset classes, and all enterprise types … We plan to invest 100 percent of our endowment—as well as other forms of capital—for mission.

In that spirit, we would like to share some lessons we learned on the path to our “100 percent” goal, as well as our thoughts on the significance of those lessons and our own plans for the future.

Seven lessons, in particular, stand out to us as potentially useful to other foundations and impact investors:

  1. When we determined to invest our entire endowment in alignment with mission, we chose to take the “enterprise view” of our portfolio. In other words, we looked underneath the traditional “asset allocation” view—equities (stock), debt (bonds), real assets, alternatives, and so on—to get visibility into the enterprises and projects that give these assets value.
  2.  We continue to see evidence that the legal form of an organization is relevant to but not determinative of its ability to have a positive social impact.
  3. The generalized anxiety that many foundations and some impact investors exhibit over the possible risks of being financially transparent is excessive.
  4. We have seen no evidence that direct impact investments by foundations have more impact or are likely to be more successful than indirect investments through funds or intermediaries of various types.
  5. We have come to use the concept of “net contribution” of an enterprise as the basis for developing measures of its social and financial performance together, over time.
  6. Conventional foundations operate with a strict separation between the investing operation (investing for maximum profitability, with no regard for mission) and the giving side (granting with maximum regard for mission with no regard for return). The former comprises 100 percent of assets; the latter is a five percent “spend” in qualifying expenses (including grants) made annually.

To deploy all our capital—financial, social, human, and more—for mission, we transformed our business model from this divided one. We became one staff, working in a single operation dedicated to deploying all our resources—investment assets, social and reputational capital, cash “spend”—for mission, thus removing the barrier between investing and giving in staffing and operations. We built systems—data, accounting, financial modeling of liquidity and return, and tracking of results—with this in mind. We consider all legal forms of business as potential investees for mission purposes, and are agnostic about investee tax status, legal form of business, and similar.

Read the full article about investing in foundation missions by Clara Miller at Stanford Social Innovation Review.