Companies Can Invest in Charities and Make Money, Report Says

Investing for Impact: Managing and Measuring Proactive Social Investments, by Mark Kramer and Sarah Cooch, studies ways a company can pour money into environmental or human-service organizations while staying true to its corporate mission. Commissioned by the Shell Foundation, this report reviews the performance of loans and other types of investments in charitable enterprises, including bonds and deposits, guarantees to consolidate debt, and venture-capital investments. For example, the F.B. Heron Foundation loaned $500,000 over eight years to the Community Loan Fund of New Jersey at a 3-percent interest rate. The foundation was able to receive a small rate of return and the nonprofit group built 2,500 child-care centers for low-income families at a lower interest rate than any commercial bank would offer. While foundations rarely support nonprofit organizations in that way, the authors note that the portfolios they reviewed that use this method of supporting charities often performed as well or nearly as well as more traditional investments. They conclude: “Social investors need not sacrifice reasonable financial returns to achieve social goals.”

Publisher: Foundation Strategy Group, 20 Park Plaza, Suite 320, Boston, Mass. 02116; (617) 357-4000; fax (617) 357-4007; http://www.foundationstrategy.com; 60 pages; $10 for hard copy or free for download on the organization’s Web site.