Mission-aligned or values-aligned investing is an approach that seeks to align investments with an investor’s mission, values, or operational goals. It can include impact investing, mission-related investments, ESG integration, and shareholder engagement. Impact investing is investing with the intention to generate positive, measurable social or environmental impact alongside a financial return. The Woodcock Foundation’s goal is to be 100% mission-aligned across our endowment, with a 5% allocation to impact-first investments.

No. Mission-aligned investing and impact investing are doable for foundations of every size, structure, capacity, and expertise. Before embarking on your journey, it’s important to remember that owning this strategy must be someone’s job. It requires a real mandate, budget, patience, flexibility, and the willingness to experiment and iterate.

For the Woodcock Foundation, considering mission is a necessary part of fiduciary duty, and we wrote that into our Investment Policy Statement. Fiduciary duty for a charitable foundation rests on three components — care, loyalty, and obedience. It does not explicitly require profit maximization. IRS Notice 2015-62 confirms that foundation managers may consider the relationship between an investment and the foundation’s charitable purposes, and are not required to select only the investments offering the highest returns. We believe that using impact-first capital as critical risk-taking investment – like through program-related investments (PRIs) – sends the right signals to the market without putting undue burden on our partners or our portfolio. For the rest of our endowment, which is committed to mission alignment, we set a risk-adjusted return target that is sufficient to cover our costs and meet our goals.

There is a common and pervasive misperception that mission-aligned investing results in financial losses. Increasingly, we are seeing that the opposite is true. Evidence continues to emerge that MRI portfolios can – and do – outperform traditional ones. This finding shouldn’t be surprising. Enhanced impact due diligence adds depth to the classic risk frameworks. Often, it includes an expanded set of material factors and criteria that look for risks lurking around corners. Our own performance is proof. The Woodcock Foundation’s core global equity portfolio returned 12.37% since 2011, outperforming the MSCI ACWI benchmark, which returned 10.76% over the same time period. Our longest-held impact-aligned manager returned 9.96% since our initial investment in 2007 — outpacing the same index roughly two points annually.

It may take longer than you think, but that doesn’t mean it’s going wrong. It’s important to deploy capital carefully to make real change. Our $3 million PRI fund was meant to deploy in 18 months and took twice that. Set board expectations accordingly and use the annual IPS review to check in.

Start where leadership buy-in and execution capacity are strongest. Hold separate structured conversations with your board, your staff, and your advisors about ambition, trade-offs, and ownership. Decide how much mission alignment you want in specific terms, and name who owns the work. Our report includes suggested questions to start conversations with each group, and the companion checklist covers what to ask advisors in an RFP.