Capricorn Investment Group partnered with Bridgespan Social Impact to release a report challenging foundations to use their investments more strategically to fix societal problems. The study Can Foundation Endowments Achieve Greater Impact highlighted a disconnect between intentions (saving the planet) and actions (prioritising financial returns over societal impact).
Foundations typically allocate only a small fraction (5%) of their assets each year to support causes through grant making, while the majority remains tied up in traditional investments. Bridgespan challenges this status quo: foundations should strategically move the other 95% into impact-aligned investments.
According to the study just 5% of investable assets held by foundations are being allocated to impact investments, far short of the 100% mark embraced by some philanthropic leaders as a signal of their all-in commitment to impact. More information here.
“Foundation endowments exceed US$1trillion, with Donor-Advised Funds (DAFs) contributing an additional US$200 billion. Where and how these assets are invested can significantly influence our world,” the report says.
As an example, the Skoll Foundation divested investments that did not align with its values in 2006 and started to explore impact investing. As of 2022, 70% of the foundation’s portfolio is aligned with four impact objectives. The remaining 30% are held primarily for their financial utility but have typically been cleared for environmental and other risks.