October 27, 2011

Roughly 1 in 7 Foundations Holds Mission Investments

About 14 percent of foundations invest some portion of their assets in a way that seeks to advance social or environmental returns, according to a new report by the Foundation Center.

The study, which is based on a survey of 1,195 foundations conducted in January, found that large foundations are more likely than small funds to hold mission-related investments. About a third of foundations that reported annual giving of $10-million or more said they hold mission investments, compared with 16 percent of foundations that award  $1-million to $10-million and 7 percent of foundations that give less than $1-million.

The type of mission-related investments that foundations hold also varies.

Seven percent of the foundations surveyed reported that they make program-related investments, or PRI’s, which often take the form of loans to charities and usually yield below-market rates of return.

Four percent of foundations said they make PRI’s and hold investments that seek both social benefits and market-rate financial returns, while 3 percent reported holding only market-rate mission investments.

Foundations' seeking market-rate financial returns in their mission investing is a relatively new phenomenon.

Of the 82 foundations that said they held such investments, 28 percent reported that they had been making them for two years or less and 27 percent had been making them for  three to five years.