Investment Criteria 1: Alignment with Our Charitable Purpose
In a previous post, we talk about the 3 major criteria Impact Foundation uses to vet investments. One of the most significant is alignment between the proposed investment opportunity and our charitable purpose - the reason the IRS has granted us tax-exempt status.
When we look at the impact of a particular investment, we want to find ways that the company is intentionally seeking positive social, spiritual, and/or environmental impact that aligns with, and furthers, our charitable purpose. Not merely aspirational in their intended impact, the enterprises that we invest in have specific plans for how to achieve these goals.
Characteristics of an Impact Company
Each company or charity that we invest with goes through a rigorous selection process to determine whether the company has a social, environmental, or other Kingdom-advancing purpose in line with Impact Foundation's mission. Specifically, we want to see that the company has the following:
1) Impact alignment - the company is intentionally seeking positive social, spiritual, and/or environmental impact that aligns with, and furthers, our charitable purpose.
2) Measurements that matter - the company knows what activities contribute importantly to the financial and social outcomes it seeks. It has developed a set of metrics to monitor those activities and the outcomes it seeks and has implemented mechanisms for measuring and reporting those metrics.
3) Supportive governance - the company has built into its governance documents certain provisions to protect the primacy of its social purpose.
4) Innovative approach - the company’s activities build upon what already exists to create an innovative product, process, or business model. They're not duplicating what's already being offered in the market.
5) Scalable design – the output (products or services) of the social venture should be able to grow to reach a level that is significant relative to the level of need and size of the target population.
6) Faith/mission supportive - the company has one or more of the following: faith-informed approaches to solving consumer/customer needs; faith-driven leadership; and/or a demonstrated commitment to donate a portion of profits to charities on the Impact Foundation platform.
Charitable Purpose and Philosophy Regarding Use of Capital
Impact Foundation’s charitable purpose is to promote a public good by growing the amount and impact of charitable giving through investments in organizations with positive social and spiritual gain alongside financial return. This purpose guides not only our grant-making, but the use of all of our resources, including investment capital, so that we use them fully to further our charitable purposes, which includes:
- Providing humanitarian help in the name of Christ as an expression of His love;
- Making grants to 501(c)(3) public charities;
- Educating the public on ways to maximize the impact of their charitable gifts and their charitable investments;
- Developing programs that may be used to measure the effectiveness of Program Related Investments and similar investments or grants;
- Supporting or investing in enterprises engaged in the following:
- Care. care for widows, orphans, oppressed or persecuted peoples;
- Evangelism and discipleship in the name of Christ;
- Stewardship. combat pollution; promote conservation and sustainable management of land, water, plant and energy resources; protect land; and develop more efficient uses of both energy and waste materials;
- Freedom. provide services to help free people from addictions, sex trafficking, criminal patterns of behavior, and similar vices;
- Justice and Poverty. address the root causes of unemployment, poverty, insecurity, poor health, social injustice, spiritual poverty, homelessness, lack of access to quality education, and similar societal ills.
We also seek to manage our investments to optimize social and financial performance, taken together. “Social performance” includes increased employment and improved job quality and opportunity, as measured not only by beneficial changes within the organization receiving the investment (e.g., increased hiring, higher wages, greater benefits), but also by broader changes in employment and opportunity that are influenced by that organization’s activities (e.g., improved employment or working conditions elsewhere in the supply chain, or improved public policy or industry practices).