Imagine if 95 percent of your organization's staff came to work each day and sat idle — completely ineffectual when it came to advancing your organization's mission. If you paid your staff simply for coming to work, even though they were unproductive, it wouldn't make sense, right?

Is it not just as ridiculous for your organization's endowment not to advance your mission when those same assets could be used to propel your organization forward? Of course it is.

Why? Because organizations can use their endowment as a powerful tool for furthering their goals. Whether those goals are to feed the poor, educate young people, or advance the arts, mission-based investing allows foundations and nonprofits to advance their goals without sacrificing security or financial performance.

In the simplest of terms, mission-based investing is the process by which investors — many of them foundations, nonprofit organizations, university endowments, or faith-based organizations — choose investments aligned with their core mission.

At my firm, Community Capital Management, we manage market-rate fixed-income portfolios in which the underlying investments align with and advance our clients' organizational missions. Yet over the course of the past half-dozen years I have frequently encountered individuals who object to the premise of mission-based investing — typically because they fail to appreciate or understand what it involves.

"We already employ socially responsible investment standards."

Socially responsible investing (SRI) is not synonymous with mission-based investing.

Yes, mission-based investing can be considered a type of socially responsible investing. However, mission-based investing excludes other types of socially responsible investing approaches, such as shareholder advocacy and portfolio screening of publicly traded companies. While these other types of socially responsible investing are not necessarily less desirable, the impact they produce with respect to an investor's mission is not as easily measured.

In other words, even if an organization utilizes socially responsible investing practices, its assets are not necessarily making the impact they could make if that same organization were to adopt a mission-based approach to their investments.

"We can't afford to sacrifice performance."

A 2006 report prepared for the Shell Foundation by the Foundation Strategy Group found that many investors' experiences with mission-based investments are better than expected, with fewer losses — and greater profitability and program impact — than originally anticipated. In fact, the study found no inherent trade-off between financial returns and social impact.

Contrary to preconceived notions, mission-based investments can deliver market-rate returns. For example, at our firm we have successfully met our clients' demand for competitive financial returns by actively managing portfolios of fixed-income securities benchmarked against the Lehman Aggregate Bond Index. Other managers utilize private debt or equity investments in small or early stage for-profit companies that generate social or environmental benefits. Another option that can produce competitive returns is making loans — to nonprofit organizations, privately-held for-profit companies that provide social or environmental benefits, and microfinance institutions. Still other investors use guarantees or deposits such as CDs at community development banks.

"We can't afford to take risks."

Just as with conventional investments, mission-based investments come in all shapes and sizes — with the accompanying continuum of risk. Investors seeking conservative, high-quality investments can utilize investment vehicles such as CDs, money market accounts, or fixed-income securities, like those our firm manages. Others may opt for greater risk and take advantage of debt or equity investments.

"We can't find enough investments to meet our needs."

Yes, it can be challenging to start a mission-based investment program. Nonetheless, many organizations and for-profit companies have successfully allocated increasing percentages of their portfolios to mission-based investing.

One of our clients, the F.B. Heron Foundation, has pioneered the use of mission-based investing, having allocated nearly a quarter of its assets to mission-related investments across a range of asset classes (deposits, fixed-income securities, senior and subordinated loans, preferred and common stock, and private equity).

Similarly, thousands of banks utilize mission-based investments as part of their Community Reinvestment Act investment programs. For the more than three hundred banks with which our firm works, we have successfully identified market-rate fixed-income securities that support community development. Moreover, as a testament to the availability of these investments, we have actually purchased these securities to specifically support economic development in banks' geographic service areas.

What does this mean for your organization?

For starters, it means you can take positive steps toward advancing your mission without assuming excessive financial risk. And by applying a rigorous set of financial criteria, your organization can actually make money while doing good.

So don't be negative. Put your fixed-income dollars to work for your organization and start investing positively...and profitably.