Mission related investment is an emerging investment approach that integrates financial objectives with intentional and measurable positive social or environmental impact. As an evolution of impact investing, mission related investment seeks market-rate or near risk-adjusted returns while advancing the mission of investors.
With the increasing attention on ESG and sustainable development goals, mission related investment provides a new solution to channel private capital to address global challenges like climate change, inequality, affordable housing etc. It is suitable for mission-driven organizations like foundations and family offices to align investment activities with their charitable mission and program objectives.
Mission related investment optimizes the use of capital to create scalable and sustainable social solutions
Unlike pure philanthropic grants, mission related investments can leverage private capital to catalyze innovative and scalable models to tackle entrenched social or environmental problems. The requirement for financial sustainability of investee organizations also leads to more accountability and resilience of solutions. As capital is recycled, mission related investments can mobilize far greater resources over time than one-off grants. For example, the Ford Foundation’s $1 billion mission related investment commitment is projected to deploy $15 billion to $20 billion for social good over the next decade.
Mission related investment expands the toolbox for foundations to achieve philanthropic goals
Foundations traditionally rely on grants and social impact bonds to fund programs. Mission related investing provides another option align the endowment with philanthropic missions. According to a 2018 survey by Mission Investors Exchange, over 200 US foundations invested $74 billion in mission related investments, signaling the mainstream adoption of this approach. Leading foundations like Ford, Gates, and Rockefeller have dedicated part of their endowment to mission related investment across themes like financial inclusion, affordable housing, inclusive economic growth and racial equity.
Mission related investment requires building an effective ecosystem beyond the organization
To identify and nurture viable mission aligned investment opportunities requires substantial internal capacity as well as broader enabling environment. Investor initiatives like the Global Impact Investing Network(GIIN) provides databases for investors to discover impact investment funds and products. Intermediaries like equity funds and social enterprises can channel capital to scale evidence-based solutions. Measurement standards like IRIS catalogues metrics for investors to select standardized social performance indicators. Robust impact evaluation and monitoring demonstrates the effectiveness of interventions to investors and stakeholders.
In conclusion, mission related investment innovatively combines financial returns with intentional social outcomes, creating a sustainable win-win solution. It is an emerging approach well suited for mission-driven investors to harmonize values with value. The future growth of mission related investment calls for continuous innovation in products, enabling infrastructure and collaborative partnerships.