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What is Mission-Related Investing/ Impact Investing?

Confluence Philanthropy defines Mission-Related Investing as the practice of harmonizing a charitable organization’s mission for social or environmental impact with the management and investment of assets while sustaining long-term financial return.

While the concept of ‘mission’ investing makes a great deal of sense for philanthropic and non-profit institutions carrying a legal social change mandate, for individual investors and institutions without a primarily charitable intent, the concept of ‘impact’ may be a better fit. The interchange of the terms in Mission-Related Investing and Impact Investing can be confusing for newcomers to the practice. Our advice? Don’t worry about it. Just manage your investments as responsibly as you can, and seek to make ‘impact’ through your investment decisions in the way most meaningful for yourself and your institution.

The Confluence motto: Know What You Own and Own What You Own.

Examples of Mission-Related Investing practices for philanthropic organizations:

  • Holding cash deposits at community-owned banks and lending institutions;
  • Leveraging ownership in the market through proxy-voting and shareholder engagement;
  • Structuring Program-Related Investments that provide loans with primarily charitable intent to non-profits and for-profit institutions;
  • Providing guarantees to grantees and for-profit institutions;
  • Offering foundation staff socially-responsible or green retirement plan options;
  • Equity investments in screened public and privately held companies that seek to maximize market rates of return with high impact;
  • Structuring angel or venture capital investments in early stage companies promising social/environmental as well as financial return.

 

As the field of Mission-Related Investing develops, philanthropies are becoming ever more sophisticated in their thinking about these their investments; distinguishing between ‘Mission-Driven’ Investments; ‘Mission-Aligned Investments’; and specifically ‘Program-Related Investments’. For a full list of terms click here.