A Peek into Impact Investing for Foundations | Tiedemann Advisors
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A Peek into Impact Investing for Foundations

Author

Stephanie Cohn Rupp

Date

October 2017

Stephanie Cohn Rupp was panelist and speaker at the National Forum on Family Philanthropy. She talked about impact investing and generational differences in family foundations, and mission investing. Prior to the event she was interviewed by the National Center for Family Philanthropy on her thoughts on these topics.

1. Why are more family foundations committing a significant share of their assets to impact investing?

We are seeing more family foundations committing their assets (both endowment and “payout”) to impact investing, regardless of asset size. The reasons are multiple and depend on the family, but we are starting to notice some trends.

First, we find that multi-generation families are being increasingly influenced by Millennials who are now working and are actively investing adults – who wish to align their endowment with their values.

The second trend we notice is that asset owners are sharing best practices more and more – through NCFP, through Confluence, Toniic, Mission Investors Exchange and other networks. Talking about your portfolio in public is no longer a taboo – and families already doing impact investing are readily sharing their experiences with other families. In some cases, like with KL Felicitas Foundation (a family foundation), the portfolios are completely shared publicly online and that has encouraged other foundations to do the same. These foundations are showing that it is completely feasible to avoid the “cognitive dissonance” that occurs when a foundation attempts to further its mission with only 5% of its assets and does not “activate” the lion share 95%.

A third and very important factor is that investment advisors and fund managers have more sustainable and values-aligned investment products to offer their clients – which are not concessionary. Fiduciaries and trustees of these foundations have realized that an endowment can be mission aligned without having to necessarily give up on your financial goals, including if your goal is growth in perpetuity.

And lastly, I believe that the mega-trends such as climate change and increased wealth disparity are such that families are looking to leverage all their assets: financial, human and intellectual to try to address and promote the systemic changes we are facing.

We still have a long way to go to ensure that most family foundation endowments are values-aligned with their respective missions. We need more advisors to offer these services, and more trustees to get on board – as anxiety around financial returns still is the reality for many foundation trustees. Slowly but surely, this is changing.

Continue reading the interview here.

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