Everything you need to know about receiving Investment from Impact Foundation

 
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Whether you were introduced to Impact Foundation by a potential donor/investor or happened across our page while searching the internet for funding options, this page explains what you need to know about receiving investment capital from us. 

We exist to provide donors a streamlined way to grow the impact of their charitable giving through an Impact Account - a special kind of donor advised fund. Purpose built for impact investing, we provide a streamlined way to fund transformational businesses, make loans to charity, and grow the amount donors have to give away.

 

The process

It all starts with a donor/investor. 

Impact Foundation is a charity that sponsors donor advised funds, which means we allow donors to recommend how the assets in their Impact Accounts will be invested and granted. We do not have a pool of capital ready to be deployed. 

Once a donor/investor recommends an investment, we vet the enterprise to make sure it matches our charitable purpose and other investment criteria. Read more about our investment criteria on our blog -->

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Assuming everything checks out during the vetting process, we can move forward with funding the investment and executing investment paperwork. Then the fun part happens, when you, the leader of the enterprise put capital to work for social, spiritual, and economic transformation. During this phase, you provide us with regular updates so we can monitor the progress, make sure our capital is being used as we expected and celebrate with you. 


what we need from you

Our vetting team needs to review certain information about each proposed investment. You'll fill out an Investment Initiation Form and send it in along with the documents listed below:

  •  Business plan/marketing plan
  • Articles of Organization/Incorporation
  • Term Sheet (if available) 
  • Private Placement Memorandum (if available) 
  • Bylaws or Operating Agreement
  • Current and prior 3 years of financials (if available)

For secured debt, please also provide: 

  • Property address or description

  • Recent title insurance report (if available)

  • Property Appraisal (if available)

 

frequently asked questions

What happens next?

1.     Send the documents and a scan or picture of this completed form to documents@impactfoundation.org

2.     We will vet the documents and our investment committee will vote on the proposed investment. This usually takes around 7-10 working days. 

3.     The donor/investors sends capital to his or her Impact Account to cover the investment plus 2 years of fees. This can be sent as a grant from a private foundation or a donor advised fund. 

4.     The donor/investor will sign an Investment Recommendation Letter (IRL) that we send electronically (via Right Signature). It outlines our understanding of the investment. 

5.     We sign investment documents with the enterprise. 

6.     We send a wire to the enterprise to fund the investment.

At this point the funding stage of the investment is complete. During the life of the investment, we will manage tax reporting, voting shares (if needed), collecting loan payments or distributions and collecting impact data from the enterprise. 

Investment proceeds less any fees or taxes due will be available for the donor/investor to reinvest or grant to another DAF or charity. 

 

What is your fee* structure?

Impact Foundation assesses a fee* of 1.5% per year on invested assets and there is no fee on cash in Impact Accounts. For donors that have more than $5M with us, the incremental fee is 1%. We request two years of fees to come along with a grant for a new investment. 

*Technically, we do not charge a fee, as the assets in Impact Accounts all belong to the foundation and it would not be completely accurate to charge ourselves fees. It is an administrative cost assessment. We use the colloquial language of “fees” because it is more customer friendly. 

 

Is there a minimum investment?

Yes, our minimum investment amount is $100,000 from a single Impact Account for an initial investment in an enterprise. We can facilitate additional investments in the same company above $25,000.

 

Do you have to pay taxes on investment income?

It depends. Even though Impact Foundation is recognized as tax exempt, we may be liable for tax on our unrelated business income. This is a very complicated area of law, but in general, investment income will not be taxed unless it is earned through business activities that are not closely related to our charitable purpose. Rental income, royalties, dividends, and interest income are generally not taxable. If income is taxable, there are a number of deductions that may reduce the amount of tax owed.

 

Will you help me raise money for my company?

No. We cannot fundraise for your company as that would violate a few IRS rules for what charities like Impact Foundation are allowed to do. 

But we can still help. As you are out raising capital for your enterprise, you can offer people two ways to fund the investment: from their personal capital or using charitable capital from a donor advised fund or private foundation. For those who are generously minded and have set their personal financial finish line, investing in your enterprise through Impact Foundation can be an attractive option.

 

What types of companies do you invest in?

We invest across industry as illustrated by the graphic showing the industries represented in our portfolio at the end of 2017.

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what causes do you support through your investments?

Impact Foundation exists to invest charitable capital to create social, spiritual & economic transformation. Specifically, this means we invest in enterprises that seek to make a positive difference in these areas:

  • Humanitarian aid (includes healthcare)

  • Grants

  • Generosity

  • Widows/orphans care

  • Evangelism/discipleship

  • Redemptive Methodology (see below)

  • Energy/environmental stewardship

  • Freedom

  • Poverty reduction

  • Education

 

resources

Wondering whether a SAFE or Convertible Note is best? Check out this article.

Looking for encouragement, inspiration, tools, blogs, podcasts to encourage you in your entrepreneurial journey? Check out our friends at Faith Driven Entrepreneur.

Not sure how to build a great pitch deck? Check out this book, “Get Backed” by our friends Evan Loomis and Evan Baehr

 
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the power of Redemptive business

"'Our endgame is for our venture to be an agent of redemption as we act as the hands and feet of Christ in the world, knowing that He is “making all things new.'" Dave Blanchard, Praxis Labs

 

Every business we invest in is part of God’s redemptive work in the world - bringing the reality of the Kingdom into closer focus. Some businesses provide goods and services that obviously make people’s lives better: a longer-lasting mosquito repellant or educational software for inmates. Their primary impact happens through the products and services they provide and it is easy to understand how they're fit for impact investing.

But what about the Believer making great tables who intentionally lives out a plan for using the very business itself as a force for God’s redeeming work? This type of business makes the world a better place by the way it conducts itself even if its product or service isn’t specifically addressing quality education, poverty alleviation, clean energy, or freedom. While there may not be anything inherently transformational about the widgets a company sells, it nonetheless has a positive impact on employees, vendors, and its community.

We desire to invest in those enterprises and need a way to describe how they further our charitable purpose. Thus, we created a category called “Redemptive Methodology” to describe these unique organizations.

REDEMPTIVE METHODOLOGY
An enterprise whose primary positive impact on the world happens through the way business is conducted. Its leadership, being rooted in Christ, follows the Spirit to intentionally participate in God’s transformational work in the lives of employees, vendors, & customers while creating sustainable value.

As we vet enterprises, we've developed a set of best practices to determine if a potential investment belongs in our portfolio. The goal is to describe a common set of behaviors that if practiced regularly over time could be expected to result in the kind of fruit the business exists to create. Below is a start to that list. Let us know if you think we should add or change anything. 

IMPACT ON EMPLOYEES

  • Pays fair compensation*
  • Jobs created and/or training for marginalized or underserved populations
  • Corporate chaplain service
  • CEO or other senior leader(s) regularly participates in spiritual disciplines
  • Flu shots, wellness programs
  • Marriage enrichment
  • Employee Assistance Programs
  • Conduct regular performance reviews*
  • Exercise hiring and termination practices that honor individuals*
  • Profit or equity sharing

IMPACT ON CUSTOMERS

  • Satisfied, repeat customers*
  • Provides value (quality service/goods at fair prices)*
  • Truthful advertising/marketing*
  • Advertising/marketing built on a redemptive storyline (i.e., not selling to people’s fear or hunger for power, money, fame, sex, etc.)
  • Builds relationships that foster opportunities to interact with the Gospel

IMPACT ON VENDORS

  • Pays bills on time*
  • Honors contracts*
  • Builds relationships that foster opportunities to interact with the Gospel
  • IMPACT ON COMMUNITY
  • Stands against corruption*
  • Owners and/or employees volunteer services in the community
  • Intentional relationships built with ministry/ church/ community leaders
  • Contribution of finances, goods, services to NGO’s, local churches

IMPACT ON ENVIRONMENT

  • Basic environmental stewardship practiced*
  • Clean water provided
  • Waste reduced
  • Improvements in natural resource management