How do foundations implement mission-related investing (MRI) in the endowment?

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AcadiFi · Accepted Answer

Mission-related investments (MRIs) are endowment investments that target market-rate risk-adjusted returns while aligning with the foundation's charitable mission. Unlike PRIs, MRIs are not below-market — they are standard endowment assets chosen (among market-rate options) for their mission alignment.

Implementation roadmap for a foundation moving from 0% to 20% MRI over three years:

Year 1 (foundation): adopt a board-approved MRI policy statement defining mission themes (e.g., climate solutions, affordable housing, health equity), governance, and return expectations. Establish that MRIs must meet the same risk-adjusted return bar as comparable traditional investments, not a discounted hurdle. Conduct a portfolio review to identify existing mission-aligned holdings (perhaps 3 to 5% are already implicitly MRI).

Year 2 (build): allocate 5 to 10% across 3 to 5 new MRI vehicles. Examples for an environmentally-focused foundation like Silverbrook Trust: a climate-tech growth equity fund, green muni bonds, sustainable timber partnership, community solar debt fund, regenerative agriculture private credit.

Year 3 (scale): target 15 to 20% MRI with multi-vintage private market commitments. Pair with public-market ESG-integrated mandates in equities and fixed income.

Measurement challenges: MRI impact must be assessed distinctly from financial return. Foundations like Heron, MacArthur, and Kresge publicly report impact metrics alongside financial performance. CFA exam point: MRIs do NOT count toward the 5% payout because they are market-rate investments, unlike PRIs which do count.

How do foundations implement mission-related investing (MRI) in the endowment?

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