12.09.20233 min
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What is the financial strategy of foundations?
Foundations are little communicative about their financial strategy. A survey carried out by the Amadeis Cabinet in 2020 in collaboration with the Centre Français des Fonds et Fondations found that only 9% of French foundations publish information on how they manage their financial assets.
The same study also mentioned that only 22% of the foundations surveyed had invested their portfolios in ESG-labelled "responsible" assets. This figure may come as a surprise, but it is likely to have risen sharply in the next survey, thanks to the European Green Deal.
Strategy aimed at social impact
In contrast, some foundations, such as the Daniel & Nina Carasso Foundation (a French-Spanish foundation), do address the financial management of their assets that they consider to be assets in the interest of their mission. Not only does the foundation award grants to projects that are often accomplished through an association, it also uses its funds to financially support companies and startups with a mission through impact investing.
For such investments, it is usually a specialized impact fund that serves as an investment vehicle (less liquid and sometimes riskier than investments in financial investments), but there are other possibilities. Indeed, it is also possible to acquire shares in social impact companies (rarer), subscribe to social impact bonds (also called social contracts) or take out loans at reduced or even zero rates¹.
By 2019, the Daniel & Nina Carasso Foundation was already aiming for 15% of its portfolio to pursue an impact investing strategy in line with the Foundation's mission, as described in its impact investment report².
In the Anglo-Saxon world, this impact objective is well established. British foundations, for example, are required by law to reserve 3% of their endowment for impact investments under the so-called Program Related Investments (social investments by charitable foundations that also seek a financial return for the achievement of their social purpose³).
The Coalition française des fondations pour le Climat (CffC), an initiative of the Centre français des fondations et fonds de dotation (French Center for Foundations and Endowments), has published a series of documents⁴ designed to help foundations find the right tools to invest their funds intelligently, for the benefit of both the foundation and society.
In Belgium, the King Baudouin Foundation also emphasizes the sustainability of the financial assets selected, as well as the possibility of using part of his capital to make investments with a social impact. These are always investments whose social impact takes precedence over any financial return.
For such investments, it is usually a specialized impact fund that serves as an investment vehicle (less liquid and sometimes riskier than investments in financial investments), but there are other possibilities. Indeed, it is also possible to acquire shares in social impact companies (rarer), subscribe to social impact bonds (also called social contracts) or take out loans at reduced or even zero rates¹.
By 2019, the Daniel & Nina Carasso Foundation was already aiming for 15% of its portfolio to pursue an impact investing strategy in line with the Foundation's mission, as described in its impact investment report².
In the Anglo-Saxon world, this impact objective is well established. British foundations, for example, are required by law to reserve 3% of their endowment for impact investments under the so-called Program Related Investments (social investments by charitable foundations that also seek a financial return for the achievement of their social purpose³).
The Coalition française des fondations pour le Climat (CffC), an initiative of the Centre français des fondations et fonds de dotation (French Center for Foundations and Endowments), has published a series of documents⁴ designed to help foundations find the right tools to invest their funds intelligently, for the benefit of both the foundation and society.
In Belgium, the King Baudouin Foundation also emphasizes the sustainability of the financial assets selected, as well as the possibility of using part of his capital to make investments with a social impact. These are always investments whose social impact takes precedence over any financial return.
Degroof Petercam Foundation: engaging differently
With this in mind, the Degroof Petercam Foundation (whose portfolio is 100% invested in ESG funds with an '8+' rating according to SFDR regulations) decided in 2021 to allocate 15% of its portfolio to unlisted impact investments. An investment committee has been set up within the foundation to manage and monitor the rollout of this new investment portfolio, in which impact has an important place. For example, the Degroof Petercam Foundation has subscribed to the social impact contract of Duo for a Job (winner of the foundation's 2019 award) to finance the further development of that association in France. For the foundation, this is a way to engage through means other than pure donations.
For more information about the Degroof Petercam Foundation and our financial strategy, please consult our Activity Report 2022.
For more information about the Degroof Petercam Foundation and our financial strategy, please consult our Activity Report 2022.
¹ Programme Tiina
² fondationcarasso.org
³ spzlegal.com
⁴ fondationetclimat.org
² fondationcarasso.org
³ spzlegal.com
⁴ fondationetclimat.org
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