Public foundations have long been at the forefront of impact investing. These non-profit organisations, often backed by large investment endowments, have traditionally invested in publicly traded debt and equity instruments to generate returns that fund their programmes. Over time, many have come to see their investment portfolios as more than just financial assets; they are tools that can be actively managed to further their broader mission through “mission-aligned investing”.
However, as foundations take a more proactive approach to managing investments that balance both financial and impact objectives, they may encounter challenges within existing tax frameworks. In some instances, such activities could raise concerns about compliance with tax-based restrictions on non-profit operations, potentially affecting their tax-exempt status.
This white paper examines how South Africa’s tax rules could be clarified to support foundations and non-profits in pursuing impact investing while ensuring their tax-exempt status remains protected.
