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Why We Invest

Founded by one of the early leaders of the 3M Company, the McKnight Foundation has innovation embedded in its approach to philanthropy.

Carrying that spirit in 2013, the board embarked on a careful process, asking: What more can our endowment do to further our mission of improving the quality of life for present and future generations?

In 2014, the McKnight Foundation committed to investing $200 million (10 percent of its $2 billion endowment) in strategies that align with McKnight’s mission. These investments generate financial return, meet our fiduciary duty, and drive program learning, all while advancing our mission. We aim to generate a triple bottom line.

Financial Returns

Each investment has a targeted financial return that meets our fiduciary standards. Half of our impact investment portfolio must return in line with standard market expections; another quarter will take slighly more risk, and the remaining quarter will be in program-related investments (PRIs), which are defined by the IRS as non-commercial investments with a charitable purpose.

Environment & Social Returns

Each investment contributes to solving social and/or environmental challenges in inspiring ways. We seek investments that create affordable housing, help build the sustainability of our metro region, increase energy efficiency, promote the distributed generation of electricity, reduce chemical inputs in commercial agriculture, or preserve grasslands and wetlands.

Annual impact reporting provides a more comprehensive picture of the success of the business. We collect data to better understand the critical social and environmental value created by the funds and businesses where we invest. We aim to keep measurement requirements simple, useful, and sustainable.

Learning Returns

Each investment provides deep learning to the Foundation about market gaps and opportunities, as well as private-sector solutions. Investment and grantmaking staff work closely to capture and institutionalize these insights. We hope that market experience contributes to better, smarter grantmaking. In addition, just as we’ve benefited from the knowledge and experiences of others, we see it as part of our mission to share our learning returns.

“Old school thinking asks whether a fund manager can succeed in spite of sustainability consideration. The reality is, it’s possible to find success because of it.”

-ELIZABETH MCGEVERAN, DIRECTOR OF INVESTMENTS
source: “Sustainability Focus, Extraordinary Performance”

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