Ford Foundation makes $1bn impact investment pledge
The Ford Foundation,the human welfare foundation co-founded by the industrialist Henry Ford, has announced it is to invest $1 billion of its $12 billion endowment in impact investments in the largest commitment of its kind by a private organisation.
The body will begin the 10-year mission-related strategy with an initial investment in affordable housing in the US and access to financial services in emerging markets – areas where it already has significant experience, sees investment opportunity and are aligned to two of its goals, reducing poverty and injustice.
In a statement the Ford Foundation, founded in 1936, described impact investing as a “nascent” field and said its commitment “sends a signal” to other investors that “perhaps the time has come” to consider its potential.
The body will carve out funds from its existing investment portfolio, deploying them over time into funds that seek to earn not just attractive financial returns but “concrete social returns” as well.
“We are making this commitment because we believe MRIs have the potential to become the next great innovation for advancing social good,” said Darren Walker, president of the Ford Foundation.
“We need to expand our imaginations and our tools if we want to tackle the large-scale problems facing the world today. We can’t neglect the tremendous power of markets, including the capital markets, to contribute – and with today’s announcement, we are putting a significant amount of our money where our mission is.”
The Ford Foundation makes between $500 million and $600 million in grants each year, drawn completely from returns on its $12 billion endowment. It has a rich history, with its projects including microfinance, public-private city partnerships, legal aid, support for civil rights and women’s movements, anti-apartheid work and the creation of US children’s TV show Sesame Street.
The foundation also helped create the investment field known as program-related investments (PRIs) – which allow organisation to offer not only grants but also low-interest loans and equity investments to drive social impact in spheres like urban development, homeownership and microfinance.
The body said that its success in managing more than $650 million in PRIs encouraged it to consider making impact investments funded directly from its endowment.
Xavier de Souza Briggs, vice president for the foundation’s Economic Opportunity and Markets program, will head up the impact investing strategy. He said capital will be allocated to established impact funds, not to individual companies.
“No matter the investment, our choices will be an extension of our history of seeking the most innovative ways to promote a more inclusive economy,” Briggs said.
“We are applying what we have learned from PRIs to inform the way we approach mission-related investing. The result, we hope, is to expand and diversify the market for MRIs so that it becomes easier for other institutional investors to invest in ways that consider social impact.”