Catalytic Capital | March 16, 2018

Donor-advised funds move to provide an onramp to impact for smaller investors

The team at


Donor-advised funds have long been seen as effective philanthropic vehicles administered by public charities. Here’s another way to look at these tax-preferred investment products that are designed to do good: an untapped pool of assets that is naturally aligned with the impact investing approach.

Using donor-advised funds is a logical way to accommodate investors and further the goals of aspiring impact investors who aren’t large-scale philanthropists or institutions with billions of dollars at their disposal. The 285,000 individual donor-advised funds nationwide already have more than $85 billion under management, according to the National Philanthropic trust.

ImpactAssets, RSF Social Finance and increasingly others have begun to tap the deep well of philanthropic resources for impact investing. More can be done.


Banks and other organizations are noting annual double-digit percentage jumps in the institutional assets dedicated to impact investing. On a smaller scale, we have seen similar increases in impact asset managers partnering with philanthropic individuals and families to amplify the impact of charitable donations held in donor advised funds. This presents a broader set of opportunities to educate the so-called “mass affluent” segment of the investing public about becoming impact investors.

Through our partnership, ImpactAssets and MicroVest have enabled individuals to invest philanthropic capital side by side with institutions. Donors are helping 13 million micro, small and medium size businesses and individuals around the world build communities and reduce poverty around the globe. Our nine-year partnership has created greater access to deep institutional-caliber impact investing through the ease of a donor-advised fund.

We have proven that we can break down the barriers to impact investing and offer an opportunity for everyone interested to be involved, creating a ripple over a generation and furthering the mainstreaming of impact investing itself.

As more money managers cite increased client interest, we believe it’s time to broaden the opportunity for smaller-scale investors to channel their money towards maximum impact.

Recent revisions to U.S. tax law, and the upfront tax benefits associated with donor-advised funds, suddenly make them even more applicable in furthering the goals of impact investors accelerating the evolution of the impact movement. Donor-advised funds realistically represent the second wave and democratization of impact investing.

Lower minimums

The people we’re talking about are wealthy enough to make meaningful charitable gifts, but aren’t putting millions of dollars into their own private foundations. Many of the funds furthering the broad objectives of impact investing require minimum commitments of $250,000 to $500,000.

Donors who’d like to channel philanthropic dollars into deep impact investment objectives can do so at much lower minimums at some donor-advised funds.

ImpactAssets, for example, has cut the minimum investment for its roster of private debt and equity impact funds from $25,000 to $10,000. The changes are designed to break down the barriers to deep impact investing for donors within the ImpactAssets Giving Fund, its donor advised fund.

ImpactAssets Drops Investment Minimums and Fees on Private Debt and Equity Impact Investment Options, Adds New Funds

We see potential in channeling the promise of donor-advised funds to multiply the impact of thousands of individuals who seek to be impact investors and harness that potential to have wider, better funded and more lasting positive effects.

The flexibility offered by donor-advised funds also allows for diversification, using a range of investment strategies, liquidity, time horizon and asset classes, because, after all, the investing portion of the impact investing proposition is what fuels the movement’s success.

We hope with investments in donor-advised funds, people with limited capital, but dedicated interest in positive change, will be able to get involved in impact investing and continue doing good work. The urgent need for constant capital flows to address pressing global challenges like poverty and climate change shows no signs of abating.

Disclaimer: This document is being distributed for information purposes only. This does not constitute an offer or a solicitation to purchase or sell any security, and nothing herein should be construed as such.