Mission-Related Investing for the rest of us (First of a series…)

Mission Related Investing for the Rest of Us series:

  1. Part 1:  Motivation  (Using your investments to earn a “social,” values-based, return as well as a financial one)
  2. Part 2:  Background & Investing Theory (Where I’m coming from, and how I used to think about investing)
  3. Part 3:  Banking and Cash Alternatives
  4. Part 4:  Bond-like Alternatives
  5. Part 5:  Stock-like Alternatives

Mission Related Investment (MRI)” is where a foundation invests some or all of its endowment in ways that not only provide a financial return, but also advance the organization’s mission.  For example:

  • Providing loans for affordable housing that wouldn’t otherwise be built
  • Providing capital for microfinance loans

By using the whole (or a large chunk) of their endowment on projects related to their mission, they can have a larger impact than just using the interest that is paid out (even if non-MRI investments earn a slightly higher return.)

This made sense to me in the context of a foundation, but I was stopped short recently when I was asked why I don’t do it personally.   Part of my mission is offering the least well off people around the world conditions that enable them to improve their lot.  Economic opportunity through microcredit is one of the key tools to make that happen.  I support some microfinance projects with my donations, but I never really considered making “mission related investments” to use the money I have to greater effect.   This has started me off on a new direction of reading and research, and my thinking is slowly starting to crystallize.

If I waited until I got it all sorted out, I would probably never finish the post, and it would be too long for anyone to read, so I’ll aim to publish shorter pieces (which will probably still be too long), get them out there more quickly (I’ve been sitting on this one in draft form for more than 2 weeks already), and edit as my understanding is refined further.




  1. Sanjay says:

    Steve, isn’t there a quick answer having to do with specialization? It isn’t obvious to me, for example, that the skills and organization ideally suited to manage protected land are the same as those used to direct investment towards sustainable business or that the skills needed to help families transition into affordable housing (or to advocate politically for affordable housing) are the same as the skills needed to invest in its development.

    • Hi Sanjay,

      Thanks for the comment. I’d tend to agree that the reason more foundations don’t attempt mission-related investing is they don’t feel they have the expertise, but

      1) For large foundations, it makes sense to develop the expertise. The impact of 100% of endowment dollars in the hands of a skilled sector investor might exceed the impact of the 5% payout in the hands of their program officers.

      2) For smaller foundations (and individuals, the point of my forthcoming posts), there are pre-packaged/managed alternatives in the marketplace. It’s just a matter of setting their endowment investment policy. They can go for maximum financial return, or they can opt for a (potentially) below-market return that has a mission benefit as well.

      At the very least, they should be thinking about it and actively choosing one course, knowing why they are not pursuing the other.


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