Earlier this year, two large pools of resources were announced to generate greater investment in impact. These funds, one from the Ford Foundation and the other led by the Reinvestment Fund, take different approaches to catalyzing change, but both bring additional capital to spur innovative investments.
The Ford Foundation made a big splash with a commitment of $1 billion from its endowment toward mission-related investments (MRIs). For decades, the Foundation has issued grants using 5 percent of its total assets, while the remainder accrued financial returns to maintain their grant-making ability. But as its president, Darren Walker, stated, “If philanthropy’s past century was about optimizing the 5 percent, its next half century will be about beginning to harness the 95 percent as well.” The Foundation believes that these MRIs can achieve social justice goals aligned with its mission, while still securing financial returns large enough to maintain the health of their endowment. The Foundation initially plans to focus on affordable housing in the US and access to financial services in emerging markets.
The Reinvestment Fund also announced a new commitment to impact investing: the creation of a $10 million fund dedicated to supporting pay for success (PFS) projects in the United States. While the Reinvestment Fund is leading this new “PFS Fund” and is committing $1 million from its core loan fund, it has also engaged two partners: QBE Insurance Group, which will invest $7 million, and Living Cities, which will invest $2 million.Read More