NEW YORK (Reuters) - The Rockefeller Foundation is helping to finance a startup hoping to build exchange-traded funds for nonprofit organizations and direct the profits back to their causes, officials from the group said with a plan to announce the initiative later on Tuesday.

A member of the U.S. Air Force talks with a representative at a job fair in Washington January 10, 2014. REUTERS/Kevin Lamarque

The foundation awarded a $300,000 grant to Impact Shares Corp, a Dallas-area organization that aims to offer charities the ability to create ETFs that will be sold to the public.

ETFs give investors the ability to buy a basket of stocks or other assets with a single trade. Many of the funds track a broad market index, rather than trying to outperform.

Charities working with Impact Shares would include in their ETF whichever companies perform well on the environmental, social or governance (ESG) criteria that matter most to them. For instance, a veterans organization might support companies with policies to hire people who have left the military.

The goal is to create a fund that will perform roughly in line with the broader market, according to Impact Shares founder Ethan Powell.

“If you really can organize corporate America around specific causes then you can make a meaningful difference,” said Powell. “The end goal is that every social issue is represented by a major nonprofit.”

Wall Street is increasingly championing ESG in an effort to appeal to younger investors and institutions like university endowments that want to align their portfolios with their values. U.S. fund managers have launched 22 "socially responsible" ETFs over the last 12 months, up from 13 a year ago and just five the year before that, according to FactSet Research Systems Inc FDS.N.

Powell, a former chief product strategist for Highland Capital Management LP, said many investors have lost faith in Wall Street’s ability to deliver outperformance, but that many want investment companies to help them do good for society.

Powell wants Impact Shares to become the first nonprofit to sponsor an ETF. He registered Impact Shares as a nonprofit in Texas and is seeking tax-exempt status from the U.S. federal government. Being a nonprofit helps ease other charity’s concerns about partnering with an organization that would profit from their brand, Powell said.

Rockefeller managing director Saadia Madsbjerg told Reuters the foundation’s innovative finance team is aiming to create new ways to mobilize private capital for public good.

Powell plans to announce partnerships with charities and start registering funds with U.S. regulators this year.