Our Approach to Achieving Impact with Investment Assets
November 6, 2015 | Article

"There is a growing and lively debate today about whether and how private foundations should align their investment practices with their programmatic missions. This debate is good for philanthropy. 

As a private charitable foundation, MacArthur’s paramount responsibility is to make the most effective use of its resources for the public good. That responsibility challenges us to periodically revisit our mission, to consider whether our objectives and our approaches are sufficiently bold and effective, and to ensure that we are tackling some of the world’s most profound issues.  

Like many large foundations, MacArthur’s investment portfolio has long been managed to achieve strong risk-adjusted returns that fund our operations and charitable activities over the long-term.  We are fortunate to have a talented investment staff that identifies and selects top-performing investment managers. These outside managers, in turn, deploy the Foundation’s capital across diverse asset classes in pooled funds with many other investors, and the managers subsequently choose the investments. 

In addition, we have a separate, professional in-house team that directly manages a sizeable, dedicated portfolio of impact investments. The primary purpose of this portfolio is to achieve program impact, and it has been an integral, successful aspect of our work for more than 30 years.

Recognizing the rising interest in the topic of foundation investment practices, and in line with our commitment to transparency, we believe it is important to share a description of our investment approach. The Foundation’s Board of Directors is committed to periodically reviewing our practices to ensure that they continue to serve the Foundation’s objectives."


Learn More About Our Approach

The MacArthur Foundation is a mission-driven charitable organization with the overarching goal of bettering the world through its philanthropic activities. It is privately funded, which allows it to operate independently from government or the commercial sector, although sometimes in collaboration with both.

The Board of Directors has the fiduciary responsibility and authority to allocate the Foundation’s assets to best achieve its philanthropic objectives and ensure its assets are managed prudently in accordance with applicable legal requirements.

To maximize its philanthropic impact, the Foundation has chosen to use two methods for the ongoing management of its financial assets. This document describes the Foundation’s model and guidelines for action in cases where there appears to be substantial evidence that an investment involves or facilitates morally abhorrent activity.

Two Methods to Achieve Maximum Impact

A substantial portion of the Foundation’s assets is maintained in an investment portfolio managed by a professional in-house staff largely through the selection and oversight of outside managers. The singular objective identified by the Board for this investment portfolio is to earn a financial return sufficient to support a substantial, stable level of grantmaking and related operating activity over the planning horizon. The Foundation undertakes substantial due diligence in its management selection process, including considering among many factors how a prospective manager approaches environmental, social, and governance (ESG) issues in its practices and choice of investments.

In addition, the Board has allocated $500 million of Foundation assets to an impact investments portfolio managed separately by other professional staff. This portfolio is dedicated to the advancement of the Foundation’s programs and other philanthropic purposes, while also earning a financial return. 

By using these two methods, the Foundation seeks to fulfill its philanthropic mission over the long term. The Foundation can shift assets from the investment portfolio to the impact investment portfolio or choose to rely solely on one or the other as its priorities and programs evolve. 

The Foundation is mindful that there are alternate models for the allocation and investment of assets that a U.S. private foundation may adopt depending on its objectives and needs. The majority of foundations continue to invest their assets solely to achieve financial return, although some have chosen to invest their assets in pursuit of one or more programmatic goals or in broad alignment with an array of social, environmental, and mission-related concerns.

Potential for Conflict

It is possible that an investment made by a foundation may conflict with its program objectives, regardless of the way an investment portfolio is managed. The ability to preempt or resolve such conflicts will vary, however, depending on its particular objectives and key practical constraints, such as investment mode or strategy and portfolio size.

Currently, almost all of the Foundation’s investments in its investment portfolio are made via intermediary funds rather than directly in individual companies through managed accounts. In most cases, therefore, it is not practical or possible for the Foundation to avoid making particular investments by requiring managers to use specific investment screens. In addition, exiting from intermediary funds can result in immediate investment losses to the Foundation and, as with imposing screens, also could limit access to high-performing managers in the future.

Nevertheless, there may be certain cases where financial investments, once made, will be judged by the Board to be sufficiently damaging to the Foundation’s mission that the Foundation should divest from the funds that have in turn made such investments, or from direct investments that might be made in the future should the current approach to managing the portfolio change.


Divestment is never to be entertained to assert policy preferences, censure, or political leverage. The circumstances under which the Board might determine that it should divest from certain investments are where a company or government, in which an investment is made, is engaged in (or provides systematic support to regimes that engage in) morally abhorrent activity such as genocide, apartheid, slavery, or systematic cruelty to humans in helpless situations (many activities that may cause social harm do not descend to the level of being morally abhorrent).

The Board may identify an investment for divestment or the President of the Foundation may bring to the Board a case for divestment from any financial investment where there is substantial evidence that the investment descends to the level of morally abhorrent activity. The case should clearly present the nature of the activity, together with the opinion of the Chief Investment Officer about the financial costs and practicality of divesting.

The Board will consider the case and make a determination consistent with this policy. The determination shall be binding until such time as the Board may decide otherwise.

In the event of such a determination by the Board that an investment should be divested, the Investment Department will present a plan to the Investment Committee specifying how that will be undertaken. Upon approval of the Investment Committee, the divestment plan will be implemented.

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