Impact investing in the endowment: Why do it and how to get started

Sarah Teacher

In the UK, the largest 300 endowed charitable foundations have over £72 billion in total assets. Yet, despite the field of impact investing originating from within the foundation community, the vast majority of these assets are invested in mainstream capital markets without consideration of their environmental and social impact.

A few pioneers have sought to challenge this norm. In the UK, Access – the Foundation for Social Investment, Esmée Fairbairn Foundation, Friends Provident Foundation, Guy’s & St Thomas’ Foundation, Treebeard Trust, and Ufi VocTech Trust are notable examples; in the US, FB Heron, and the KL Felicitas Foundation are leaders in their field. There have also been high-quality interventions from key bodies, with the Association of Charitable Foundations, ShareAction, and EIRIS, in particular, creating helpful resources for charities.

Despite these efforts, however, impact investing has not cemented a strong foothold in a field which may, from the outside, seem ideally suited to it.

At the Impact Investing Institute, we believe that the time is ripe for change. The myriad issues the world faces – from climate change and biodiversity degradation to Covid-19 and the cost of living crisis – have driven home the need for a massive increase in investment to help address environmental and social problems.

 
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