The Ford Foundation has announced plans to commit up to $1 billion of its $12 billion endowment over ten years to mission-related investing — the largest commitment to MRIs by a private foundation to date.
Ford will carve out the funds gradually from its existing investment portfolio and deploy them over time to investments designed to deliver concrete social returns as well as attractive financial returns. Initial investments will focus on areas where the foundation has prior experience and sees both significant investment opportunity and alignment with its mission to reduce poverty and injustice — starting with affordable housing in the United States and access to financial services in emerging markets. Capital will be allocated not to individual companies but established impact funds.
The New York City-based foundation, which in 1968 pioneered program-related investments — a programmatic tool that allows foundations to offer low-interest loans and equity investments aimed at catalyzing social impact — has managed more than $650 million in PRIs in the years since. Its success with PRIs over nearly five decades encouraged the foundation to consider the next step: making mission-related investments directly from its endowment. As part of a larger sector-wide effort to create a broader, more robust marketplace for impact investments, the foundation will make the results of and learnings from its MRI program widely available and will continue to award programmatic grants that enrich the evidence base and market standards for impact investing.
"No matter the investment, our choices will be an extension of our history of seeking the most innovative ways to promote a more inclusive economy," said Xavier de Souza Briggs, vice president for the foundation's Economic Opportunity and Markets program. "We are applying what we have learned from PRIs to inform the way we approach mission-related investing. The result, we hope, is to expand and diversify the market for MRIs so that it becomes easier for other institutional investors to invest in ways that consider social impact."
In 2015, the Ford Foundation announced that it was refocusing its grantmaking — between $500 million and $600 million annually — on inequality in all its forms and would concentrate its initiatives in seven areas: civic engagement and government; gender, racial, and ethnic justice; equitable development; inclusive economies; Internet freedom; youth opportunity and learning; and creativity and free expression.
"We are making this commitment because we believe MRIs have the potential to become the next great innovation for advancing social good," said Ford Foundation president Darren Walker. "We need to expand our imaginations and our tools if we want to tackle the large-scale problems facing the world today. We can't neglect the tremendous power of markets, including the capital markets, to contribute — and with today's announcement, we are putting a significant amount of our money where our mission is."
"Since our mission has been funded by returns on our endowment, we have come to believe, firmly, that we have a special responsibility — and unique opportunity — to help influence the very markets that allow us to operate," Walker wrote in a blog post. "Previous divestment movements tried to prevent investors from harming society; now, institutional investors can begin to move from 'do no harm' to exploring how to 'do more good.'"