Learn the Lingo
An Impact Company is one that (1) earns financial profit, (2) has measurable, positive social/environmental change, and (3) regularly works toward Kingdom impact. These companies may be organized as LLC's, corporations, partnerships, or one of the fancy new corporate forms like "L3C" or "B Corporation".
An Impact Fund is a donor advised fund at Impact Foundation and all moneys in a Fund are legally owned by the foundation. We allow donors to advise on how their Impact Funds will be invested within the parameters of the foundation's Investment Policy. This means a donor can select the companies in which it wants to invest. When those investments liquidate, the donor can choose to invest in another Impact Company or grant the money to another charity.
According to the Global Impact Investing Network, impact investments are "investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending upon the circumstances. The growing impact investment market provides capital to support solutions to the world's most pressing challenges in sectors such as sustainable agriculture, affordable housing, affordable and accessible healthcare, clean technology, and financial services."
Program-Related Investment (PRI)
A term of art, program-related investments are codified in the Internal Revenue Code section 4944. A PRI is an investment "the primary purpose of which is to accomplish one or more of the [charitable] purposes, and no significant purpose of which is the production of income or the appreciation of property, shall not be considered as investments which jeopardize the carrying out of exempt purposes."
Mission-Related Investment (MRI)
The IRS defines Mission Related Investments in Notice 2015-62 as "investments that are made by private foundations for [charitable] purposes described, but are not program-related investments (PRIs) as defined in section 4944(c) and the regulations thereunder".
Charity Enterprise is a profit-making endeavor that funds and complements a charitable purpose. It’s not just a business that uses only its profits to fund ministry work. The business itself advances the mission. This model blurs the lines between ministry and business, creating social impact, while making a profit at the same time.