Foundations Go in First  

Foundations aren't just participants in impact investing – you could say they invented it. They're also pioneers in the sense that their grants can catalyse other capital providers, such as impact investors, and public and private institutions, to partner and co-invest for social and environmental impact.  

However, with a diverse sector including 180,000 philanthropic organisations in Europe alone, foundations' approaches to deploying capital can vary greatly. This article provides an overview of those approaches, especially useful for foundations curious about entering the impact space.     

For a deeper dive: Check out Beyond Grants, our industry leading programme in collaboration with Philea and the Impact toolbox for philanthropic organisations.  

 
Pioneers historically – and today  

Foundations have consistently led the charge in creating new models for positive change. In fact, the term "impact investing" was formalised by the Rockefeller Foundation (around 2008), which also incubated the Global Impact Investing Network (GIIN).  

Flash forward to today, foundation-led impact funds are actively involved in impact investing. Catalytic grantmaking starts with foundations and actively aims to bring in co-investors. In both cases, foundations are going first and taking a more holistic view of the partners and financial tools available to serve their grantees.   

As social and environmental challenges grow more complex, the world needs foundations' unique blend of patience, flexibility and focus on impact more than ever. That means bringing the full weight of Europe's foundation assets – both resources and knowhow– to bear on our greatest challenges. 

But first – let’s define our terms  

As a network that stimulates connections, knowledge exchange and co-investment, Impact Europe seeks to accelerate positive change by leveraging the important role of foundations within the impact ecosystem.  

Even so, those within the world of philanthropy often shy away from ‘impact investing’ terminology. Instead, they see themselves as social actors primarily focused on grantmaking. However, many are already engaged in forms of ‘investing for impact’, whether they embrace the term or not. No matter what words they use, foundations play an outsize role in the impact ecosystem. 

Foundations in the impact ecosystem 

Europe's foundation sector represents approximately €54 billion in annual philanthropic spending and manages around €650 billion in endowment assets, according to our partner Philea’s research. This significant capital is deployed through various approaches, depending on the foundation's structure: 

• Programmatic side: foundations deploy grants, provide direct services or support social purpose organisations (also known as impact organisations or social enterprises) 
• Endowment side: foundations invest their assets to generate returns that fund their philanthropic activities 

On the programmatic side, some foundations have evolved beyond traditional grantmaking to embrace venture philanthropy approaches, including: 

• Enhanced non-financial support for grantees 
• Sophisticated impact measurement and management 
• Tailored financing mechanisms including repayable grants, debt, and equity investments 
   

The untapped potential of endowments 

While foundations have innovated on the programmatic side, a significant opportunity remains with their endowment assets. The traditional model of investing endowments solely for financial return and using a small percentage for impact activities represents a missed opportunity. 

Many forward-thinking foundations, both in- and outside ourt network, are exploring how they can put that €650 billion in endowments to smarter use. Beyond investing endowments for impact, they’re asking structural questions like: should foundations exist in perpetuity, or should more capital be deployed now? 

In addition, foundations have joined an ongoing dialogue with EU policymakers to tap the potential of their endowments. Our network’s role in partnership with others is to advocate for the creation of a policy framework that enables foundations to invest their endowments for impact.  

Corporate foundations evolve  

Corporate foundations have traditionally faced divides between the goals of the foundation and the needs of the company. Leaders like BMW Foundation are demonstrating how impact investing can bridge these divides: 

1. Creating dedicated impact funds: Johnson & Johnson Foundation established a $50 million impact fund to invest in companies improving health equity for underserved patients. 
2. Aligning endowments with mission: BMW Foundation strategically invests its €142 million endowment to deliver both market-rate returns and advance its mission of strengthening societies. 
3. Unique structures for holistic corporate impact: Our recent case studies with Philips Foundation, IKEA Social Entrepreneurship and Sanofi Global Health Unit explore the unique ways corporates bridge the gaps between their foundations and impact investing activities.  
4. Building field-level partnerships: Numerous foundations partner with impact funds or intermediaries like Yunus Social Business to scale their impact without building in-house investment capabilities. 

This report includes more in-depth cases and insights on how corporates do impact investing – including the vital role of corporate foundations in the impact ecosystem.  
 

How foundations start exploring impact investing   

Foundations typically begin their impact investment journey by supporting a single pilot project; then, as they recognise systemic boundaries limiting impact, they begin exploring collaborative approaches with peers facing similar challenges. To connect with the right peers, they often need a network like Impact Europe.  

“We connected to Impact Europe to understand what was happening around impact investments,” shared one foundation leader. “By beginning to speak to other foundations, we became interested and are just starting to implement a strategy using market-based tools.” 

Impact Europe offers foundations both deep impact investing expertise and access to a community of other European foundations along the impact journey.   

1. Peer learning opportunities with foundations already deploying impact investing approaches 
2. Practical guidance on moving from intent to action 
3. Access to the full spectrum of capital providers from impact funds to corporates 
4. Latest knowledge on trends like catalytic capital, impact management, and policy developments 

Next steps  

If you’re a foundation looking to accelerate your journey to impact, becoming an Impact Europe member puts you on the fast track – learn more about membership. 

Further reading on foundations in the impact ecosystem:  

Beyond Grants – our partnership with Philea  
Impact Toolbox for Philanthropic Organisations 
The 5 Ws of Impact Investing 

 
Connecting at Impact Week Malmö – 18-20 November 

This November in Malmö, Sweden, Impact Week 2025 will bring together the European impact community under the theme "Light the Night." The theme is a reminder that when it gets darker – through funding cuts, trade wars or other disruptions – we shine brighter together. 

For foundations, Impact Week offers a tailored programme, including our track "Catalytic Constellations: Mobilising Transformative Capital." The event is designed to help foundations connect with peers and others pioneering new approaches to deploying capital for maximum impact. Tickets are available now – we invite you to join us and bring your brightest ideas!