Starting Point

Why

Why impact investing can be a great fit for foundations

Foundations have a long history of enabling social change as they have been uniquely positioned outside the constraining structures of business and government to address the most pressing of issues facing society.

These changes have been achieved through mission-driven programs and grant making, even though the majority of a foundation’s assets remain invested in traditional financial products without due consideration of their impacts on the world.

Increasingly, foundations are seeking to place a greater portion of their endowed assets in investments that will generate financial returns and enhance their positive social and/or environmental impact. At the same time, there is an ever-increasing number of organizations that generate precisely this kind of holistic return. Impact Investing is an approach to providing capital to these types of organizations, companies and funds with the intention of generating positive social and environmental outcomes alongside a financial return.

Benefits

Impact investing complements the mission-related impact of grantmaking. Through impact investments, foundations can target positive social and environmental impact alongside a financial return. There are a range of benefits to this approach. For example, foundation endowments can, among other things:

  • Support small-scale social entrepreneurs
  • Grow the stock of green, urban, and social infrastructure like affordable housing that our cities and communities need
  • Help charities with capital needs and cash flow challenges
  • Support the switch to sustainable energy
  • Bring mission-aligned capital into partnerships with government and the private sector
  • Aim capital towards gaps in financing, such as for newcomers to Canada, Indigenous communities, and women
  • Work at bigger scales and over longer terms