How we advanced a UK charity's mission through impactful private equity

We are seeing increasing interest from charities, endowments and foundations in investing with the dual objectives of competitive financial returns and positive societal or environmental outcomes. Drawing on our experience in impact investing, we’ve supported several clients in aligning their investments with these goals. Below we highlight one such example.

The objectives

A UK charity with an inflation + 3.5% return target sought to advance its charitable mission by investing in assets aligned with the UN Sustainable Development Goals (SDGs). The charity was clear that these sustainability ambitions had to complement, not compromise, long-term financial returns.

Our approach

We reviewed the charity's portfolio and identified private equity as a route to achieve both financial and impact objectives while diversifying a portfolio heavily concentrated in public markets.   

A key challenge was then to narrow down a universe of around 10,000 private equity funds to a suitable shortlist for our client to consider. 

As a first step, we produced an advice paper that assessed the various routes to accessing private equity (e.g. primary funds, funds of funds, secondaries, co-investments), evaluating the pros and cons of each against the client’s objectives.  

Leveraging our industry relationships and manager research programme, we compiled a longlist of 24 private equity funds with a sustainability focus for further consideration. 

To ensure the allocation was effective, we designed and ran a structured manager selection process. This involved developing a bespoke scoring framework to assess the 24 funds on our longlist against both financial and sustainability criteria. We then held in-depth due diligence sessions with shortlisted managers, testing their approaches to value creation and ESG integration. 

Key insight

Our analysis highlighted that fund of funds and secondaries, while highly diversified and efficient, offered limited control, visibility and influence over ESG integration. 

Co-investment funds, by contrast, provided the transparency and mission alignment the client was seeking, while still maintaining an appropriate level of diversification. Four managers, representing five co-investment funds, were invited to pitch for the mandate. 

The outcome

Two co-investment funds were appointed: 

1. A dedicated impact strategy, focused on environmental sustainability, health and wellbeing, equality and inclusion, aligned with the SDGs.
2. A sustainable strategy, targeting companies with a positive impact, but with broader diversification than a typical impact fund.

The resulting allocation: 

• Is expected to deliver strong long-term returns for the charity, exceeding the inflation + 3.5% target.
• Enhances portfolio diversification by introducing a private markets allocation to complement the existing public bond and equity holdings.
• Delivers measurable, real-world outcomes aligned with the SDGs (e.g. SDG 3 – Good Health and Wellbeing; SDG 4 – Quality Education and SDG 13 – Climate Action).

The value we added 

By combining rigorous manager research with a clear focus on the client’s objectives, we helped translate high-level ambitions into a practical charities investment strategy in private equity. The charity is now positioned to achieve robust financial performance while demonstrably advancing its mission.