Community Foundations Embrace Impact Investing

Wednesday, January 7, 2015

A small, but growing, number of community foundations are starting to embrace impact investing in a big way.

That’s one of the conclusions of A New Anchor Mission for a New Century, a report recently produced by Takoma Park, Md-based Democracy Collaborative. The authors studied 30 foundations focused on two areas, which sometimes overlap–impact investing and economic development.

There are about 760 of these place-based foundations with combined endowments of $65 billion and annual grant-making of about $5 billion, according to the report. But since 2000 or so, they’ve been facing competition for donors from commercial banks and investment firms managing donor advised funds, as well as crowdfunding platforms and giving circles. At the same time, according to the report, these foundations have begun paying more attention to what the report calls structural poverty, thanks to the stagnation of real wages over the last 30 years, and what they can do about it.

In response, some community foundations, which traditionally have focused on a passive approach to making grants, have started experimenting with a new, active style, including impact investing.

The report identifies four noteworthy strategies:

Source: Forbes (link opens in a new window)

impact investing, lending, social enterprise