Impact Investing : a Lever for Granting Foundations

Impact Investing : a Lever for Granting Foundations

Mission-based organizations, such educational institutions, health care organizations, foundations, and environmental organizations – with mandates to advance broader social welfare and environmental sustainability – are often unaware they can align their investments with their values. During the Ethiquette True Face of Responsible Investment campaign, we had two granting foundations that submitted testimonials as to how they use their full sphere of influence to drive mission and value. This post on foundations and impact investment explains the issues and summarizes the true face of granting foundations for the two that participated in our campaign.

Few Canadians know much about foundations other than that they give out money to charities. In Canada, both private and public foundations are charities registered under the Income Tax Act. The Income Tax Act is concerned about how money and resources are collected, distributed and spent, but it pays little attention to how a charitable foundation invests the assets it acquires with the donations or other money it receives.

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Basically, foundations are obliged to disperse 3.5% of their assets every year in the form of donations to charitable organisations that align with their mission. The remaining 96,6%, which is invested in different financial assets (equities, bonds, alternative investments,…) in order to continue to generate money that will be disbursed to charities, can also be used as a very significant lever to advance the institutions social or environmental mission. (If you’re interested in reading more on the legal details of this, please refer to “Mission Investing for Foundations: The Legal Considerations“ (2012)).

To give you a bit of an idea of what aligning investment practices with the values and mission of a foundation, think about at hospital foundation. It would make sense that a hospital foundation might want to consider health-improving, disease preventing, or minimally, avoiding health-compromising companies when selecting and managing its investment portfolio.

The number of foundations that engage their assets on their mission, beyond their program dollars, is growing. Two such foundations submitted testimonials to our True Face of Responsible Investment communications campaign:

The President and CEO of the Inspirit Foundation, Andrea Nemtin, explains (English only) in a short video how the foundation, which has a mission to “…work to challenge prejudice and discrimination based on ethnicity, race and religion, and to promote inclusion and Inspiritpluralism“, has adopted a 100% impact investment portfolio. She discloses that she invests her personal investment portfolio along sustainability guidelines as well. Jory Cohen, Director of Social Finance and Investment at Inspirit Foundation also submitted a testimonial on his passionate path to responsible and impact investment. View Andrea Nemtin’s testimonial, and read Jory Cohen’s testimonial.

The Executive Director of the Béati Foundation, Jacques Bordeleau, explains (French only) Béatihow this social justice foundation further pursues its mission through various responsible investment strategies that apply for the entire investment portfolio. The Béati foundation has even gone so far as to select a responsible investment workplace pension plan for the staff of the organisation. Read Jacques Bordeleau’s testimonial.

Thank you to these two inspiring foundations for sharing their stories and daring to do things differently from how they’ve been done in the past.


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