Imagine this scenario: you have a strong conviction to protect our planet for future generations and you devote a lot of time and resources to this effort. You spend your evenings and weekends organizing awareness campaigns, clean up efforts, and fundraisers. You sacrifice some bucket list items to send donations directly from your paycheck to organizations that share your conviction.

Now imagine finding out that the organizations you support actually invest into corporations responsible for depleting and destroying natural resources. Moreover, you find out that they have upwards of 20 times their operating costs invested into companies that at-best have nothing to do with their mission and at-worst are actively working against their mission.

This scenario elicits feelings of betrayal, cynicism, nihilism, and disgust. Unfortunately, this scenario is common amongst the majority of endowed foundations. As the Forum for Sustainable and Responsible Investing noted in its 2016 survey of foundations, a “small but growing number of US foundations are investigating or pursuing sustainable and impact investing. They are embracing the notion that in addition to making grants, they can employ investment and shareowner strategies across their assets to help achieve positive societal outcomes and targeted financial returns.”

It’s common for large foundations to have a disconnect between their mission and the means in which it produces income.


It’s common for large foundations to have a disconnect between their mission and the means in which it produces income. Access Ventures is keenly aware of these issues and we believe the disconnect stems from how a foundation thinks about its resources.

What is an endowment and why create one?

An endowment is a financial asset, in the form of a donation made to a non-profit group. Most endowments are designed to keep the principal amount intact while using the investment income from dividends for charitable efforts. Given the context of this journal post, endowments are created by benefactors to sustain the mission and operation of a non-profit organization which reflects the benefactor’s values and passions.

How are endowments traditionally managed?

This is where issues begin to arise between a foundation’s mission and the totality of its operations. It starts with the IRS requirement that a foundation distribute a minimum of 5% of the fair market value of its assets towards its charitable activities. The IRS requirement can, and does, frame how a foundation thinks about its resources.

The prevailing viewpoint is that endowment assets are best utilized when providing the highest-possible return, because it generates the highest-possible dollars for charitable purposes under the IRS minimum rule. We call this the two-pocket mindset: assets in one pocket are viewed strictly as income-generating, while the other pocket gets the feel-good money for philanthropic purposes only. Mathematically this is fine; practically, it leads to missional conflict. In the pursuit of maximizing returns, the endowment assets are often invested in companies that are antithetical to the organization’s purpose for existence.

How does Access Ventures manage its endowment?

At Access Ventures, we subscribe to a one-pocket mindset. We believe that all assets pledged to our organization should be used to reflect the values of the organization. Therefore, we actively manage our investment strategies and inspect every dollar for mission fit.

In order to achieve a mission-aligned portfolio, we operate with a network of experts across asset classes to surface high-performing opportunities that meet the investment targets necessary to fund our operations.

We believe that all assets pledged to our organization should be used to reflect the values of the organization.


Does The ‘One-Pocket’ Approach achieve similar investment returns?

In short, yes. For a longer review of this topic, see the Sustainable Reality Report from Morgan Stanley. This is a topic of discussion which requires a paradigm-shift amongst investment advisers before it is settled, which is my way of saying “we won’t conquer it in this article.”

How does the Access Ventures Approach impact culture?

Earlier in the article, I alluded to issues between a foundation’s mission and the totality of its operations. In a two-pocket foundation, the investment work is typically outsourced to managers far removed from the organization. Within the one-pocket approach, the investment work is considered part of the mission of the foundation and very much embedded in its culture.

A tremendous benefit of the one-pocket approach is that our entire team is aware of our investments and the operating thesis which directs them. Each team member brings their perspective on building inclusive economies to the table which better informs how we invest our endowment.

Are there downsides to the Access Ventures Approach?

One outcome of the one-pocket approach is a blurred line between our program work and investment work. Externally there can be a challenge in explaining the difference between an investment in a disruptive technology for the social sector and building an inclusive economy, which leads many to the false conclusion that we are simply an investment company. The flipside impression is that our investments are all designated as “program-related,” which place an emphasis on achieving goals in line with our charitable purpose and ignore financial return.

The downsides of our approach lay with the impression of Access Ventures and do not impede our ability to achieve our goals as an organization. Although the one-pocket approach presents a challenge on how we message our work, we do not let it hinder our desire to share the totality of our operations.

Who else operates like Access Ventures?

Although the one-pocket approach is nascent, there have been some trailblazers. We take inspiration from Omidyar Network and Skoll Foundation. Since we have adopted this philosophy, we have been encouraged to see others, like the Chan Zuckerberg Initiative, follow suit.

Access Ventures invests across a spectrum of asset classes, ranging from program-related investments to market-rate investments. This leads to a blended portfolio approach that is maximized for impact and weighted for return. If you are involved with an organization, foundation, or idea that you believe is an investment that matters and aligns with our mission then we would like to hear from you.

Share your thoughts

TJ Abood

Partner, Investments