Investment intermediaries’ catching on

Foundations and funders increasingly are turning to specialized investing groups, which tout both social and financial returns, to help them achieve mission-related goals when they invest their assets, a new study says.

These groups, known as “mission investment intermediaries,” can take various forms, but generally pool resources from funders to invest in vehicles that have social impacts.

In “Aggregating Impact: A Funders Guide to Mission Investment Intermediaries,” FSG Social Impact Advisors identified more than 1,000 such groups, ranging from community development finance institutions to private equity and venture capital funds.

Between 2001 and 2005, a quarter of funds designated for mission investing went to intermediary groups, the report says.

Of those assets invested by intermediaries, 13 percent were invested for market-rate returns, and among foundations utilizing intermediaries between 2002 and 2005, 57 percent of the capital was invested in loan funds and a quarter went to venture capital or private equity funds.

And among intermediaries themselves, more than three quarters focused their investing on economic development, the report says, while almost 6 in 10 favored housing and 1 in 10 targeted the environment.

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