For many years, small-staffed foundations have been at the heart of the impact investing movement, joining with, and at times leading, larger philanthropies.
Small-staffed foundations tend to be more agile than their larger, staffed counterparts; they often have more knowledge on needs in certain issue areas and geographies; they’re better positioned to deploy a greater portion of their resources in support of mission and goals; and their investments can catalyze an enterprise or field.
About one in ten small-staffed foundations are already engaged in some form of impact investing, and many more are well positioned to do so.
Today’s private foundations are investing for impact in two ways: through program related investments (PRIs)—made with the expectation that the amount invested will be repaid to the foundation—and by investing a portion or even the whole of their endowments in enterprises and funds aligned with their missions.
For foundations, the early stages of adopting a form of impact investing lies with the board. In most cases, board approval is required for a foundation to engage in impact investing, and such engagement often requires ongoing, high-touch engagement from impact investing champions: perhaps a single board member, staff member, or consultant.
Champions must be prepared to help boards understand their options and to allay any concerns by:
- Reviewing the practices of peer institutions to show how impact investing operates
- Describing the capacity required for different impact investing strategies
- Examining the existing literature on impact investing performance
- Identifying examples of impact investing policies and vehicles to illustrate the strategy’s potential
Read the full article about foundation impact investing at Exponent Philanthropy.