To have enough money to give away, most trusts and foundations need to make investments. Until recently, though, their investment policies have not been subjected to the kind of scrutiny applied to other financial institutions, such as banks or pension funds.
"Grants may be made to support services or advocacy, for communities that are also being harmed by the behaviour of companies in which some of the foundation's resources are invested," says charity consultant David Carrington.
But this is starting to change, and not just in terms of 'negative screening' - avoiding companies that conflict with the foundation's aims. There has also been an increase in investment in organisations that further those aims. Those investments also have to make financial sense, and that is where foundations have often come up against the conventional way of thinking that claims it simply cannot be done. However, New York's FB Heron Foundation has been demonstrating for 11 years that it can be done successfully. The board decided "that the foundation should be more than a private investment company that uses its excess cash flow for charitable purposes". It then started to change its investment policy and activities accordingly.
It has seen success since its first investment in New Jersey Community Capital, and the portfolio includes deposits in new rural credit unions, loans to small business funds that invest in low-income communities and investments in community development venture capital funds. And it is bringing in the returns.
"Aggressive, mission-related investing policies have not hindered our ability to achieve total investment returns in the second quartile for the past several years," says William Dietel, chair of the foundation.
Carrington is one of a growing number in the UK grant-making field who want to encourage this trend in the UK.
Sam Collin, of the Eiris/UKSIF charity project, which works to increase the number of charities investing in line with their missions, says: "We would like to see more foundations achieve consistency between their programme work and investments. Foundations in the UK are in a powerful position and could be achieving much more with their assets."