Viewpoint: Foundation Impact Investing Is Gaining Steam. But Can Proponents Answer These Four Questions?
Monday, March 19, 2018
By David Callahan
I’ve long been a fan of more impact investing by foundations. It’s always struck me as nuts that these institutions use only their pinkies to advance their missions, keeping the vast majority of endowment capital—the “other 95 percent”—off to the side, invested in whatever the bean counters say will yield the best returns.
Foundation leaders never tire of stressing how paltry their grantmaking budgets are relative to society’s problems, and they’re exactly right. So it’s been exciting to watch more of these leaders break the glass to get at the real money.
This week, it’s the Nathan Cummings Foundation making a move. And it’s going all in, pledging to “align 100 percent of our nearly half-billion dollar endowment with our mission.” NCF is the largest foundation to take this step, and it follows most directly in the footsteps of the F.B. Heron Foundation, which made the shift to 100 percent alignment under the leadership of Clara Miller. In contrast, the other major foundations engaged in impact investing—an increasingly long list—have mostly committed only small portions of their endowments to this approach.
It’s not surprising to see Nathan Cummings make such a bold move. This progressive foundation has long been innovative about leveraging its investments. Under a past president, Lance Lindblom, it became a leader in shareholder advocacy to push corporations to change their ways. It says that it’s filed “nearly 200 shareholder proposals” related to “environmental, social, and governance issues.”
Photo courtesy of Steven Depolo.