Leveraging the Other 95%

Impact investing is a powerful tool for amplifying McKnight Foundation’s work as a grantmaker.

Approximately 45 percent of our endowment is aligned with our mission to advance a more just, creative, and abundant future where people and planet thrive. We seek investments that create affordable housing, build the sustainability of our metro region, support small businesses owned by people of color, increase energy efficiency, promote the distributed generation of electricity, or reduce chemical inputs in commercial agriculture.

Early thinking about impact investing framed it as a sacrifice of financial capital for social impact. In our experience, it is no sacrifice. In fact, each of our impact investments has generated a triple bottom line made up of:

• environmental and social returns, by contributing to solutions in inspiring ways;
• learning returns, including deep insight into market gaps, opportunities, and private-sector solutions; and
• financial returns, meeting a targeted goal that meets our fiduciary standards.

Impact investing enables funders to align more of their assets with their philanthropic goals. Most foundations are required by law to distribute five percent of their investment assets each year; through impact investing, they can leverage the other 95 percent to further advance their missions. Additionally, funders can feel assured that their endowments are furthering their grantmaking strategies, rather than working against them.