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If foundations are to achieve their lofty ambitions for social impact, they must find creative ways to use every resource they possess. Enter mission investing (now more popularly called impact investing), a practice of using financial investments as tools to achieve a foundation’s mission. In the past decade, this practice has grown significantly in foundations of all sizes and types. Written in 2007, Compounding Impact provides a study of the landscape of mission investing by U.S. foundations.

Top Takeaways

  1. Foundations have 3 primary motivations for mission investing: recovering philanthropic funds for future use, achieving social benefits in ways that grants cannot, and aligning assets with the mission.
  2. Approaches to mission investing include “screening” on social or environmental criteria; shareholder advocacy and proxy voting; and proactive mission investing.
  3. To continue the momentum, improved performance measurement, record keeping, and information sharing must be developed.
Mission investments are financial instruments made with the intention of (1) furthering a foundation’s mission and (2) recovering the principal invested or earning financial returns.