Giving Compass' Take:

• Ford Foundation discusses the steps it is taking to adopt a mission-related investing approach that incorporates financial returns and advances the progress of a foundation's mission.

• Are you ready to engage in mission-related investing? What are the first steps in your transition to mission-related investing? 

• Read more about what mission-related investments can do for philanthropy.

For the better part of two decades, the world of philanthropy has been engaged in an important, sometimes contested, conversation about “impact”—both how we measure it and how we deliver it.

As with most foundations, our own impact-related work—our support for individuals, institutions, and ideas—has remained almost entirely separate from the way we steward our endowment. While most of our work is grantmaking, the vast majority of our assets are actually financial investments.

The time is right for us to look at this paradigm with fresh eyes—to consider how we might start to bridge the gap between philanthropic impact and investments. Indeed, we have come to believe that if we expect to overcome the forces of injustice and inequality, we need to expand our imaginations and our arsenals. In short, we must begin to more deliberately leverage the power of our endowment.

Today, we have an opportunity to build on this proud, powerful legacy. Previous divestment movements tried to prevent investors from harming society; now, institutional investors can begin to move from “do no harm” to exploring how to “do more good.”

That brings us to [Mission-Related Investments] MRIs. Through this new tool, we will leverage the power of our endowment and start to unlock the potential of the 95 percent to create impact through the market. MRIs seek to achieve attractive financial returns while also advancing the foundation’s mission. Unlike PRIs, they can bring to bear large amounts of capital in the service of multiple bottom lines.

Since the birth of foundations, our endowments have been essential to our work. Going forward, I believe they will become an essential part of our work and how we continue that work into the future. This is the next great challenge in philanthropy: to find and finance more social good than we ever have before.

Read the full article about mission-related investing by Darren Walker at Stanford Social Innovation Review.