There's a common, subtle and dangerous message that sometimes runs through christian circles. How many of you have felt this before:
Leaders in business can’t have as much impact in the kingdom of God as pastors and those in full time ministry. So the highest purpose for those working in business is to donate their profits to charities that work in God’s name.
That's just plain wrong, but too often that misconception defines our charitable giving practices.
Our friend Patrick is a great example of someone who’s thinking and acting differently. After growing a successful internet-based business through the early 2000s and exiting at just the right time, he funded a private foundation so he could give to support clean water, bible translation, his local church, and whatever else God put on his heart.
In the pursuit of giving wisely from his foundation, Patrick rejected the idea that the ONLY use for business was to generate profits to give part of it away to charity where the “experts” used donations to feed the hungry, run a church, and do “good” work. Furthermore, he rejected the notion that “nonprofit” had to mean unprofitable.
Patrick wondered if instead of investing in public stocks so the profits could accumulate in his private foundation to be given away, he could invest in something that did both – earned money and accomplished kingdom good. It’s 2016 and there’s been advances in everything else – I mean, we’re not driving the same cars or using the same phones – so why hasn’t philanthropy changed in 100 years?
In the past few years, Patrick started wondering if maybe business with purpose can do more good than charity alone.
Frankly, after running a company for years Patrick saw the impact he was able to have as an entrepreneur and wondered if there are some types of kingdom good that can only happen through business.
Patrick came to us with a problem: he’d found a business that he loved. He’d mentored the leadership in the for-profit class of Praxis. The company has a beef processing plant in Ethiopia and a bold goal – to transform an Ethiopian economy through profitable, sustainable business.
Patrick wanted to invest from his private foundation but found that a whole bunch of state and federal rules were making it very complicated.
We helped Patrick using an innovative tool called an Impact Fund. Patrick is able to make a simple grant from his private foundation to us and then we invested in Verdant on behalf of his foundation.
Patrick is super happy because he was able to use tax-advantaged money for the investment, essentially realizing a 40% headstart on return, and help fund the growth of Verdant as it changes lives in Ethiopia.
Did you catch that? Let’s run through it one more time.
Donors like Patrick find investment freedom for their charitable capital through a special type of donor advised fund that we call an impact fund. Step 1: You contribute money to your Impact Fund and receive a tax deduction because we’re a charity. You can also grant from an existing private foundation or donor advised fund. Step 2: Next, you recommend a company or nonprofit to invest in and Impact Foundation vets the opportunity, executes the paperwork, and funds the investment. Step 3: Finally, when the profits come in, the returns are available for you to reinvest or grant to another charity through your Impact Fund. They don’t go back to you personally, and your charitable giving pile grows.
Bet you didn’t know you could do that with your charitable funds.
If you're wondering how to take the next step in your journey to invest for impact, sign up for our newsletter at http://eepurl.com/bip21D. Or if you have a deal in mind that you'd like to invest in with your charitable capital, reach out by phone or email.