Impact Investing and the Casey Foundation

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: 

1. mis­sion relat­ed, when the Foun­da­tion deter­mines a strat­e­gy is like­ly to deliv­er tar­get­ed social impact and a mar­ket-rate finan­cial return; or 
2. 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.