top of page
  • Writer's pictureKatie & Brian Boland

The Other 5%

Updated: Mar 13

Foundations give grants aligned with their mission but their biggest impact comes from what they are doing with the rest of their money. For the last couple of decades, the idea of impact investing has been on the rise, allowing folks to ensure their investments reflect their values. You'd think foundations would be at the forefront of this movement, given the increasing ways to marry their investments with their mission.


But, surprisingly, that's not the case.


A revealing survey by Bridgespan and Capricorn Investments, which looked at 67 foundations, found that only a slim 5% were truly investing in a way that matched their mission. Now, you might wonder if the survey just happened to pick foundations not really into impact investing. Interestingly, it's quite the opposite—92% of these foundations are part of organizations dedicated to impact investing, like GIIN and MIE.


It's quite the letdown.


We've been cheering on as foundations seemed to be slowly, but surely, starting to align their investments with their values. But when you think about it, why is this shift something we're celebrating? It reminds me of an eye-opening moment from my earlier career days:


My team and I made a small but significant change in how we charged for ads. Before, companies had to pay as soon as their ads were loaded on a website, even if no one actually saw them. We thought it made more sense to only charge when someone actually saw the ad. We were proud of this idea because it seemed fairer to everyone.


I remember sharing this industry-shifting update with a major advertiser, expecting some applause. But his reaction was sobering. He simply said, "I'm not sure how much praise you deserve for doing something you should have been doing all along."


That's exactly how I feel about the slow and celebrated shift of foundations aligning their investments with their mission. This report is quite condemning. Instead of a scenario where all investments reflect the values of these foundations, only a tiny fraction truly does.


But it's even worse than it appears. The impact of investments isn't limited to those labeled "impact investments." Every investment leaves a mark. Many of the non-aligned investments have likely fueled the very issues these foundations aim to solve. Their vast portfolios have backed companies that view employees merely as costs, suppressing wages; tech giants that have weakened democracies, endangered our children, and divided us; businesses with supply chains involving child labor; and corporations whose environmental footprint has hastened the climate crisis.


Given that these foundations typically allocate about 7% of their funds to their causes, it's not hard to imagine that the negative impacts of the other 93% could completely overshadow the good done by their grants. Without applying the same mission-driven scrutiny to their investments, it's plausible that these foundations might be doing more harm than good.


As we've pointed out before, there are plenty of folks profiting from keeping things as they are. So, let's stop patting foundations on the back for shifting a mere 5% to 10% of their portfolio to mission-aligned investments. Why not aim for 100%? We need to call for detailed reporting on their investments and hold them accountable for fully aligning their investments with their mission. Perhaps it's time to reconsider the tax benefits for any investments that aren't mission-aligned. Or even more radically, question their tax-exempt status if they aren't predominantly invested in mission-aligned ventures.


On a brighter note, some foundations are genuinely committing to aligning their investments with their missions, like the Skoll Foundation, the Russell Family Foundation, and the Lora and Martin Kelley Foundation, to name a few. While I applaud their efforts, I'm also cautious about giving too much praise for simply doing what should have been standard practice all along.

291 views1 comment

Recent Posts

See All

Results Based Funding

Recently Brian put down some of his thoughts about Results Based Funding with Village Enterprise's Chief Innovation and Financing Officer Celeste Brubaker. We believe RBF holds a lot of promise for in

1 Comment


Kristian Nammack - Personal Email
Kristian Nammack - Personal Email
Mar 27

This 5% has been a pet peeve of mine. Esp as they are by law required to donate 5% per year - yet PRIs count against that requirement. A bit of my cynical New Yorker wanted to start a campaign called "what about the other 95%" but I didn't want to make enemies among the foundations!

Like

Subscribe to Our Blog

Thanks for submitting!

bottom of page