While others are beating a retreat from climate and diversity commitments, some family offices, pension funds, foundations and other asset owners are standing firm.
Some are dumping asset managers that abdicate their corporate stewardship duties (looking at you, BlackRock). Some are sticking with diversity initiatives and raising climate ambitions. Some are catalyzing local capital to replace disappearing development assistance (see our Pathways to Growth lookahead earlier this week). And some are declaring their purpose as “impact first.”
“People working from the allocator’s seat have the power to reset, to reframe, to suggest what risks are worth taking and which discomforts worth enduring in order to continuously improve and push for better outcomes for all,” said Margot Kane of the Philadelphia-based family office Spring Point Partners.
Spring Point, for example, supports emerging and first-time fund managers investing in underrepresented founders, with an emphasis on community and employee ownership and wealth building, to advance equity and social justice.
To take the pulse of the market as we head into a new year, we reached out to more than a dozen foundations, family offices and institutional investors about their allocations, their portfolios and their strategies.
Many small, as well as large, investors are seeing themselves as long-term, “universal owners” who must be attuned to enduring risks. Runaway global warming and biodiversity loss. Debt crises and wealth inequality. Microbial resistance and pandemics. Disinformation and runaway AI. Systemic risks that can crash their investment returns weigh heavier than stock-picking in determining total portfolio returns, just as shared prosperity can lift all boats (see our 2026 shared prosperity lookahead, “Beyond affordability to ownership, wealth-building and fair gain-sharing”).
Many of these asset owners and allocators, limited partners and providers of debt capital, are bringing social and cultural, as well as financial, capital to bear on impact strategies. And they are increasingly collaborating with peers to amplify their impact (for more, read “These wealth holders are deploying ‘multicapital’ strategies to deepen their impact,” by Kirsten Andersen).
“We’re exploring how LP portfolios can do more than generate impact and returns – they can shape how markets interact with public actors to create meaningful, tangible outcomes for communities,” Gary Community Ventures’ Santhosh Ramdoss told ImpactAlpha. “The biggest theme for us is systemic investing—how impact investing can create durable change, influence policy outcomes, and mobilize large-scale public dollars.”
Ramdoss is looking for distinct, deeper approaches in specific impact themes rather than generalizable strategies. “For example, a homeownership-focused fund that delivers outcomes in a particular way would likely have greater traction than a generic early-stage impact venture fund,” he said.
Likewise, World Education Services, a social enterprise that works with some of the six million students studying abroad, is focused on the unprecedented level of global mobility, with more than 300 million people living outside their country of origin and 117 million people forcibly displaced from their homes. WES’s Smitha Das says her team is working to “activate our multiple levers for impact –portfolio, philanthropy, products, policy, and programs – to meet this moment and advance meaningful impact for our target communities. “
WES is more than halfway to its 2023 pledge to align 100% of its balance-sheet assets with its mission, ramping up its private market allocations, rotating its public-markets portfolio and looking for cash investment opportunities. WES reported $233 million in assets in 2023.
“I am encouraged by how quickly interest in 100% mission-aligned investing is spreading beyond early adopters,” Das told ImpactAlpha. “Now, more than ever, we need to support the movement from an extractive model of capitalism to one that is more just, regenerative, and sustainable and where the needs of all stakeholders are considered.”
The $200 million Sierra Club Foundation “is setting a strong example for other institutional investors by better aligning its assets with its mission and fiduciary responsibility in the face of mounting systemic risks,” Dan Chu, the foundation’s executive director, told ImpactAlpha (see, “Sierra Club Foundation is dumping managers, innovating indexes and embracing ‘system-level’ investing”).
In June, the $200 million Sierra Club Foundation dropped BlackRock’s Aperio unit as an asset manager, citing BlackRock’s “refusal” to address climate risks. Since then, other LPs, including Dutch pension funds PME and PFZW, have followed suit and New York City’s comptroller has recommended a similar move.
Follow the money
The miserable year for fundraising served to obscure the many LPs that continued to deploy capital for impact. Among our many “LP Scans” were the more than a dozen family offices investing in impact and the more than two dozen LPs investing in nature-based climate funds around the globe.
ImpactAlpha tracked more than two dozen limited partners backing “first of a kind,” or FOAK, climate tech funds and two dozen LPs backing impact funds focused on Indigenous communities, and even a half dozen Japanese LPs backing impact funds across Asia, Africa and Latin America.”
Among the 10 sovereign wealth funds deploying billions into climate and infrastructure strategies is New Mexico’s $67 billion fund that is flush with proceeds of the oil and gas assets on state-owned land – and is leaning hard into renewable energy solutions that can bring jobs and development to New Mexico.
“We’re risk positive. This is a time we can go forward, big time,” Bruce Brown of New Mexico’s State Investment Council said on ImpactAlpha’s Agents of Impact podcast. “It couldn’t be a better time for us. You hate to see people being hurt elsewhere, but we’ve got the money at a time when very few people do.”
Impact investors likewise have a contrarian role to play as other sources of financing are withdrawn or constrained.
“With global challenges growing and investors increasingly seeking ways to contribute to social, economic, and environmental solutions, impact investing should demonstrate strong growth — not just in 2026, but over the next 5 to 10 years,” MacArthur Foundation’s Debra Schwartz told ImpactAlpha.
MacArthur, along with Rockefeller Foundation and Omidyar Network, launched the Catalytic Capital Consortium in 2019 to broaden the deployment – and the appeal – of flexible investments that accepts disproportionate risk or concessionary returns in order to to generate outsized impact and crowd in commercial capital that wouldn’t otherwise participate. The consortium has grown to a dozen members, including Ceniarth, Blue Haven Initiative and Builders Vision (disclosure: C3 supports ImpactAlpha’s coverage of catalytic capital).
“Rising interest in catalytic capital is particularly encouraging because it deepens and extends the reach of impact investing overall,” Schwartz said.
The Dublin, Ireland-based Small Foundation has for nearly two decades collaborated with organizations and ecosystem builders on the ground in Africa as part of its mission to alleviate poverty on the continent. Small is also working closely with foundation peers and other investors to advance best practices in catalytic capital.
“Collaboration is deepening,” Small Foundation’s Karina Wong tells ImpactAlpha. “We are leaning into co-learning and co-creation with other investors, and we are working with a wider range of stakeholders than ever before.” (Read Wong’s guest post, ““Why catalytic capital matters now”).
Family matters
Among family offices, a power shift to next-gen family members is spurring increased interest in impact investment. “Impact first” has become a rallying cry for some families willing to break free of traditional “market-rate returns” expectations.
“We continue to think about how we can put our head down and get more money into the hands of those creating real impact on the ground,” said Alex Evangelides of the family office A to Z Impact, who said that after a tumultuous 2025 impact investing is poised for growth next year.
“We hope to continue to see GPs and entrepreneurs and CEOs prioritize impact first and foremost,” he said, “and to see investors and investments that are happy to trade some of the potential financial return for more impact return.”
In Singapore, the Tsao Family Office invests in opportunities in climate action, health and education from experienced asset and fund managers. It is stepping into new, more risky areas as well. This year, it was the first family office to join a roster of development finance institutions to stake London-based TLG Capital’s second Africa Growth Impact Fund, which uses a unique structure to provide dollar-denominated loans to African businesses (for background see, “From Singapore, Tsao Family Office expands the LP pool for impact strategies in Africa”).
“It’s a bit of a risk,” Leslie Lim, who leads Tsao’s fixed-income portfolio, told ImpactAlpha this summer. “But it’s the type of risk the family is prepared to take given the impact focus.”
In Germany, the family office Aurum Impact aims to be a resource for helping next-gen family members get started with impact investing, structure their strategies and bring along other family members. Aurum invests in sustainable materials, climate and energy, natural ecosystems, and solutions such as education and housing that support social stability (see, “Aurum Impact wants more European family offices to invest for impact”).
Miki Yokoyama, who co-founded and manages Aurum Impact, told ImpactAlpha this year that she is on a mission to encourage “more family offices to become more active in impact investing, in thinking about how they can create value with the wealth that they have.”
Ramdoss of Gary Community Ventures said he’s concerned that the slowdown in private-market exits and other headwinds could cause a pullback, hurting managers who are in the market with impact-oriented funds.
“LPs need to step up and play a more active role in collaborative efforts, taking insights from our managers and turning them into systemic outcomes,” he said. “The real benefit of being an LP isn’t just investing in great managers—it’s leveraging those insights to create durable change.”
