Foundations Embrace Mission-Based Investing, Study Says
The investment potential of U.S. foundations far outweighs their grant-making potential and more foundations are beginning to make investments that coincide with the their goals, which is known as mission investing, according to a recent study.
U.S. foundations made grants totaling abut $46 billion in 2010 but held assets totaling more than $600 billion, vastly increasing their potential to support their missions, according to Key Facts on Mission Investing by The Foundation Center.One in seven foundations that responded to the survey are investing in market-rate, mission-related investments and/or below-market-rate, program-related investments. Market-rate investments earn more but do not count toward the foundation's disbursement requirements, while program-related investing may earn below market rates but can be counted as part of the foundations' disbursement requirements.
Both types of investing have been around for decades, but half of those engaged in mission investing started doing so only in he last five years and 28% started in the last two years. Survey results were compiled from 168 foundations that have $119.2 billion in assets.
Half of the foundations engaging in mission investing have program-related investments and 28% have both program-related and market-rate investments, while 22% hold only market-rate investments.
Just over one quarter (26%) of those making mission-related investments commit half or more of their assets to this type of investing, according to the study. Most reported holding only 5% or less in mission-related investments.
Stephen Viederman, former president of the Smith Noyes Foundation and a
proponent of mission investing, argues that foundations' investment
strategies should be guided by their mission to benefit the
pubic and that social investing does not underperform general investing.
Global Credit Crisis Avoidable, MFO Analyst Says
Global markets will continue to be affected by the situations in Greece, China and elsewhere, but the problems should not be as harmful as in 2008 and investors can take steps to protect themselves, says Greg Peterson, director of research at Ballentine Partners.
Peterson believes Portugal's fiscal problems will not reach the level of those in Greece and Ireland and that the country will be able to repair itself.
"We expect an extended period of global deleveraging and low growth, accompanied by heightened market volatility and higher correlations," Peterson says. However, the situation will not mimic 2008. "Investors may be well-advised to rebalance to the same equity targets held in early September but to wait for a better tactical entry point to make equity purchases."
In the U.S., a double-dip recession should be avoidable, but global markets could still be seriously disrupted by policy errors, such as not passing the recommendations submitted by the Joint Select Committee on Deficit Reduction, Peterson says.
"The situation in China is like that in the U.S. in that policy errors could create problems," Peterson says. "Slower global growth, a burgeoning real estate bubble, and a potential trade war with the U.S. could hinder China's progress."
A global credit crunch should be avoidable, Peterson says.