3 Takeaways From Our Webinar on Carve-outs for Place-Based Impact Investing

When Mary Rutherford, President & CEO of the Montana Community Foundation first pitched local impact investing to the foundation’s Board of Directors, she was told that it was too risky of a concept.  

But over time, as the board reflected on the performance of its traditional investments, they noticed that some of their existing asset classes were taking on significant amounts of risk.  

“We’re encountering risk by investing through Wall Street,” Rutherford said. “Why don’t we on Main Street?”  

Once they shifted their mindset on risk, the Board committed 5% of all investable assets to Montana impact investments, opening a new spigot of capital for rural and tribal development, affordable housing, economic mobility, and other impact. 

The Montana Community Foundation is just one of the growing cadre of foundations embracing place-based impact investing by allocating a portion of assets to local impact.  

On February 24, 2025, Social Finance hosted Rebecca Price of the Boston Foundation, Mary Rutherford of the Montana Community Foundation, and Shanaysha Sauls of the Baltimore Community Foundation to discuss their journeys implementing place-based impact investing. 

Here are 3 main takeaways from their conversation:  

1. Impact investing is a strategic tool for community foundations. 

With impact investing, assets that usually sit on the sidelines are mobilized for impact locally, creating a multiplier effect on limited resources. 

“Not only are we helping our donors to deploy grant dollars, but we’re using a portion of capital that would otherwise be in traditional investments,” Price, of the Boston Foundation, said. “Now we’re deploying it for further positive change in the community.” 

This approach creates a unique competitive advantage for community foundations, allowing them to differentiate themselves from large, national DAFs.  

“We can say to our donors that it gives us a competitive advantage,” Rutherford said. “When you establish your funds at the Montana Community Foundation, a portion of those assets are reinvested in Montana. It’s very compelling.” 

2. When taking the step toward impact investing, stakeholder engagement is key.  

When the Montana Community Foundation wanted to build Board buy-in for impact investing, they created a special working committee that could research and explore the concept before reporting back to the entire Board. 

To garner support for their initial impact investing efforts, the Boston Foundation brought together 30 donor “champions.” The foundation leaned on feedback from this group as it designed its new impact investing portfolio and honed donor communication practices. 

“Now, as we’re engaging in the education process for our larger donor base, we will leverage the enthusiasm of the smaller group of donors,” Price said. 

Once investments are made, keeping donors updated on impact outcomes is crucial to maintaining buy-in. The Baltimore Foundation evolved their traditional investment briefing to include report-outs on the impact of their local investments.

3. Start with easy wins to build trust. 

A shared starting point for the Baltimore, Boston and Montana community foundations was focusing on investments in Community Development Financial Institutions (CDFIs). These organizations and similar intermediaries generally have long track records in lending in low-income communities and returning capital to investors, making them a low-risk way to deploy capital. 

The Baltimore Community Foundation was initially authorized to deploy 4% of endowment assets toward local impact investments. At this point, Shanaysha Sauls said they focused on proving the viability of the concept. 

Their first investments involved intermediaries and existing foundation partners. Once they established a track record and success of the carve-out model, the foundation slowly increased its appetite for risk and now only pursues opportunities within the Baltimore region. 

“We moved from really safe, great partnerships with national and regional CDFIs to working on launching [Baltimore’s] first microloan program for immigrants and refugees,” Sauls said. 

The Baltimore Community Foundation is now authorized to deploy up to $13 million for impact investments. Their investments support affordable housing, mixed-use commercial and residential spaces, green energy infrastructure, and more.  

When getting started with impact investing, there’s no need to build new systems from scratch. There are robust peer learning networks through organizations like Mission Investors Exchange, Confluence Philanthropy, and more. Advisors like Social Finance can also support your foundation—from building board buy-in to constructing investment policies. 

To learn more about Social Finance’s impact investing advisory work, contact Mike Silvestri, Vice President, Impact Investments →