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A Look at Impact Investing

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A trend among some funders at the national, regional & local level is the adoption of impact investing strategies. Foundations and large funders still provide grants, but are blending the “investment” model with traditional grants.

=>see below for a list of Impact Investors in MN

The investment portion aims to produce both financial returns and positive societal change, aligning their capital with market-driven solutions. This shift is largely driven by the desire for sustainable, long-term impact where capital can be reinvested rather than distributed as one-time grants. Some funders see private capital and market mechanisms as more efficient in driving social change compared to traditional charity models. Furthermore, impact investments often come with defined metrics, allowing for greater accountability and transparency in tracking results.

The rise of blended finance models also allows funders to use their capital as catalytic funding, leveraging private sector investments through mechanisms like loan guarantees and program-related investments (PRIs). Regulatory and tax considerations further encourage this shift, as impact investing offers foundations flexible financial options, especially with mission-related investments (MRIs). Foundations embracing this shift include the Ford Foundation, which has committed $1 billion to mission-related investments in areas like affordable housing, and the Rockefeller Foundation, which focuses on climate resilience and healthcare through impact investments. Other prominent foundations, such as the MacArthur Foundation, Kresge Foundation and Omidyar Network, have also committed significant funds to impact investing in sectors like housing, climate solutions, and economic empowerment.

It is important to clarify a funder’s approach—whether they are offering grants, investments, or a blend. Asking about the funder’s expectations for financial returns and reviewing past funding models can provide insight into their approach. Adapting your language to focus on scalability, sustainability, and return on impact can make your proposals more appealing to impact investors.

Here’s a list of Key Impact Investors & Funds in Minnesota

  1. Blandin Foundation focuses on rural impact investing in economic development, broadband expansion, and community resilience. Uses program-related investments (PRIs) to support rural businesses and social enterprises.
  2. Otto Bremer Trust uses mission-aligned investments (MAIs) and grants to support economic development, community resilience, and racial equity. Provides low-interest loans and direct equity investments. 
  3. Bush Foundation provides social impact investments, grants, and program-related investments (PRIs). Focuses on Native communities, leadership development, and community innovation.  
  4. Cogent Consulting & Wealth Advisory is a Minneapolis-based impact investing and ESG consulting firm. Works with investors looking to align their portfolios with social impact goals. 
  5. Community Reinvestment Fund, USA (CRF) is a  Minnesota-based CDFI (Community Development Financial Institution) providing impact investment opportunities. Funds small businesses, affordable housing, and community infrastructure. 
  6. Great Plains Institute (GPI) supports clean energy and sustainable infrastructure projects. Helps investors identify opportunities in renewable energy and climate solutions.  
  7. Local Angel Investor Networks (with Impact Focus) is a Twin Cities Impact Investing Network: Connects investors with mission-driven startups. Gopher Angels invests in Minnesota-based businesses, including social enterprises.
  8. McKnight Foundation is one of the largest impact investors in Minnesota, allocating $500 million of its endowment for impact-focused investments.  Funds clean energy, economic development, and racial equity initiatives. 
  9. MEDA (Metropolitan Economic Development Association) provides capital and investment support for minority-owned businesses in Minnesota. Offers loans, venture capital, and technical assistance. 
  10. Minnesota Impact Investing Initiative (MI3):  A collaboration between the Minnesota Council on Foundations (MCF) and financial institutions to invest in projects that generate both social and financial returns. Focuses on affordable housing, small businesses, and environmental sustainability.
  11. Mortenson Family Foundation invests in climate change solutions, racial equity, and local communities. Provides grants and mission-related investments (MRIs). 
  12. Northwest Area Foundation invests in Native American communities, racial equity, and economic justice. Provides grants and impact investments for economic mobility. 
  13. The Jay & Rose Phillips Family Foundation of Minnesota supports economic empowerment, racial equity, and workforce development. Uses grants and impact investments to create sustainable community change.  
  14. The Saint Paul & Minnesota Foundation engages in impact-first investments to strengthen local communities. Focuses on racial equity, affordable housing, and economic opportunity.  
  15. Social Impact Strategies Group (SISG) is a woman- and BIPOC-led impact investment firm focused on funding local businesses and social enterprises in Minnesota.

Are you interested in learning more about impact investing? Drop us a note — [email protected]. and let us know what you want to know and how it fits into your work.

Trends In MN Arts Funding

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Top Trends by the numbers in MN Arts Grantmaking

  • The overall # of arts grants rose by 844 from 2018 to 2021, then declined.
  • 2019 and 2020 were High Water Marks, almost every area of arts funding then declined from 2021 to 2022
  • General Operating Support grants in the arts increased by 1,100 grants from 2018 to 2021 but also declined in 2022
  • Grants for “BIPOC” arts is consistently around 20% of total arts giving.

Key Takeaways

  • Performing Arts grants declined by more than 1,000 from 2019 to 2022
  • While General Operating grants went up, Arts Education grants declined.
    • Some arts groups used Education as a substitute for Gen Op, is there a correlation?
  • A closer look at BIPOC arts grants is revealing. For example, in 2021:
    • Total # of BIPOC arts grants: 825
    • # of grants to BIPOC-led groups: 515
    • Latin, African Descent & Asian American arts groups are particularly under-represented in Minnesota arts grantmaking. (See specific tables below.)
  • Cultural Awareness grants are a relatively new area of arts grantmaking, growing from 80 grants in 2014 to 273 in 2022.
  • Surprisingly, grants for Visual Arts nearly doubled from 2018 to 2022.
  • We imagined Arts Services grants would go up during Covid, but they declined by nearly 200 grants in 2020
  • Grants to Museums declined by 201 grants from 2018 to 2022. Certainly, Covid affected this but grants did not recover in 2022. Dominance of a few museums did decline. A ratio of 6 grants for every recipient in 2018 to 4 grants for every recipient in 2022.

All Arts Grants in MN 2018-2022

(Source: Foundation Directory Online)


Grants by Interest Area & Race-Specific Arts

10 Words and Phrases You Should Never Use

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An advice piece in the Chronicle of Philanthropy goes after “Philanthro-speak” which often means one thing to a foundation program officer and another to people outside that bubble.

Here are a few terms — suggested by the CP staff as well as nonprofit leaders and communications experts — that may alienate or confuse rather than inspire:

Asset mapping
This is a popular term in community-development work. “Asset mapping,” explains the Local Initiatives Support Corporation on its website, “is a capacity-focused way of reimagining the place-making practice around the strengths and gifts that already exist in our communities.” More simply, the phrase describes the process of cataloging a community’s strengths and resources. A derivation perhaps more confusing: “asset-based framing.”

Best practice
The phrase was first found in Scientific American in the 1920s, according to the Oxford English Dictionary, and burrowed into the business and management consultant fields in the 1980s. It since has migrated to medicine, government, education, and the philanthropy and nonprofit worlds. The problem, experts say: Something is best practice only until research finds something else is indeed better. The phrase also encourages standardization — a one-size-fits-all approach that fights against the philanthropy trend captured by another buzzword: “participatory grant making,” in which communities or individuals closest to a problem are the ones that decide what’s best.

Bridge building
Words from the design or construction fields — including “scaffolding” and “infrastructure” — suggest that philanthropists are expert planners. “Bridge building implies an architecture designed to bring things together that weren’t intended to be together in the first place,” Dean-Coffey says.

Concretize
An authority no less than the Allied Grant Writers advises grant seekers to “concretize your overall idea of a project.” Dictionaries confirm it’s a word — the OED says it dates to the 1800s — but a more user-friendly piece of advice might be: “Offer details to illustrate your project.”

Ecosystem
National Geographic Society, the venerable nature and science nonprofit, calls an ecosystem a “geographic area where plants, animals, and other organisms, as well as weather and landscapes, work together.” Nonprofits often use the term to describe the set of relationships between groups in a network of organizations. The result can be quite confusing. When Deloitte Consulting’s Monitor Group identified 45 roles for community philanthropy organizations, it included those “proactively planning for the long term,” some “building collaboratives,” and others “managing formal collaborations.”

Impact
It’s probably one of the most seemingly benign yet most overused words in philanthropy. Every program officer wants their grants to result in change. But “impact” is something that happens to something; it suggests, for instance, that a community working with a foundation has no role in its betterment, says Jara Dean-Coffey, director of the Equitable Evaluation Initiative, an effort to redefine how foundations determine grant results.

Meteors make impact. Teeth get impacted. The word is “violent, nonconsensual, and not fair,” she says.

Leverage
Tony Proscio, a retired consultant to large foundations, says that too often,  philanthropy leaders use fancy words from other fields that shroud what they really mean. “Leverage,” which is borrowed from the financial world, is “the one I despise the most.”

Socialize
Foundations sometimes say they need to “socialize” a big idea — shorthand for testing whether the people they want to help will embrace the concept. Merriam-Webster’s third definition — “to organize group participation in” — might be appropriate, but the word can strongly suggest training others in established values and habits — in other words, bending others to norms.

Systems change
This phrase typically describes efforts to “tackle the root causes” of a societal issue, not the symptoms. But it’s so dense with connotations that Rockefeller Philanthropy Advisors even wrote a “topic brief” to explain the term (complete with an infographic). Ambitious grant makers reach for “systems transformation.” And when change efforts grow complicated, they require an “orchestration mechanism” to coordinate parties involved.

Theory of change
The authors of a 2004 study commissioned by the Annie E. Casey Foundation suggested that without a theory of change — that is, a plan for how to solve a problem — nonprofits and the people they serve are vulnerable to “wandering aimlessly.”

Enter a foundation, which will present a plan, packaged as a theory of change. Barriers to change will be identified, partners in the work engaged, money will be well spent, and the problem will be managed. But the term suggests a single answer to a problem and a prescriptive approach.

ChatGPT in Philanthropy: Useful?

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A number of recent articles have covered artificial intelligence gone awry: Microsoft’s AI’s strange declarations of love. ChatGPT’s inaccuracies. Midjourney’s odd human portraits with too many fingers and too many teeth. And worse, accusations of plagiarism from both human and AI.


But could ChatGPT in Philanthropy be a Useful Tool for Philanthropic Writing?

Here’s One Way it could: Breaking Writer’s Block

There are certainly a whole host of questions to consider and issues to address when it comes to this newest technological advance. However, there is a useful and ethical way to use the technology for writing purposes, specifically in the philanthropic sector: brainstorming.

You may be familiar with the feeling of blank-page-anxiety. That feeling you get when you have a prompt and a flood of information in your head but no way to funnel that information onto paper. ChatGPT is a powerful tool to bridge that gap.

Create ChatGPT account > Get acquainted > Give a command for a response > Ask bot to revise> Make it your own

Step 1: To use the chatbot you’ll need to first make an account on OpenAI. Using ChatGPT is currently free, although there is an option to purchase a Pro account subscription where you get priority access to the chatbot when it’s overloaded with use and unavailable to free use.

Step 2: Get acquainted with the chatbot. It can be a bit daunting at first and you might not know what to ask. The best way to start is with a question or a command. You could ask, for example, what the Bill & Melinda Gates Foundation does. Then perhaps command the chatbot to write a paragraph about the efficacy of mosquito nets. Really get into the brainstorming mindset here.

Step 3: Once you have an idea of the functionality, you can start asking the real questions.

Say for instance you’re writing a grant proposal for a program that would increase pollinator habitats in cities and you’re stuck on that first large daunting question: What is the goal of the project/program?

I asked this very question and received a moderately acceptable response.

Not the worst response, but it could use a bit of pathos and a bit more specificity. The situation might also occur where you forgot a key piece of information or the chatbot didn’t give you exactly what you’re looking for.

Step 4: Ask the chatbot to revise. A useful function of ChatGPT is its ability to learn within the current conversation. If the chatbot didn’t answer the question quite the way you wanted, you can tweak the language or ask it for something specific.

In this example, I asked the chatbot to add an example of a city that is designated as a “Bee City” in the paragraph it had generated.

Step 5: Revise. You may notice the AI also uses certain phrases much more commonly than others, making it sound a bit stiff and a bit one-voiced. These traits are generally unappealing in grant applications or website descriptions; both of which are common time-consuming writing tasks in philanthropy. At the end of the day, you can likely write a more specific and targeted response than the chatbot can, with better pathos. The response is just your starting point.

Say I decide that actually, the first response was a better fit for the direction I want to go in. I might revise it to:

Urban development and other human activities have led to a decline in pollinator populations (bees, butterflies, and the like), exacerbating issues of health and wellness. However, by increasing pollinator habitats in cities through our program, “Save the Pollinators,” we can support the health of the entirety of urban and rural ecosystems, human and nature, through the process of acquiring land and developing land into pollinator-friendly green spaces. Pollinators play a crucial role in maintaining the health and productivity of these ecosystems specifically by aiding plant reproduction. In urban ecosystems this means an abundance of flowers and lush green plants which increase the urban beauty, aid in the mental health of residents, and increase overall the temperature regulation of the area. In rural ecosystems, this means stabilized food production of croplands and an aid in the strengthening of the entire ecosystem, from insects to apex predators. In addition to these benefits, increased pollinator habitats can improve air and water quality and reduce soil erosion.

In this new paragraph, I saved those green highlighted lines but shifted everything else to include some more pathos-centric words and specificity as well as more firmly solidifying a problem-solution narrative. For example, using “urban beauty” and “acquiring land and developing that land.” Had I needed to write this paragraph wholly unaided, it may have taken me a good 30 minutes to complete, needing to go through the task of brainstorming and listing and condensing. With the ChatGPT generated response, I finished in 15 minutes flat, cutting my time in half.

Limitations to remember here: the chatbot won’t have any knowledge of something that doesn’t exist yet, or likely personal details of your organization. In fact, at present, it has limited knowledge of events that occurred after 2021 due to its training data ending in that year.

It also has the ability to make incorrect information sound factually plausible. For example, I asked the AI how many countries start with the letter “v.” The first answer, “There is only one country that starts with the letter “V,” and that is Vietnam,” obviously did not cover every country. I tried again: “There are only two countries that start with the letter “V”: 1. Vanuatu 2. Vatican City (officially known as the Holy See).” Venezuela is nowhere to be found. So that information on Bee Cities? Worth a fact-check.

Examination of environmental grantmaking practices reveals disparities

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“Examining Disparities in Environmental Grantmaking: Where the Money Goes” examines the environmental grantmaking practices of 220 foundations that distributed more than 30,000 grants totaling $4.9 billion that were distributed over three years. 

The study, conducted by Yale School of the Environment professors Dorceta E. Taylor and Molly Blondell,  reveals disparities in environmental grantmaking that are related to region, the size of the grantees’ revenues, the sex and race/ethnicity of the grantees’ chief executive, and the type of organization being funded. 

The study also found that environmental justice organizations and those focused on people of color were at a disadvantage in the number of grants received and the grant dollars they were awarded.

The report argues that foundations must identify inequities in their practices and develop more equitable grantmaking processes.

Below is a copy of the Report’s Summary

Download the Report

  • Foundations are unevenly dispersed across the country, as is the funding awarded to grantees.
    The Northeast region has the densest concentration of foundations (87 were based there). However, most grants and grant dollars originated in the Pacific region; the Northeast region was second.
  • About 60% of the grant dollars originating in the Pacific region are awarded to grantees in that region. A similar percentage of the grant dollars generated in the Northeast stays in that region. Roughly 29% of the grant dollars generated in the Midwest stay in that region. The pattern reverses itself in the South-Central and Mountain regions. Most of the grant dollars generated in the Mountain and South-Central regions are sent to grantees in other regions.
  • The fewest foundations were based in the South Central and Mountain regions. Moreover, the two regions generated the fewest awards and the lowest grant dollars. The fewest grants were also disbursed to grantees in the two regions.
  • The study also found that foundations tended to fund organizations in their home state. Since most of the foundations were located in California, most of the grants and grant dollars originated in that state. Most of the grant dollars ended up going to California.
  • At a micro-scale, there is an urban bias to environmental grantmaking. That is, grantees in large cities and cities with dense clusters of foundations receive the most awards and the heftiest grant dollars. Ergo, the most grants and the highest grant dollars were generated in New York City. San Francisco was second in both categories.
  • Organizations’ revenues matter in their ability to attract funding. Foundations prefer to direct funding to organizations with significant revenues. Consequently, more than half of the grant dollars go to organizations with revenues of $20 million or more. Organizations with revenues under $1 million receive less than 4% of the grant dollars.
  • Funding to organizations was so lopsided that several environmental organizations obtained more funding than all the environmental justice organizations combined. For instance, the Sierra Club received more than $200 million in grants, almost five times what all the environmental justice organizations combined received.
  • Large mainstream environmental organizations are active participants in the process of hyper-concentrating grants. They have grant-writing teams that apply for many grants and build robust funders networks. They typically have scores of funders they rely on for grants. In contrast, smaller organizations tend to have fragile funding networks with few funders.
  • The organizations studied were split into 59 categories and two tiers. The 14 categories constituting Tier I received 64% of the grants and three-quarters of the grant dollars. Natural resources and conservation protection organizations were the most prolific grant-getters. The 45 categories of Tier II organizations received a mere 25% of the grant dollars. In other words, they received fewer grants that were smaller in size.
  • Foundations preferred to fund organizations working on the following issues – conservation, education, energy, ecosystems, and water resources. Though foundations lavished funding on these core topics, philanthropies also funded other issues such as social inequality, justice, empowerment, Indigenous rights, environmental justice, disaster preparedness and relief, housing and homelessness, food assistance and food insecurity, faith and religion, movement building, voter mobilization, workplace and workforce issues, and institutional diversity.
  • General support grants, highly coveted by grantees, were awarded frequently. However, over 80% of the general support grants went to White-led organizations. Moreover, less than 10% of the general support grants go to organizations focused on People of Color.
  • Male-led organizations obtained about 54% of the grants and more than two-thirds of the grant dollars. White-led organizations obtained more than 80% of the grants and grant dollars. Hence, White-male-led organizations received the most grants and grant dollars. White male-led organizations obtained about 48% of the grants and roughly 61% of the grant dollars awarded.
  • Though 56% of the foundations funded organizations primarily focusing on People of Color, less than 10% of the grants and grant dollars go to such organizations. Female-led organizations were more likely than male-led organizations to focus primarily on People of Color.
  • Roughly 46% of the foundations supported environmental justice organizations. People-of-Color-led environmental justice organizations obtained 71% of the grants and about 77% of the grant dollars.

2023 Lean Foundation Operations And Management Report

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Exponent Philanthropy is an association of mostly small funders- private and community foundations with few or no staff, philanthropic families, and individual donors.  The group surveys its membership to understand and share how lean funders are managing their foundation operations. About a quarter of their members responded to the 2022 survey.

  • 35% said racial equity is very relevant to their mission, this was particularly the case in board membership. (Defined as “the systematic fair treatment of people of all races that results in equitable opportunities and outcomes for everyone.” )
  • Less than 5% reported implementing any type of strategy to promote disability inclusion.
  • 73% have paid staff of some kind, with 72% having between one and three paid staff members.
  • On average, 65% of full-time staff identified as White women; 15%, as White men; 5%, as Latina; 5%, as African American women; and 4%, as Asian women.
  • 89% of board members identified as  White; 4%, as Black or African American; 3%, as Asian/Pacific Islander; 2%, as Latinx; and 1%, as Multiracial.
  • 68% reported having no BIPOC board members. The percentage of foundations with no BIPOC board members has significantly decreased over time.

Most Important Challenges Facing the Foundation  

  1. The board is not considering succession.
  2. The need for a greater focus in grantmaking
  3. Lack of long-term asset growth

Top 11 Trends in Philanthropy For 2023

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The Dorothy A. Johnson Center for Philanthropy’s  Top 11 Trends in Philanthropy For 2023 includes:

#5 New Organizational Structure Models Toppling the Staff Pyramid. “Today, nonprofits are increasingly embracing non-traditional structures such as co-leadership, co- or multi-executive directorship, worker self-direction and fiscal sponsorship as opportunities to create more sustainable and mission-driven programs.”

#10: IRS Delays and Other Barriers to Data Mean Real Risks for Nonprofits. Siting staffing problems at the IRS, and the pandemic, The Johnson Center quotes Candid reporting that “for 990s filed for tax year 2019 and later, the processing delay for most organizations is now well over 36 months.” Other data concerns include the lack of information about communities and populations served by specific nonprofits and the dependence on private giving at most organizations that track philanthropic data. The report does not ask how much transparency should reasonably be mandated of 501(c)(3) organizations, nor does it question whether nonprofit data-gathering should be handled by an agency of the federal government.

 Link to a summary of Johnson Center  the list

About Those 990PFs…

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Many funders don’t have a website, this is especially true with small family foundations. So, the 990PFs are often the only source of information about them.* Foundations must submit tax reports to the IRS every year. But lately… well, according to Candid (fka Foundation Directory Online), “before the pandemic, Candid usually received comprehensive IRS 990 data about nonprofits and foundations about 1.5–2 years after the close of a given year. After 2020, the time lag is closer to three years.
Reasons include:

  • Thousands of filing organizations are requesting extensions.
  • The growth of 990PF filers.
  •  The IRS is understaffed and going through 990 process changes.

Johnson Center for Philanthropy Reports:
IRS Delays and Other Barriers to Data Mean Real Risks for Nonprofits – Mandatory electronic filing of all 990 tax forms after July 19 has made every field on those forms accessible electronically. The pandemic, however, has caused considerable delays in the IRS release of this data. The Johnson Center report notes, “In September 2022, Candid reported that for 990s filed for tax year 2019 and later, the processing delay for most organizations is now well over 36 months.” Other data concerns include the lack of information about communities and populations served by specific nonprofits and the dependence on private giving at most organizations that track philanthropic data.

*This delay makes it tougher to gather information, so AP has expanded our personal phone and email outreach to foundation personnel and we’re using more foundation website and even Google searches to fill in the blanks