Impact Investing and the Casey Foundation
![A designed image of people standing atop a piggy bank putting in coins from ladders and people seated atop a platform working at a desk. A lightbulb sits above them, hovering in the sky, and a female sits on a stack of books on the ground below.](https://assets.aecf.org/m/blogimg/_largeHeader/539221/Blog_whatisimpactinvesting_2024.jpg)
Impact investing is a type of investing that uses capital from a philanthropy’s endowment to achieve both a social and financial return. The Annie E. Casey Foundation uses part of its endowment to advance its mission of ensuring that all children and youth in the United States have a bright future. Complementing the Foundation’s grants budget, Casey’s impact investments increase the financial resources available to improve the life trajectory of young people through their educational, economic, social and health outcomes.
Like the Foundation’s grants, impact investments are expected to create measurable results for children, families and communities; combine effectively with funds from other investors for this purpose; or influence policy, practice and systems. Unlike grants, impact investments are expected to provide a financial return, which can be recycled into additional mission-aligned investments.
The Casey Foundation made its first impact investment in 1998. Since 2015, the Foundation has allocated 4% of its endowment for impact investments, which range in size from $500,000 to $10 million each. To date, the Foundation has made 111 impact investments totaling $232 million.
What Are the Impact Areas for Casey’s Investments?
The Foundation’s impact investments advance its mission to strengthen families, build stronger communities, ensure access to economic opportunity and promote racial equity and inclusion. Recent areas of focus, for example, include increasing access to affordable, quality housing and developing pathways for parents to become financially stable and be able to support their children’s healthy development and academic success. The Foundation’s impact investments in these areas have financed more than 10,000 affordable housing units and created more than 36,000 quality jobs.
What Are the Casey Foundation’s Investment Types?
Investments are categorized in two ways:
- mission related, when the Foundation determines a strategy is likely to deliver targeted social impact and a market-rate financial return; or
- program related, when potential impact outweighs the likelihood of achieving a below-market financial return.
Who Receives Impact Investments?
The Casey Foundation typically invests through financial intermediaries, taking advantage of their expertise across sectors and geographies. More than a third of the Foundation’s impact investees are Community Development Financial Institutions (CDFIs), which provide credit and financial services to small businesses, affordable housing developers and other entities serving low-income communities. Like Casey’s grants, impact investments are identified by staff, and unsolicited proposals are not accepted.
Examples of the Casey Foundation’s investees include:
- Ignite Capital invests in entrepreneurs of color who typically cannot obtain traditional bank loans or venture capital funding.
- The Atlanta Neighborhood Development Partnership develops, finances and advocates for affordable housing that promotes racial equity and healthy communities.
- Coastal Enterprises, Inc., a large Maine-based CDFI, makes investment decisions based on its Good Jobs Framework, which has three key features: living wages, basic benefits and a fair and engaging workplace.
- Scale Link, formerly known as the Entrepreneur-Backed Assets Fund, helps CDFIs strengthen their capacity to lend to small businesses owned by people of color and people in low-income communities.
- Mission Driven Finance, a San Diego-based firm that combines philanthropy with traditional investing, has developed Care Access Real Estate, a real estate investment trust that is increasing the availability of affordable, quality child care and building community wealth.
The Casey Foundation and the Field of Impact Investing
The Casey Foundation is part of a growing global community of investors employing a wide range of investment strategies to achieve a social or environmental impact as well as a financial return. These investors include foundations, financial institutions, governments, family offices, other organizations and individuals. The global market for impact investments totals $1.2 trillion, according to the Global Impact Investing Network (GIIN), a nonprofit dedicated to increasing the scale and effectiveness of impact investing.
The Foundation has supported the growth and development of impact investing, promoting best practices and filling knowledge gaps. GIIN and the Mission Investors Exchange, a network of foundations dedicated to deploying capital for social and environmental change, receive funding from the Casey Foundation.