INSIGHT

Impact Investing for Foundations

Shannon Winter • September 23, 2026

Industries: Foundations, Nonprofit

---

Foundations have spent decades writing checks that support causes they believe in. Through effective grant management, programs get funded and communities see real change. But there’s often a disconnect between that generosity and the money sitting in the investment portfolio, quietly growing (or not) without any connection to the mission it’s meant to serve. Impact investing closes that gap. It asks foundations to treat their endowments and reserves not just as a funding source for future grants, but as another tool for driving the change they already care about.

A foundation that funds affordable housing programs through grants can also invest in community loan funds that finance housing development. A foundation supporting education initiatives can put capital into ed-tech companies expanding access to learning. The mission doesn’t stop at the grants budget; it extends into every dollar the organization holds. This article walks through what impact investing means for foundations, why more organizations are adopting it, and how to start building it into an investment strategy.  

What “Impact Investing” Means 

Impact investing refers to investments made with the goal of generating both a financial return and a measurable social or environmental benefit. It goes by other names too, including mission-related investing and program-related investing, but the concept stays consistent: put capital to work in ways that support your organization’s purpose, not just its balance sheet.  

This isn’t a new idea. Foundations and nonprofits have engaged in some version of impact investing since the 1960s. What’s changed is the level of intention behind it. Organizations used to treat their investment portfolios and their programmatic work as two separate operations, managed by different people with different goals. Now, boards and finance committees are asking whether those two functions can work together. 

Why Foundations Are Paying Closer Attention 

Donors and stakeholders are asking harder questions about where foundation assets actually go. It’s not enough anymore to fund a scholarship program while also holding investments that work against the same communities being served. Foundations are under more pressure, and more genuine desire, to make sure their full balance sheet reflects their values. 

Better data and more transparent reporting have made this shift possible. Foundations can now see, with real specificity, where their investment dollars are landing and what effect they’re having. That visibility didn’t exist in the same way even ten years ago, and it’s made it much easier for boards to justify a strategic shift. 

There’s also a practical benefit. Impact investments can generate a financial return while advancing a mission, which means foundations aren’t necessarily choosing between doing good and growing their assets. For many organizations, that combination makes impact investing an easier conversation to have with a board or investment committee than it once was. 

Building an Impact Investing Strategy Without Starting from Scratch 

Foundations don’t need to overhaul their entire portfolio to get started. A more realistic approach is to set a modest goal, such as aligning a quarter of total assets with impact investments and building from there. That conversation should start with the board, along with the finance and investment committees, so everyone agrees on priorities before any capital moves. 

Cash management is often the easiest entry point. Nonprofit scenario planning can help foundations evaluate reserves and liquidity before moving organizational reserves into a Community Development Financial Institution targeting specific geographic areas or community needs. This kind of investment tends to be lower risk than other impact investment types, since deposits are typically insured, while still directing money toward underserved communities and causes like affordable housing or health care access.  

From there, foundations can expand into a broader range of opportunities, from renewable energy projects to community loan funds to companies working directly on the causes a foundation already funds through grants. The options span nearly every program area a foundation might support, which means there’s rarely a mission that can’t find a corresponding investment opportunity.  

Working with BPM 

Foundations considering impact investing often run into the same roadblock, they aren’t sure how to translate mission goals into an actual investment strategy, or how to manage the nonprofit financial management questions that come with it. That’s where a firm that understands both the financial and mission-driven sides of a foundation’s work makes a real difference.

At BPM, our team works across the foundations industry and nonprofit industry, helping organizations think through these decisions, from setting realistic goals to understanding the tax and reporting implications of different investment vehicles.If your foundation is ready to align its portfolio with its purpose, contact us to start the conversation.