The New Family Philanthropy: Investing for Social and Environmental Change

August 2, 2013

The impact invest­ing mar­ket­place is gain­ing traction—investment vehi­cles now span asset class­es, infra­struc­tur­al improve­ments are enhanc­ing trans­paren­cy and investor con­fi­dence, and social enter­prise is matur­ing with a new gen­er­a­tion of entre­pre­neurs. On the investor side, indus­try growth is being dri­ven by large insti­tu­tion­al investors such as pub­lic sec­tor pen­sion funds, banks, and pri­vate foun­da­tions. Today, we are also see­ing a grow­ing move­ment by fam­i­lies who seek to real­ize their core val­ues, and effect soci­etal change, through their fam­i­ly assets. This paper focus­es on fam­i­ly invest­ing through fam­i­ly offices and foun­da­tions. Data was com­piled from 17 research inter­views in August of 2012 with trustees and staff of fam­i­ly foun­da­tions and offices as well as invest­ment advi­sors and con­sul­tants. The authors acknowl­edge that the data from this study comes from a rel­a­tive­ly small sam­ple size of qual­i­ta­tive research inter­vie­wees. The paper com­mu­ni­cates themes heard through research inter­views, and does not intend to make defin­i­tive claims based on quan­ti­ta­tive data. Inter­views cen­tered on the fol­low­ing top­ics: (1) the cur­rent per­cep­tion of impact invest­ing among those affil­i­at­ed with fam­i­ly foun­da­tions and offices; (2) the fac­tors that fam­i­lies and advi­sors con­sid­er when decid­ing whether or not to invest for impact, with spe­cif­ic atten­tion to the asset class of impact-ori­ent­ed ven­ture cap­i­tal (Impact VC); and (3) the dis­tinct char­ac­ter­is­tics of Impact VC for fam­ily foun­da­tions and fam­i­ly offices that are com­ple­men­tary. The paper con­cludes with thoughts on strate­gies for the con­tin­ued growth of impact invest­ing among fam­i­lies.

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