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The Russell Family Foundation moved most of its endowment to impact… and outperformed its benchmark

The Russell Family Foundation’s journey to align its $141 million endowment with its philanthropic mission began with a contradiction: Does an environmental foundation undermine its grants to improve water quality by investing in businesses that pollute local waterways?

The inquiry jump-started a process that led the foundation to embrace a role as an investor, asset owner and shareholder seeking to protect the environment and empower local communities in the Pacific Northwest and Puget Sound. As the foundation has achieved nearly 75% alignment over the last five years, the mission-aligned portfolio outperformed its benchmark by nearly 3%. A snapshot of the portfolio:

  • Positive tilts. About $61 million of the foundation’s mission-aligned portfolio is invested through positively screened low-carbon portfolios managed Aperio Group, Breckinridge and SNW Asset Management.
  • Impact and place-based funds. The foundation has backed sustainable forestry funds from Lyme Timber and Ecotrust Forests, an affordable housing funds from Jonathan Rose, Agriculture Capital’s sustainable and organic agriculture fund and waste-to-energy projects through the Wastewater Opportunity Fund.
  • First-time funds. The foundation makes higher-risk, potentially lower-return investments with the potential for outsized impact, including in first-time funds. One example includes the Forterra Strong Communities Fund, which acquires land in Seattle and Tacoma considered “at-risk” of market-rate development, and then applies site restrictions to ensure any future development will be community-oriented.  

The Russell Family Foundation joins a growing list of foundations deploying more of their endowments for mission. In March, the Nathan Cummings Foundation pledged to align its entire $443 million endowment with its mission, including fighting climate change and income inequality.

With new pledge, another foundation moves to align endowment with mission

The F.B. Heron Foundation last year announced that it met its goal to align 100% of its approximately $250 million in assets with its mission of fighting poverty. Ford Foundation has carved $1 billion from its $12.4 billion endowment for mission-related investments. The Kresge and McKnight foundations and the Wallace Global Fund are also making mission-related investments from their endowments.

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