Endowments and Foundations in a Low Interest Rate Environment
In December 2016 and January 2017, Associated Grant Makers (the regional association of foundations and grantmaking organizations in Massachusetts) partnered with Fiduciary Trust on a survey to research how foundations, endowments and other nonprofits have been affected by the low interest rate environment.
The results of this survey are now out. On June 19, my colleagues from Fiduciary Trust – Joel Mittelman (Vice President, Endowments and Foundations) and Stacy Mullaney (Vice President & Chief Fiduciary Officer) – joined me in presenting findings from the survey which received 236 responses from nonprofit organizations including corporate, family, public and private foundations as well as other nonprofits from across the U.S. From the results, we shared insights on recommended best practices covering areas of fundraising, investing, grantmaking, spending and board governance.
Looking back over the last 50 years, we have been in an unprecedented extended period of low interest rates. Given that we cannot change the circumstances, there are smart, informed ways to move forward – finding strategic approaches to operating in this environment. Particularly for trustees and others reliant on volunteers, sharing best practices and providing informed, professional perspectives can help you be more strategic in your work. Also in this particularly challenging time of low interest rates, there is an even smaller margin for error.
Impact Investing: Toward Impact Consensus
A prevailing narrative has developed that impact investing offers investors pre-defined financial returns. This has many in the philanthropic community confused whether impact investing is about the needs of investors or the needs of the communities which their funding seeks to benefit. Indeed, the more recent debate has framed the discussion as one in which investors attain nothing less than market-rates of return for their impact investments. However, impact investing was originally conceived to improve the lives of others; that impact investing could also deliver financial returns to investors was a means to an end.
For decades, the financial instruments used to improve the lives of people living in poverty included making grants to nonprofit organizations, or possibly offering below-market-rate loans instead of grants to support low-income housing. The microfinance movement dramatically expanded access to credit for people living in poverty. Gradually, new financial instruments coupled with innovative business models could benefit marginalized communities.