From Governance to Action: Practical Strategies for Implementing Impact Investing in Community Foundations

Introduction

In Part 1 of this series, we explored why impact investing is fundamentally a governance opportunity for community foundations. Strong governance provides the clarity and structure needed to align mission and fiduciary duty. But governance alone does not move capital. Foundations also need practical, scalable strategies to implement impact investing in ways that reflect community priorities and organizational capacity.

This second article focuses on the “how”— drawing on Highland’s experience and on community-centered models used by organizations like IFF[i] to demonstrate what effective implementation looks like in practice.

1. Start With Community-Defined Priorities

IFF’s work emphasizes investing in projects that expand access to essential community services, such as housing, education, healthcare, and economic opportunity. Community foundations can adopt a similar approach by:

• Hosting listening sessions with nonprofits, civic leaders, and donors
• Identifying two or three priority areas where investment can accelerate community outcomes
• Mapping investable opportunities within those themes

This ensures that investment decisions reflect real community needs rather than abstract mission language.

2. Use Flexible Capital Structures

IFF frequently deploys flexible financing—below-market loans, patient capital, credit enhancements—to unlock projects traditional lenders overlook. Community foundations can adapt this approach by:

• Creating a small pool for program-related investments (PRIs)
• Offering recoverable grants for early-stage or high-impact projects
• Partnering with community development financial institutions (CDFIs) to co-invest in community facilities

These structures allow foundations to support high-impact projects while managing risk through diversification and partnership.

3. Partner With Intermediaries to Build Capacity

IFF’s model demonstrates the power of pairing capital with technical assistance. Community foundations can:

• Partner with CDFIs, housing coalitions, or small-business accelerators
• Support pre-development work such as feasibility studies or site assessments
• Provide grants that strengthen nonprofit financial management

This approach increases the pipeline of investable opportunities, reduces project risk and,  is where partnership becomes transformative. As Scott Hackenberg of IFF notes:
“When impact-driven foundation capital is paired with the technical support CDFIs provide, it unlocks a powerful multiplier effect. Foundations don’t need scale, just clarity of purpose and a willingness to partner.” – Scott Hackenberg, IFF, Managing Director of Lending – Eastern Region

4. Adopt a Simple, Mission-Aligned Impact Framework

IFF’s sustainability reporting shows that impact measurement does not need to be exhaustive to be meaningful. Foundations can begin with:

• A short list of metrics tied to their investment themes
• Annual narrative reporting from investees
• A dashboard that tracks progress over time

This keeps reporting manageable while reinforcing accountability.

5. Leverage Co-Investment and Pooled Funds

IFF often collaborates with philanthropic and financial partners to scale impact. Community foundations can:

• Join regional pooled funds focused on housing, small business, or climate resilience
• Co-invest alongside CDFIs or mission-aligned lenders
• Use donor-advised funds as a source of impact-investment capital

These partnerships expand capacity without requiring large internal teams.

Conclusion – A Moment of Possibility

Impact investing is reshaping expectations for community foundations, but it is also creating an opportunity to modernize governance practices and strengthen alignment between mission and investment strategy. Foundations do not need large committees or extensive staff to succeed. They need clarity, consistency, and a governance framework that supports thoughtful decision-making, paired with practical strategies that translate mission into action.

When community foundations embrace both governance and implementation, they position themselves to lead with confidence and invest with purpose.

[i] iff.org/about

Highland Consulting Associates, Inc. was founded in 1993 with the conviction that companies and individuals could be better served with integrity, impartiality, and stewardship. Today, Highland is 100% owned by a team of owner-associates galvanized around this promise: As your Investor Advocates®, we are Client First. Every Opportunity. Every Interaction.

Highland Consulting Associates, Inc. is a registered investment adviser. Information presented is for educational purposes only and is not intended to make an offer of solicitation for the sale or purchase of specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.