Aligning Mission and Money: A Conversation with Hidden Leaf Foundation
Are you or your organization considering bringing your finances into better alignment with your values or mission? Maybe you’ve got some misgivings, or you’re not sure where to start. Just Futures asked various organizations why and how they aligned their investments with their mission. We hope their answers can be a resource for you!
Here’s what Hidden Leaf Foundation had to say about aligning their finances with their mission. To read what other organizations are saying, check out our case studies collection. Note: Some of the people and workplaces featured in this series are Just Futures clients. Others are not. In all cases, their answers reflect only their unique experience aligning their investments with their mission.
1. What does it mean to you to align your financial resources with your mission and values?
To us, alignment means recognizing that all of our financial resources - not just our grants, but our full endowment as well as our operating budget - have an impact on the world. As stewards of these resources, we have a responsibility to ensure this impact is aligned with our mission and values.As a foundation with a long-term (though not necessarily perpetual) time horizon, Hidden Leaf seeks to steward its capital in service of four complementary goals:
1) Advancing Hidden Leaf’s core vision and mission;
2) Supporting grantees and movement partners with multiple forms of capital;
3) Preserving sufficient resources to sustain our work for the long-term; and
4) Maintaining the liquidity needed for our ongoing operations.
While we seek to sustain the foundation so that we can be a long-term partner to the communities and movements we support, preserving capital is not our end in itself. Our goal is to maintain an endowment floor, rather than to continually grow it and maximize returns through extractive financial markets. As our understanding of aligned stewardship has evolved, we have intentionally spent down a portion of our endowment growth, reflecting our belief that capital exists to serve our mission.
Over the past six years, we have increasingly embraced an integrated capital approach, recognizing that our investments can be just as consequential as our grants. Rather than viewing grantmaking and investing as separate activities, we are working to steward our entire portfolio with greater intentionality.
This includes increasing investments in communities, enterprises, and funds that advance the public good while reducing our exposure to industries and practices that drive inequality, racial injustice, and environmental harm. Today, our portfolio includes both screened investments within public markets as well as deeper experiments in community investing that support a Just Transition to a more restorative and regenerative economy.
Hidden Leaf aims to be a bold and visible experiment in liberatory philanthropy. We recognize that stewarding the full endowment in alignment with mission is still a growing edge for philanthropy, especially for non-spendout funders like us, and we hope that by documenting our learning - including our successes, challenges, and ongoing questions - we can contribute to advancing this work alongside many others.
2. What changes did Hidden Leaf Foundation make?
Our process of aligning more of our resources with our mission has been iterative and multi-faceted. First, we developed an internal learning journey to examine our assumptions, illuminate areas of opportunity and possibility, and build the confidence of our board and staff to move toward greater alignment with our values. We worked with multiple advisors who are helping to shape the field of Just Transition investing, including Nwamaka Agbo of Kataly Foundation; Taj James and Rachel Burrows at Full Spectrum Capital Partners; and Justice Funders’ Just Transition Investment Community.We then invited a consultant to evaluate the social and environmental impacts of our existing investment portfolio, establishing a baseline from which we could make informed decisions.
From there, we developed two complementary investment strategies:
- Community Investments: Similar to Program Related Investments, Community Investments provide patient, flexible capital to organizations aligned with our mission, including our current grantee partners. These investments are often structured as recoverable grants. Rather than seeking financial returns, our goal is to recycle the returned capital so it can continue supporting additional community partners over time.
- Internal Impact Investments: These mission-aligned investments seek modest, bond-like financial returns while investing in enterprises and funds that advance a more just, restorative, and regenerative economy.
Across both strategies, we expanded our understanding of return. Alongside financial returns, we increasingly consider community wealth, partner resilience, and social and environmental impact as equally important measures of return. This shift has fundamentally changed how we evaluate investments and steward our portfolio.
As an initial experiment, we committed at least 3% of our endowment to direct mission-aligned investing over a five-year learning period. We are now three years into that experiment and continue refining our strategy based on what we are learning.
Finally, we recognized that stewarding aligned investments requires different organizational capabilities. We initially relied primarily on external advisors to help steward our investments, and over time have expanded our internal team to build long-term investment stewardship capacity and more deeply integrate investing with our grantmaking strategy.
Throughout this process, we have approached mission alignment as an ongoing practice rather than a singular destination. We continue to refine our investment strategy, governance, and internal capacity as we learn alongside peers across the field. Currently, we are updating our Integrated Investment Policy Statement (IPS) and further defining our investment decision-making criteria and process.
3. What challenges or concerns did you encounter?
One of the biggest challenges has been that much of the philanthropic ecosystem was designed around grantmaking rather than stewarding multiple types of capital. As a result, this work has required ongoing learning and adaptation for Hidden Leaf as well as for our grantee partners.Many of our grantees have not historically had access to loans, recoverable grants, or other investment structures. As a result, we've found that providing these forms of capital often also requires providing education, technical assistance, and long-term accompaniment and partnership, as well as complementary grant capital when possible. Building our partners’ capacity to steward multiple forms of capital is an important part of the work, and one that takes time.
Internally, Hidden Leaf has also had to adapt our own systems, governance, and staffing. Stewarding aligned investments requires different ways of working than traditional grantmaking, including how we think about risk (and where it should live), returns (in their various forms), and relationships. We continue to learn and evolve our process.
Another challenge has been learning how to navigate the contradictions of being invested in the current extractive system even as we experiment with and build alternatives. While we have made significant shifts towards greater alignment, we continue to hold investments in conventional real estate and public markets to sustain our work as a long-term foundation.
Rather than waiting for perfect alignment, we are choosing to be transparent about these limitations, and to keep experimenting - strengthening our investment screens, exploring shareholder engagement and active ownership, increasing mission-aligned investments, and continually asking how we might further align our capital with our mission.
More broadly, we recognize that we are experimenting in an area where there are relatively few established models. We don't expect to have all the answers, and we're approaching this work with humility, curiosity, and a commitment to continuous learning.
Ultimately, we hope to contribute to a broader shift in philanthropy. That means being both thoughtful and bold, taking incremental steps where appropriate while remaining willing to take a leap when the opportunity calls for it. Systems change is a long-term journey, and we're grateful to be learning alongside many others.
4. What ultimately gave you confidence to move forward?
Ultimately, we moved forward because it was the right thing to do. As we learned more about how our endowment was invested, we realized that many parts of it were working against the very mission we were trying to advance through our grantmaking. Once that contradiction was made visible, it became difficult to ignore. We came to believe that stewarding our endowment in alignment with our mission was a necessary part of living our values and coming into wholeness as a foundation.We also realized that we didn't need to have all the answers before taking action. By starting with thoughtful experiments, learning from our peers, seeking support from trusted advisors, and committing to learn and adapt along the way, we found the confidence to begin.
We are grateful to be part of a growing community of practitioners who are exploring many of the same questions. Learning alongside peers who generously share both their successes and their challenges has given us the confidence to move forward with both courage and humility, knowing that we are all contributing to a broader journey of reimagining philanthropy's role in creating a more just and regenerative future.
5. How have the changes affected your organization, staff, members, or community?
One of the greatest impacts has been a deeper sense of alignment within our organization. Hidden Leaf's mission is rooted in cultivating inner awareness. For us, becoming more "awake" also means becoming more aware of where our actions may not fully reflect our values. As we learned more about the relationship between our investments and our mission, we recognized a disconnect between what we were supporting through our grantmaking and what our endowment might simultaneously be financing.Working toward greater alignment has brought a greater sense of integrity to us and our work. It has allowed us to breathe a little more freely, knowing that we are making progress toward bringing more of our resources into service of our mission. We still have a long way to go, but the journey itself has deepened our learning, strengthened our relationships with peers and partners, and reaffirmed our commitment to continually aligning our values with our actions.
6. What advice would you give to another nonprofit or foundation considering similar changes?
- Start with learning, and then begin practicing and iterating! Bring the same spirit of curiosity and experimentation to investing that foundations are increasingly bringing to their grantmaking.
- Invest time in helping your board and staff explore what it means to align your financial resources with your mission. Don't assume that those with financial expertise will resist the conversation - in our experience, we found far more openness and shared purpose than we initially expected, even when there were healthy debates about pace and strategy.
- You also don't have to do this alone. There is a growing community of practitioners, advisors, and peer foundations generously sharing their successes, challenges, and lessons learned. Their wisdom can help you avoid reinventing the wheel while reminding you that this is a collective journey.
- Finally, don't wait for the perfect strategy before taking action. Start with thoughtful experiments, learn from what works (and what doesn't), document your journey, and have the courage to take bigger steps as your confidence and capacity grow. We believe this work is less about finding a single right answer and more about continually bringing our values and the resources we steward into closer alignment.
To learn about how Just Futures might help you align your finances with your values, book an intro call with us!