Foundation staff and trustees across the country are discussing whether or not to integrate an impact investing strategy into their investment portfolio. In our experience, the hesitance many stakeholders feel in incorporating impact investing into their investment or giving practices can arise from a basic misconception: that impact investing is a recent strategy that doesn’t have a track record or buy-in from established players in philanthropy. In fact, though “impact investing” has only recently become the established term to define the practice of making return-seeking investments to accomplish social and environmental goals, major players have been making such investments for decades. As foundations make their investment decisions, we encourage them to keep the following in mind.
The practice is not new
While the concept of impact investing is new to many foundation staff and board, in practice it has been around for almost half a century. Benjamin Franklin is often cited as the godfather of impact investing: he bequeathed2,000 in sterling to be designated as a revolving loan fund for young married tradesmen to start their own businesses. This fund was active for almost 100 years until it was converted (as stipulated in his will) to the Benjamin Franklin Institute for Technology in Boston.