Investing for Impact: Making Your Foundation’s Capital Count

Why It’s Not Just About What You Give — But How You Grow It

Years ago, I met a founder in Asia who was incredibly thoughtful about his philanthropy. He had built his wealth from scratch, donated generously, and supported causes he truly believed in. But during one of our conversations, he paused and asked, “What happens to all the money we haven’t given away yet?”

It was an honest question—and a turning point. Like many foundations, his was sitting on significant assets waiting to be distributed. The grants were doing good. But the investments? They had no connection to the foundation’s values.

That conversation opened the door to something bigger: the idea that a foundation’s balance sheet can reflect its mission just as much as its grantmaking does.

Your Portfolio Is Part of Your Legacy

Foundations often focus so heavily on what they’re funding, they overlook how they’re funding it. But the reality is, for many foundations, the assets under management far exceed the annual giving budget.

That’s a powerful opportunity—or a missed one.

I've worked with families who didn’t just want to fund change—they wanted to model it. And that started with revisiting how their capital was invested.

What I’ve Learned Working With Impact-Driven Families

1. Aligning Your Investments Doesn’t Mean Sacrificing PerformanceOne family I worked with was deeply committed to climate action. At first, they worried that removing fossil fuels from their portfolio would hurt returns. But after careful review, we found a strategy that met their financial goals and their values. Two years later, performance held steady—and the family felt proud of how their dollars were working.

2. Define What Impact Means to YouImpact investing can mean different things to different people. For some, it’s screening out industries like tobacco or firearms. For others, it’s proactively investing in affordable housing, clean energy, or diverse fund managers. One foundation I advised focused on women-led ventures across Southeast Asia. That clarity led to better decisions—and better partnerships.

3. An Investment Policy Statement Is More Than a Compliance ToolMost foundations have one. Few revisit it. But a well-crafted IPS can be a guiding document. It should include not just risk tolerance and time horizon, but also values-based constraints, ESG criteria, or mission-aligned asset targets. It’s the blueprint that turns intention into action.

4. You Don’t Have to Do It All at OnceOne couple I worked with in California began with a simple change: asking their investment manager to report on ESG exposure. Then they shifted 10% of their portfolio to sustainable bonds. Over time, they moved more. The key was starting small—but starting.

5. Consider Program-Related Investments (PRIs)Not all investments have to go through traditional markets. Some foundations deploy capital through loans, equity, or guarantees that serve a charitable purpose. I’ve seen PRIs help fund community clinics, provide low-interest loans to small farmers, or support local green energy startups. These tools blend impact and return in powerful ways.

A Foundation That Made All Its Assets Count

One U.S.-based foundation I support took the leap to invest 100% of its endowment in mission-aligned strategies. They partnered with diverse managers, prioritized environmental resilience, and embedded community empowerment metrics into their performance reviews.

Were there trade-offs? A few. But the gains—in clarity, consistency, and pride—far outweighed them. Their board meetings are no longer just about grants. They’re about legacy—measured in dollars and direction.

Closing Reflection

Foundations don’t just give money. They hold money. And how they hold it says just as much as how they spend it.

If you’ve ever looked at your foundation’s portfolio and thought, “This doesn’t quite reflect who we are,” that’s your cue. You don’t need to overhaul everything overnight. But you can start asking better questions.

Because every dollar is a vote for the future. Let’s make them count.