Foundations in the U.S. collectively control nearly $750 billion dollars, and our total giving is over $50 billion per year. That’s impressive, but it’s only 6-7% of our total financial capital.
What are we doing with the other 94% of our capital? How can we put more of our assets to work in service of our mission, while continuing to generate financial returns and create a renewable cycle of return and reinvestment? When we begin to ask these questions, we begin to speak the language of impact investing.
Impact investments are investments designed to produce social outcomes while also generating financial returns. Foundations, funds, individuals and companies can all be impact investors. Impact investments are found across all asset classes and all levels of risk and return.
Typically, market-rate impact investments are part of a foundation’s endowment, while below-market investments (including program-related investments, aka PRIs) are, like grants, charitable distributions. While the majority of impact investments are made with debt instruments (i.e., notes and loans), impact investments can be made across all asset classes, including equity investments, deposits and cash equivalents, guarantees and real assets (i.e., land and real estate).
Impact investing is a vibrant and fast-growing field — regionally, nationally and globally. It is also known as mission-aligned investing, mission-related investing, mission investing, sustainable investing or socially-responsible investing.
Incubating Impact Investing
Impact Investing Consulting Services
Our consulting team at The Giving Practice offers a full suite of services to help you explore, launch or deepen an impact investing program, including: strategy, governance, program design, operations and communications.
Local Impact Bond Project
In early 2019, Philanthropy Northwest announced an impact investing collaboration with RBC Global Asset Management (RBC GAM), which supports homeownership, affordable housing and social impact initiatives across communities in the northwest and other designated areas across the U.S.
As part of the collaboration, foundations and grantmakers in six Northwest states can invest in RBC GAM’s impact investing strategies, within their fixed income allocation, that focus on the geographic or thematic areas of interest important to their organizations. The grantmakers can focus the purchases on specific communities that are important to their missions. Read more about the Local Impact Bond Project in this FAQ.
This project was a collaboration of foundation and individual impact investors coming together to grow the local food economy in Oregon and Washington. Cascadia Foodshed Financing Project (CFFP) focused on five impact areas: health, social equity, family-wage job creation and preservation, rural community resilience, and ability to influence policy. From the notion that the best learning is from doing, CFFP used action-oriented strategies that advance the fields of food, finance and philanthropy.
Read the final CFFP report for more info and project outcomes.
A Thriving Regional Ecosystem
The Northwest has a thriving impact investing ecosystem, and through our network, programs and publications, we are championing the leaders of this field. The following Philanthropy Northwest members and partners have active impact investing programs: