Investing foundations endowments for societal change
Two Strategic Round Tables held on March, 13-14 and July, 3-4 2014 at Philanthropy House in Brussels, bringing together top managers from 18 foundations from eight countries (Be, Fr, UK, Se, Ch, Nl, It, USA).
A growing number of foundations are now looking at innovative ways in which the investment of their endowments can align with and/or actively contribute to the mission of the foundation, with approaches ranging from responsible investments to impact investments to venture philanthropy. A lot has happened in the past years, both in terms of the range of strategies offered by the investment industry and in terms of foundations involvement.
The March Round Table aimed at developing a shared understanding of inspiring investment practices that allow for foundations to invest their endowments to further power societal transformations, all throughout the decision-making and implementation process, from the board of trustees to the implications for external intermediaries.
The challenges that the board of directors, the managing director and the CFO are facing in choosing and developing investment strategies, as well as the related governance issues, were investigated.
The Round Table in July had a specific focus on two investment strategies in particular. The aim was to obtain a global understanding on the concrete implementation of impact investing and program related investing. Next to financial returns, these investment strategies actively aim at social and environmental benefits in general.
The following questions were specifically investigated:
- When is program related investing / impact investing an effective tool for foundations? Are there certain conditions (in terms of the sectors targeted, the mission of a foundation, etc.) that make it particularly effective?
- What is required in terms of internal governance, board support, management resources, integration in strategy for it to happen?
- What are advantages/disadvantages of program related vs. broader impact investments? What are limitations imposed by regulators (e.g. with regard to foundations' tax-exempt status)?
- What are practical solutions for managing risks related to these investments? How can intermediaries help?
- What are practical solutions for reducing cost/time/know how required to select and monitor these investments? How can intermediaries help?
- Can impact be assessed/reported in a way that fulfils foundations' needs?