Key Points

Foundations increasingly use their full balance sheets to unlock more of their capital for good. They look beyond conventional grantmaking to pursue their charitable purposes in many ways that exemplify innovative, full-balance sheet approaches: investing in nonprofit and for-profit companies that offer clear social and financial returns; investing their corpus in companies whose products and services align with their missions; using social bonds to inject new resources into their programs; offering guarantees to help grantees manage risk; and avoiding companies whose practices run counter to their grantees’ efforts.

This article looks at the structures, pathways, and tools for foundations wanting to use all their assets and strategies to enhance their positive impact, describes the context in which these efforts are occurring, and provides the landscape of actors and leaders. It also notes countervailing arguments to foundations using their balance sheet or grant dollars for anything but awarding grants mainly focused on opportunity costs and net social impact. In addressing some legitimate concerns, this article offers considerations and suggestions that may help foundations identify and evaluate their investment options.

Amid the rapid evolution of impact investing, much remains to be done; there are gaps to fill and value to be created. This article concludes with a discussion of key opportunities and challenges for philanthropic foundations and all investors wanting to ensure a sustainable planet and the well-being of all people.

Open Access