By Peter Berliner, Mission Investors Exchange

In the final post of this 3-part series on impact investing, we hear from the managing director of Mission Investors Exchange, a membership organization for foundations that use or are learning to use program-related and mission-related investing to accomplish their philanthropic goals. Read the series’ earlier posts on who makes impact investments and the strategies they favor.

The recently released Exponent Philanthropy survey results indicate that a significant number of foundation members are engaged in impact investing. It’s great to see these foundations adopting this strategy to complement their grants. By doing so, they are helping transform traditional approaches to philanthropy.

In 2011, the Foundation Center reported that overall about one in seven foundations were making impact investments. Only one-quarter were using their endowed funds to do so. We are seeing growing interest among foundations of all sizes in using these tools. We are even seeing ones that are seeking to align 100% of their investments with their mission. They are truly leaders in the field. Other trends in impact investing

Impact investing means using capital creatively to drive positive social or environmental change. It is a great way to fuel innovation and make investment capital more accessible to communities that are overlooked by financial markets.

By making loans or equity investments, foundations are putting their resources to work while preserving them for future use. They can, in effect, recycle their funds for greater impact. In addition, in the right circumstances, foundations use the investments to attract additional money for the projects they support.

How might impact investing go mainstream?

Foundations have at their disposal an array of financial and non-financial assets (e.g., knowledge and influence) that make them uniquely positioned to catalyze change. Putting them to use requires a willingness to learn new approaches, experiment, and assume some level of risk. But the payoffs are great for both the foundation itself and, more important, the community it serves.

Related resources

Insights From an Experienced Impact Investor, a podcast with Exponent Philanthropy CEO Henry Berman and Luther Ragin of the Global Impact Investing Network

Impact Investing: A Framework for Decision Making

Evolution of an Impact Portfolio

Peter Berliner joined Mission Investors Exchange (then PRI Makers Network) as managing director in January 2009. Peter was formerly program director of The Paul G. Allen Family Foundation and executive director of Children’s Alliance, a nonprofit organization advocating for children in Washington state. Peter served as president of the Philanthropy Northwest board from 2003–2005. Follow Mission Investors Exchange on Twitter @MissionInvest.