Foundation
A foundation is a nonprofit organization that manages assets to fund charitable purposes, often through grants, programs, or mission-aligned investing.
Allocator relevance: A major allocator type where spending policy, governance, and mission constraints shape mandate fit and risk posture.
Expanded Definition
Foundations invest to support ongoing charitable activities and may have explicit mission alignment constraints. Their portfolio decisions are influenced by spending requirements, board governance, and risk limits that preserve the ability to fund programs across cycles. Some foundations allocate to impact strategies; others focus on maximizing returns to support grants.
For manager selection, foundations often require strong reporting, compliance posture, and clarity on alignment with mission or exclusions.
How It Works in Practice
Foundations set an investment policy statement, define spending policy, and implement allocations across public and private markets. They often work through an investment committee and may use consultants or advisors.
Decision Authority and Governance
Decision authority typically sits with an investment committee or board, with staff executing within IPS guardrails. Governance cadence can be slower but consistent and documentation-driven.
Common Misconceptions
- Foundations invest only in impact strategies.
- Foundations can ignore liquidity because they are long-term.
- Foundations behave like endowments in every case.
Key Takeaways
- Spending requirements create real liquidity constraints.
- Mission and governance shape mandate fit.
- Reporting and compliance readiness matter for selection.