The Ford Foundation, one of world’s largest charitable foundations, has announced that it will invest up to $1 billion of its $12 billion endowment in Mission Related Investments (MRIs).
Billed by the New York based philanthropy as ‘the largest commitment of its kind by a private foundation’, its executives hope it ‘sends a signal to other foundation and institutional investors that perhaps the time has come to consider the potential of impact investing.’
The commitment to invest up to $1 billion of the foundation’s endowment in ways that are consistent with its mission will see the foundation gradually carve out funds from its existing investment portfolio and deploy them to earn both ‘attractive financial returns’ and ‘concrete social returns’ over the next 10 years.
Under US law, grant-making foundations are obligated to spend five per cent of their assets each year. Typically, this has led to a separation between the grant-making and investment arms of foundations. Acknowledging this gap, Ford Foundation president, Darren Walker said ‘As with most foundations, our own impact-related work…has remained almost entirely separate from the way we steward our endowment.’
The commitment of the foundation’s endowment to its mission therefore marks a break with the past. Darren Walker commented: ‘If philanthropy’s last half-century was about optimizing the five percent, its next half-century will be about beginning to harness the 95 percent…’
According to Walker, the commitment of one billion dollars of its endowment, one twelfth of the total means the foundation is now ‘putting a significant amount of our money where our mission is.’
For more on the Ford announcement, read this statement from Darren Walker
For more on mission related investment, read Charles Keidan’s interview with the Heron Foundation’s Clara Miller.