Giving Compass’ Take:
• National Center for Family Philanthropy provides a guide for foundations to build the impact investing strategy that works for them.
• How could impact investing fit into your family foundation’s model? What changes need to be made to make your strategy a reality?
• Learn how to build an impact investing team.
Charting a Course to Impact Investing
A successful impact investing strategy requires clarity of intent. Foundations must ask “Why do this?” and “How best to proceed?” Knowing exactly what is in your portfolio is the first step. Could there be any holdings working at cross-purposes with the mission? When TRFF began asking these questions, the answers led to a relatively small divestment from 15 coal stocks. From there, the foundation ultimately decided to divest fully from all oil, gas and coal holdings in favor of specific themes such as forestry, agriculture, and clean technology. Those decisions highlight another point: Having a deliberate, phase-based framework for ongoing divestment decisions is essential.
Investing in the Environment
For families and foundations, there are many ways to explore impact investing with an environmental theme. Whether your particular interests are driven by providing climate solutions, conservation, environmental justice or education – structuring a portfolio to invest for a sustainable environment is possible through most asset classes. Stepping away from harmful investments and building an ecosystem of assets that are aligned to your mission and/or values can be achieved, opportunistically, in a number of ways.
Foundations of Wellbeing
In response to what has become a crisis of housing affordability in cities across the U.S., innovative family philanthropists are collaborating with real estate developers, affordable housing organizations, governmental agencies and other community leaders tackling these challenges. New affordable housing investment strategies and structures are being implemented that can be adapted across geographies.
Raise Your Voice
As stewards of capital, corporations have a profound impact on society. Their decisions shape local communities and global economies as well as the built and natural environment. However, not all corporations have ethical or transparent social and environmental practices, and this can leave many investors confused about what to do with investments that run counter to their values. For example, a family foundation whose grantmaking supports sustainable farming initiatives might also hold stock in large factory farms or food companies. Rather than simply divest from these companies, shareholders have other tools in their toolset to influence corporate decisionmaking. An active shareholder can have immense power in creating sustainable corporate change by filing shareholder resolutions and speaking out against poor practices.
Families looking to initiate or expand impact investing strategies should reflect on how deeply their philanthropic mission permeates their investment philosophy.