The Ford Foundation’s recent decision to commit $1 billion of its $12 billion endowment to impact investments was years, even decades, in the making. The move represents the foundation’s long-honed belief that impact investing can build social change. It is also an intentional “signal to other foundation and institutional investors” that now is the time for mission-related investment, the foundation said.
“When you ask me how do you come to this [decision], the roots are quite deep,” Xavier de Souza Briggs, the vice president of the Ford Foundation's Economic Opportunity and Markets program, told Devex. “It begins with trying to solve some tough problems in which the private sector and private capital necessarily play an important role and looking for more flexible ways to stimulate that role.”
The foundation will start with an initial investment focus on financial inclusion in emerging markets and affordable housing in the U.S. — areas that are both priorities for the foundation and offer investable opportunities, fund managers and promising deal flow. Over time as the foundation builds the amount of funds it invests in this way, it will consider about adding additional sectors and make judgements about investment size, among other factors.
All of the funds will be deployed through fund managers and the foundation will not be making direct investments into companies or real estate. And while not driven by profit for its own sake, “we don’t aspire to concessionary returns,” Briggs said. “What we're going to seek is the most attractive financial returns we can subject to a serious test of social impact.”
As a Devex Impact associate editor, Adva leads coverage of the intersection of business and international development. From partnerships to trade and social entrepreneurship to impact investing, she enjoys exploring the role the private sector and private capital play in development. Previously, she has worked as a reporter at newspapers in both the U.S. and South Africa. Most recently, she has been ghostwriting a memoir for a former child slave and NGO founder in Ghana.
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