The nonprofit Merchants Fund has given out more than $10 million in grants to small businesses facing financial hardship since 2007 as part of its mission to support small businesses and create a vibrant business community in Philadelphia — particularly one that is diverse, with small businesses owned by women, people of color and immigrants.

So it was with some surprise and dismay that TMF’s Executive Director Jill Fink realized, during a presentation in the fall of 2021, that her organization was investing its own money in ways completely antithetical to its mission. In particular, some of the millions of dollars in their endowment was being used to finance things like border detention facilities used to house immigrants the government is trying to deport.

“One of our priorities is to support businesses that are owned by immigrants. There’s a disconnect there,” says Fink, who was nominated for a 2025 Rad Award. “It was a real eye-opener.”

Like other grant-making organizations, The Merchants Fund pools donations and its endowment into stock market funds and other assets intended to ensure the nonprofit continues in perpetuity. And like other foundations, they had long been more concerned about how much growth TMF was getting out of its investments than about parsing exactly how the money was invested. Then Fink saw a presentation from Ty Thiele of Andorra, a financial advisory firm that helps institutions ensure their investments support businesses that have similar goals — or at least aren’t actively working against the nonprofit’s goals.

That presentation spurred The Merchants Fund to divest from companies that conflicted with their values and to adopt an investment strategy that considers what benefit they can have with their endowment, alongside the work they’re doing as a nonprofit. They’re now one of nine Philly nonprofits or foundations over the past three years that have shifted their investment strategy to match their values.

These organizations represent more than $400 million in assets under management, money that is now serving three purposes: growing their endowments, doing good and supporting the local economy.

Putting dollars toward solving, not creating, problems

The idea of using investment dollars to drive social impact has been around for a number of years, but in Philly it really took off in 2015, with the launch of ImpactPHL, a nonprofit that evangelizes impact investing to nonprofits and foundations, but also individuals, family offices and high net worth individuals.

The strategy is part of a broader movement toward impact investing, where investors consider factors like social or environmental benefit alongside a company’s returns when picking their stocks. There are tools, like As You Sow, that help individuals do this with their 401(k)s and some public pensions have divested from various things like prisons or companies responsible for the climate crisis.

For many nonprofits and foundations, the move toward investing with a purpose makes sense intuitively: If you’re trying to eradicate gun violence in the city, why would you invest in weapons manufacturers?

“Envision what would be possible if all that [endowment] money was aligned with mission, because it’s in the public good.” — Cory Donovan, ImpactPHL

“The grants committee is over here trying to align with the mission of the organization and then the investment committee, which has 95 percent of the assets, could be completely misaligned,” says Cory Donovan, co-founder and SVP of community engagement at ImpactPHL. “If your 95 percent is creating the problem that your five percent is trying to solve, you’re shooting yourself in the foot.”

In 2017, the Philanthropy Network of Greater Philadelphia adopted the Mission-Aligned Investing working group model championed by The Patricia Kind Family Foundation. Two years later, it published an assessment on how to scale the impact investing landscape in Philly. And in 2020, it worked with Andorra and the nonprofit Common Future to establish, so far, two 12-month-long cohorts of nonprofits that wanted to pursue this type of strategy. Meanwhile, ImpactPHL launched their Total Impact Summit, which helps educate investors, both in Philly and around the country, about how they can make the switch.

Outside of ImpactPHL and the Philanthropy Network’s programming, nonprofit leaders have been spreading the word amongst themselves.

“There’s 1,000 different ways to do this,” Donovan says. “Hopefully, 10 years from now, if you’re in a room with other foundation leaders, whether it’s an executive director or the board, somebody says, wait, you’re not doing [mission-aligned investing]. What is wrong with you?”

How foundations can pursue mission-aligned investing

The first step toward pursuing mission-aligned investing is getting an organization’s board to agree with the strategy, and dispel the long-held idea that investing in a socially conscious way will decrease returns. A 2021 study of 115 outsourced chief investment officers found that impact investments performed on par with a more traditional investment strategy. Locally, foundations say this matches their experience.

“Our returns have been really, really solid since we started doing this,” says Diane Cornman-Levy, chief disruptor of Women’s Way, which made the switch two years ago. “Our return rate did not decrease at all.”

Once a nonprofit or foundation has determined they want to change strategies, they may need to revise their investment policy statements to include impact — or even hire a new financial advisor with experience in the area. Mission-aligned investing can look different for every organization. A nonprofit focused on fighting climate change might want to divest from coal and invest in sustainable energy companies, for example.

“A lot of people might say, I don’t really know how to navigate this or what to do,” Donovan says. “The good news is that you’re not the first one to face that challenge. … A lot of this is relationship building and being able to talk through the challenges.”

Philly-based Independence Public Media Foundation recently joined the movement in order to better fulfill their mission of supporting local internet, documentary filmmakers, digital storytellers, journalists and grassroots media groups.

“Let’s drive more capital money to people who are trying to create a more inclusive and equitable economy in Philadelphia.” — Diane Corman-Levy, Women’s Way

“We had a very traditional portfolio and we couldn’t see the mission being deployed or the values being exercised,” says Christopher Capato, finance director, Independence Public Media Foundation. “We thought we could move more than just grant resources.”

So, they now work with financial advisors, Bivium Westfuller and Zenith Wealth Partners and today are investing in community internet and community owned-media. They’re also working toward carving out 5 percent of their endowment for direct, local investments. Last year, they made their first two: the De-Carceration Fund and a community center in North Philly.

Driving local impact

Investing in local businesses and funds is another focus for local foundations.

Women’s Way, which is now supporting companies that care about gender justice and local firms, have invested locally in women-owned businesses, including Trapezium Math.

“We want an economy that works for all people,” says Cornman-Levy. “People care about Philadelphia — the poorest city of the 10 largest cities. Well, what are we doing about it? Let’s drive more capital money to people who are trying to create a more inclusive and equitable economy in Philadelphia.”

But investing locally is not as easy as looking at the stock market and picking what companies you think will perform well. This is where collaboration among investors is also important.

“As we add local as lens, part of [the challenge is] what is the deal flow locally? Because that’s not something that the mainstream financial system does,” Donovan says. “Part of it is just making it easier to find. I always say, make it visible. That’s part of our resource with our investor briefing that we put out there to show local deal flow.”

Donovan says another four local foundations are currently in the process of changing their strategy to align their endowments with their values. He expects more will follow. There are thousands of nonprofits in the City. The largest have millions or billions of dollars in assets. What if all of that money was invested for impact?

“I ask people to envision what would be possible if that money was all aligned with mission, because it’s in the public good. It’s been put into a place where the purpose is to create good outcomes in health and education and environmental issues and on and on and on,” Donovan says. “What’s possible if we can make this transition?”

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