The list of foundations beginning to move their endowment assets to align to their values and mission keeps expanding. As the universe of investable impact investing product grows and diversifies across asset classes, it is a natural progression for the asset allocation of foundations’ endowment to reflect their core values. This congruence of the investment allocation with the programmatic focus areas is an interesting trend to watch out for and the early findings will bolster the “no trade-off for impact” school of thought.
Edward Mother Earth Foundation (EMEF) is a $35 million family foundation dedicated to climate change disruption, whose endowment previously held traditional investments in fossil fuels, which inherently conflicted with EMEF’s core mission. In 2014, they applied rigorous ESG screens and divested from fossil-fuel investments, ultimately reducing their portfolio’s carbon emissions. The publicly traded portion of EMEF’s portfolio has delivered 5% annualized returns, falling in line with constituent benchmarks.
The Russell Family Foundation (TRFF) began strategically leveraging their endowment to pilot mission-aligned investments in 2004. With over a decade of experience, TRFF developed a spectrum of impact approaches for asset allocation ranging from negative screens (Level 1) to catalytic ESG investments (Level 5). As of June 2018, TRFF has dedicated over $100 million or around 74% of their endowment to mission-aligned investments and has out performed their blended benchmark by 2.7% on an annualized basis.
Recently, The Nathan Cummings Foundation (NCF) made headlines when it announced that it will be moving its nearly half a billion dollar endowment to 100% mission-aligned investing. NCF has been a prominent voice in the impact investing sector. It was one of the first to engage in shareholder advocacy and was a founding signatory of The United Nations Principles for Responsible Investing. NCF has developed a pipeline of mission-aligned investment strategies and will detail how their endowment will be leveraged to achieve impact at the end of the year.
This comes in the wake up of commitments from larger foundations like Ford Foundation which famously moved $1 billion to mission-related investments, and Heron Foundation that concluded its transition to 100% mission-aligned ahead of schedule in 2017.
The impact investing world hopes that many more foundations are paying attention.