Key Points

While some foundations have put their entire focus on impact investing, philanthropy still lacks the tools that enable such investments to be made with the same rigor as the best financial investments and philanthropic grants. This reveals a more fundamental problem: We do not currently manage foundations as the integrated portfolios that they are.

This article proposes a framework for evaluating a foundation’s blended performance that enables both grantmaking and endowment investing to be evaluated jointly, and thus also allows a complete evaluation of how impact investments could improve — or fail to improve — overall performance.

The article demonstrates the framework’s utility by using it to evaluate a set of actual impact investments in the field of the environment. Using this framework to assess foundations’ performance would not only improve fundamental performance, but also potentially unlock vast new areas of social entrepreneurship.

Open Access