Case Study

Mission Investing: A Framework for Family Foundations

In partnership with the foundation, NYU Wagner Social Innovation & Investment Initiative analyzed more than 40 foundation-related investments, and together we developed a MISSION framework to document its impact investing strategy.

Excerpt:

When the foundation started operations in India in 2006, its early programmatic work in education exemplified its focus on quality and commitment to transforming the lives of the urban poor. Through this work, the foundation came to recognize the link between financial stability and increased educational opportunities and started its Family Economic Stability program. The local market was ripe for impact investing because of its robust entrepreneurial culture combined with an opportunity to achieve impact at scale. However, very few investors were willing to take on the risk of developing products and services for the bottom of the pyramid.

The foundation saw an opportunity to increase the penetration of urban microfinance in India and zeroed in on investment, alongside grants and technical assistance, as a tool to catalyze the market. The foundation was an early mover in this space and helped to spur the impact investing movement in the country, using impact investments as a funding tool to address its programmatic priorities. Around this time, the foundation and CARE India commissioned Intellecap, a research and consulting firm, to conduct a market analysis of the urban microfinance market. While most donors were investing in rural microfinance institutions (MFIs), the foundation saw a potential in adapting the group lending model to an urban context and was one of the first investors to take a risk on new ventures serving these customers. Between 2006 and 2011, the foundation invested around $12 million in eight urban-focused MFIs that have collectively impacted more
than 12 million people.

The foundation has unique organizational attributes that have contributed to its successful impact investing work. Some of these attributes have been garnered through experience, while others are inherent within its founding structure as an innovative hands-on partner in the philanthropic space. These attributes include programmatic strategy, geographic context, internal resources, infrastructure, processes, and organizational culture. In combination, these qualities allow the foundation to continue to make successful investment decisions while providing an environment to iterate on key learnings from each new venture.