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Welcome to the new era of impact investing with opportunities to invest in Main Street as well as Wall Street and significantly amplify funder’s mission attainment.
In 2017, the U.S. Impact Investing Alliance was launched to create a network of leaders focused on advancing the use of philanthropic capital for social good. Soon after, in 2018, the Ford Foundation announced it would be allocating $1 billion to mission-related investments (MRIs).
MRIs are a powerful tool to help foundations utilize more of their philanthropic capital to achieve mission-focused impact. Foundations traditionally invest their capital on Wall Street and annually deploy about 5 percent of their assets in furtherance of their missions. This means that 95 percent of available funds are sitting on the sidelines, not directly working towards the mission.
For place-focused funders, MRIs can be a powerful way to invest a portion of that 95 percent in their own communities, betting on their town, city, or state to yield both a market-rate return and community benefit. Yet a 2019 report from The Foundation Center stated that while there are 86,000 foundations in the U.S., just 15 percent of them were actively engaged in MRIs.
Why is the industry slow to adopt place-based investments? Do they see mission related investments as a risk or outside their philanthropic comfort zone?
At Pikes Peak Community Foundation (PPCF), we are using MRIs as a tool for social good. In Colorado, PPCF and other regional foundations have come together to collectively leverage impact investing as a tool to advance our missions and strengthen our local economy. This spring, we launched The Philanthropy Collective in the city of Colorado Springs’ downtown center. It is a first of its kind consortium that brings regional foundations, philanthropists, and the charitably minded together to create a collective vision and pool resources for greater impact.
For this group of funders, mission-related investing took the form of the 315 Collective, LLC and the purchase and restoration of a building to house the Collective. The joint investment was an opportunity to bring “funders together under one roof to inspire creativity, spark both intentional partnership and fruitful water cooler moments,” as Phil Lane, chairman of The John and Margo Lane Foundation, one of the funders in the Collective, put it.
At its core, The Philanthropy Collective represents a community of philanthropic organizations and individuals dedicated to working collaboratively to address the Pikes Peak Region’s most significant challenges and actualize its potential. The group convenes, facilitates, and supports the funding community in achieving its goals. At launch, 10 foundations and philanthropic enterprises co-office at the Philanthropy Collective and a score of additional foundations and philanthropists regularly participate in sharing information.
Read the full article about investing by David Dahlin and Leslie Sabin at The Center for Effective Philanthropy.