Give or invest?
You grant 5%. What's the other 95% doing?
Most foundations give away a small slice of their endowment each year and invest the rest. The giving gets all the attention. But the far bigger question is what the rest is doing — and whether it's working for the mission, or quietly against it.
The 5% payout — and the provocation
As a rule of thumb, a foundation grants around 5% of its endowment each year and invests the other ~95% to preserve and grow the corpus. In Australia, recent reforms have moved the minimum distribution upward — toward roughly 6% for some structures — but the shape of the picture holds: a small share is given, the large majority is invested.
Which sets up the provocation Dan Madhavan poses, and it's a good one: what's the other ~95% actually doing? Everyone scrutinises the grants. Almost no one asks the same hard questions of the corpus that funds them — even though it's roughly twenty times larger.
~5% — the grants
The visible giving. Carefully chosen, measured, reported on. This is the part everyone talks about.
~95% — the corpus
The invested endowment. Far larger — and often invested with no reference to the mission it exists to serve.
When the corpus works against the mission
Too often the un-granted 95% sits warehoused in a standard investment portfolio that has never been checked against what the foundation is for. In the worst cases it can actively contradict the mission — an environmental funder whose corpus is invested in the very industries it grants against. Green dollars going out the front door; the endowment quietly funding the opposite out the back.
It's rarely deliberate. It's just that the investment side and the giving side have historically been run as two separate worlds. The opportunity is to stop treating them that way.
The opportunity: put the 95% to work on the mission
The move is to align more of the corpus with the mission rather than leaving it on autopilot. For the parts of the endowment that still need to earn a return, mission-related investing (and impact investing more broadly) lets the money seek returns and advance the cause instead of ignoring it.
And for the giving itself, recyclable structures make each dollar keep working. A recoverable grant is still pure philanthropy — the money is given away — but instead of being spent once, it recycles and gives again. It's a way to make the annual distribution do the work of several grants over time. Add it up and you're activating both sides of the balance sheet: the invested corpus and the giving.
Seeking a return? Mission-related investing
Align the invested corpus with the cause, so the ~95% stops being mission-neutral (or mission-negative).
Giving? Make it recycle
Recoverable grants keep the distributed dollar working — pure philanthropy that gives more than once.
Activating the 95% raises a governance question
The moment you start putting the corpus to work on the mission, a real question surfaces: how do we preserve the original intention as capital moves in more ways and through more hands? That's a governance question, not just an investment one — and it's exactly the kind of thing families and foundations should be deliberate about from the start.
To be completely clear: this is 100% philanthropy
The recyclable giving we build is 100% philanthropic — you get a tax-deductible receipt and impact, never a financial return. The only “return” is that your gift recycles to give again. Mission-related investing (where you do seek a return on the corpus) is a separate thing — a great thing — but it isn't us.
Your call
If you set capital aside to give, how would you want it to work?
Rethinking what your endowment does?
We're building recoverable grants in the open — the legal structure, the recycling mechanics, the first proof-of-concept cycle. If you're thinking about how to make more of the corpus work for the mission, follow along or reach out.
Follow the build
Notes on how recyclable philanthropy actually works — structure, mechanics, what's real and what isn't. No spam.
Prefer to talk? Tell us what you're trying to do or email hello@elevate.gift.
Related
Sources & thanks. Frameworks drawn from Dan Madhavan (Ecotone Partners), in “Impact investing explained: finding the right capital for your mission”, via the Wade Institute of Entrepreneurship. Put in our own words, with thanks.
General information only, not financial or tax advice.