By Lauren Kotkin and Ruth Masterson, ASF

The first post in this 3-part series on impact investing looked at the ASF member foundations that make impact investments. Now we turn to the sorts of impact investments these members make. 

Among the 11% of ASF member foundations that make impact investments, the most common impact investing strategies are screens (59%), direct investments in private companies or funds (31%), and deposits at community development financial institutions (CDFIs) (10%).

• Screens on stocks, bonds, or mutual funds—Screens, both positive and negative, are a straightforward way to act on your values and a great place to start your impact investing. When a longtime ASF member joined her foundation’s finance committee and took a close look at the foundation’s portfolio, she saw that the foundation was invested in companies whose practices and products were in direct contrast with the foundation’s mission. Her first recommendation as a committee member was to screen out those companies from the portfolio.

• Direct investments in private companies or funds—Not only does financial due diligence for direct investments in private companies or funds not change when looking to invest with impact, it requires more research into a fund or company’s practices to see if they align with one’s mission. The impact investing field has developed and continues to build metrics and tools to measure impact, defined in different ways. Take a look at the GIIN’s IRIS catalog to review useful metrics. 
• Deposits at CDFIs—When looking for easily implemented impact investing tools, think about “where your cash sleeps at night,” as investment advisors say. One ASF member visited the five community development financial institutions (CDFIs) in the foundation’s community, and, after board discussions, made a decision to move the foundation’s cash to one of those local banks. The CDFI provides financial assistance directly to underserved populations in the local community—and in line with the foundation’s mission—and even offers a slightly higher interest rate (0.075%-0.15-% depending on the balance) than the foundation’s previous bank (0.01%).

How about you? Are you among the philanthropists using impact investing? If not, what is standing in the way?

In part 3 of this 3-part series, we’ll learn about today’s impact investing trends. 

Related resources

• ASF’s resources on investing
• ASF’s resources on impact investing (members only – join today!)
• ASF’s Foundation Operations and Management Report, with data on ASF members’ investments and much more
• Mission Investors Exchange, where philanthropic innovators exchange ideas and experiences to improve the impact of their capital
• The Global Impact Investing Network, a nonprofit dedicated to increasing the scale and effectiveness of impact investing 

ASF Senior Program Director Lauren Kotkin plans a range of educational programs for the ASF community, including conferences, webinars, and conference calls. She also dedicates a portion of her time to managing ASF’s resources on investments. Previously, she worked at the Council on Foundations in the Family Foundation Services department. Lauren holds an undergraduate degree from Duke University and an M.Ed. from Lesley University, with a focus on using arts in education.

ASF Senior Program Manager Ruth Masterson works closely with members to create written materials and training curricula, and answers member questions on foundation administration, governance, boards, and tax and legal topics. She is also is the project manager for ASF’s Practical Board Self-Assessment. Prior to joining ASF, Ruth served nonprofits in her work at Adler & Colvin and the Council on Foundations. She earned her B.A. at the Monterey Institute and M.P.P. from Johns Hopkins University.