New Guide to Impact Investing for Small-Staffed Foundations

Pages from Essentials of Impact Investing full layout_v8Exponent Philanthropy, together with partners Mission Investors Exchange and Arabella Advisors, is pleased to announce the release of Essentials of Impact Investing: A Guide for Small-Staffed Foundations.                 

Below is an excerpt from the actionable guide—a Q&A with Luther M. Ragin Jr., former president and chief executive officer of the Global Impact Investing Network (GIIN) who helped accelerate the development of the impact investing industry. He speaks to opportunities for small-staffed foundations that want to invest for impact. 

Q: How does impact investing from small-staffed foundations help create impact? 

A: The same way it would from foundations with large staffs or from other philanthropically minded organizations. But small foundations are unique in two noteworthy areas:

  • Flexibility. Their small size makes for nimble structures that can adapt or respond more readily than larger foundations. This nimbleness leads to clear signals on the part of funders and allows asset managers and social entrepreneurs to make sharp decisions based on these signals. It’s better to get a “no” in a matter of weeks than after a process of several months.
  • Specialized knowledge. Small-staffed foundations have unique understanding and expertise in particular geographic or program areas, or both. This can be leveraged to attract other outside investors who can capitalize on the foundation’s connections to the community.

Q: What are some of the specific strategies leaders in small-staffed foundations can use to play a role in moving capital in markets including or beyond their traditional grant-making activities?

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Foundation Impact Investors: Strategies They Favor

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.

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