Maximizing your impact through mission investing

By Gretchen Greiner-Lott
Vice President
Washington Regional Association of Grantmakers

Do you want to maximize your foundation’s impact? Are you willing to go beyond grantmaking to make a real difference in the community you serve? Consider mission investing.

Mission investing is the use of assets to make strategic investments that support the social mission of your foundation. Mission investing is a tool that has been available to foundations for over 40 years but has not yet become a standard practice. However, it has the potential to drive new capital into areas of need while providing financial returns to your foundation. What mission investing allows organizations to achieve is a double bottom line – both financial and social returns.

One type of mission investment is a mission-related investment (MRI). Basically, MRIs are investments in for-profit businesses that relate directly to a foundation’s mission. As Tamara wrote about last week, the W.K. Kellogg Foundation invested in “Acelero Learning, a for-profit company focused on efficiency and greater impact for Head Start, to support higher salaries for teachers.” Businesses like this, and the investments made in them, will have a positive social impact. However, MRIs are still a financial investment that must be made from the foundation’s corpus.

Program-related investments (PRIs), on the other hand, are investments that are consistent with a foundation’s charitable purpose but do not seek a market rate return. PRIs are treated much like grants for tax purposes and are typically counted toward a foundation’s minimum payout requirement. One of the great things about PRIs is that the money earned on the investment goes back to the foundation and can be reused, unlike a grant. Locally, the Consumer Health Foundation has been engaging in mission investing for over a decade. The foundation has used PRIs through an intermediary to support the growth and development of high quality nonprofit health care clinics in connection with the DC Primary Care Association’s Medical Homes DC Initiative, a clinic-based quality and capital improvement project.

Yanique Redwood, CEO of the Consumer Health Foundation, says, “As a small foundation, we’re constantly looking for ways to extend our reach. [PRIs were] one way for us to do that. The funds are being used to advance our mission, and we receive a below market rate return on the investment. We are now trying to figure out how to bring together mission investing and market rate returns. We’re learning from our peers here and around the country that this is entirely possible.”

Not everyone can or should invest $100 million or 100 percent of their assets in mission investing. However, it is important to note that you don’t have to work at these levels to get started and make a real difference with your investments. Even doing something as simple as banking with a community development financial institution (CDFI) can be a step in the right direction.

WRAG members gathered together recently for a Member to Member Learning Exchange on mission investing. What they learned, ultimately, is that mission investing has the potential to not only maximize their missions but to drive new sources of capital into areas of need. That’s the real bottom line.

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