You fund affordable housing in your city. You run youth mentorship programs. You pour resources into health equity work in historically underserved communities.

Now answer this question honestly: Does your endowment reflect any of that?

For most nonprofits with endowments between $5M and $20M, the answer is no. The investment portfolio and the mission exist in completely separate conversations. The program team is out there changing lives, and the finance committee is reviewing a quarterly report that has nothing to do with any of it.

This is a structural contradiction at the heart of your organization, and it’s more common than most boards want to admit. Nationally, 92% of foundations are actively engaged in impact investing networks and conversations, but only 5% actually invest their own assets for impact (Bridgespan, 2024). Awareness has outpaced action by a wide margin.

The Disconnect Has a Name

Mission-aligned investing, sometimes called values-aligned investing, is the practice of building a portfolio that reflects the same priorities as your grantmaking or operations. It’s often confused with ESG, but the two aren’t the same thing: ESG is a backward-looking risk screen; did this company manage its risks well historically? Mission-aligned investing is forward-looking and intentional, built around what your organization is actually trying to achieve.

It asks a simple question: should the capital you have invested in the market work against the communities you are trying to serve?

A housing nonprofit holding significant exposure to predatory lending companies. A racial equity foundation with returns tied to private prison contracts. A women’s equity fund with its biggest holdings in a company that doesn’t have paid maternal leave. These scenarios happen when the investment strategy is built around returns alone and the mission conversation never makes it into the room.

Why This Happens

There are a few reasons this disconnect persists, specifically at the $5M–20M endowment level.

First, many advisors serving organizations of this size are generalists. They do not have a framework for connecting investment strategy to grantmaking priorities. It is not part of their intake process, their portfolio construction methodology, or their quarterly review.

Second, the board and finance committee often operate under a legacy assumption: that mission alignment is a trade-off. That screening your portfolio for values means giving up returns. That assumption is increasingly being questioned, but for many boards, it still goes unexamined.

Third, nobody is asking. The advisor is not asking because they do not specialize in this. The board is not asking because they assume it is too complicated or too expensive. The result is silence, and the contradiction continues.

What Alignment Actually Looks Like

A values-aligned investment strategy does not mean avoiding every company that has ever done anything wrong. It means intentionally building a portfolio, knowing what you own, why you own it, and whether it aligns with your organization’s values.

For a $10M endowment, a values-aligned review might mean:

• Auditing current holdings against your organization’s issue areas and flagging material conflicts
• Setting a clear investment policy statement that reflects your mission priorities
• Constructing a portfolio that overweights sectors aligned with your grantmaking (health, education, community development) while screening out sectors that actively conflict
• Establishing a shareholder engagement policy so that even where you hold a company, you are using your ownership position to push for accountability

Done well, this is a strategy question, not a sacrifice. It requires an advisor who understands the connection. As Freada Kapor Klein and Mitch Kapor put it in the Chronicle of Philanthropy: “Five percent of our resources won’t solve the world’s most entrenched inequities. They require 100 percent of our ambition and dollars.” 

The Question to Ask Your Advisor

If you want to know whether your current advisor is equipped for this conversation, ask them one question at your next quarterly meeting: “How does our portfolio reflect what we fund?”

If they can answer that in specific, concrete terms, with examples from your actual holdings, you have a partner.

If they say “That’s a bad idea” or change the subject to performance benchmarks, you have a vendor.

Your mission deserves an advisor who knows how to get all of your resources rowing in the right direction.

– Andrew Tudor, CFP®, CAP

All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.