Mission-Related Investment (MRI)

Mission-related investments, commonly called MRIs, occupy a different conceptual space than program-related investments. Where a PRI accepts below-market returns in exchange for charitable impact, an MRI is expected to generate competitive financial returns. It simply does so through companies, funds, or instruments that align with what the foundation stands for. An environmental foundation might invest its endowment in funds that exclude fossil fuel producers, or a health-focused foundation might avoid tobacco manufacturers across its entire asset allocation.

MRIs do not count toward the foundation's minimum distribution requirement because they are investments, not charitable expenditures. Their purpose is to ensure the endowment itself does not work against the foundation's values while the foundation waits to distribute grants. Some foundation boards describe this as "aligning the whole balance sheet with mission."

A hypothetical family foundation focused on ocean conservation might screen its fixed-income holdings to exclude issuers with significant pollution liabilities and seek private equity exposure in sustainable aquaculture, all while expecting market-competitive returns. These portfolio choices would constitute MRIs.

A common confusion is assuming MRIs require sacrificing returns. Proponents argue that mission-aligned screens can reduce certain long-term risks; skeptics question whether constraints limit diversification. Families evaluating MRI strategies should discuss both the investment and governance implications with their advisors, keeping in mind the considerations explored in discussions of diversification.