Giving can take many forms. We help our clients apply the right tools for what they want to accomplish: grants, loans, philanthropic equity, investments in social purpose companies, social impact bonds, microfinance investments, etc.
The word “philanthropy” comes from the Greek work meaning “love for humankind”. Our definition of philanthropy is as broad as our clients’ intentions to help others without expecting anything in exchange. It includes both donations and impact investments.
The most traditional form of philanthropy is a donation given to a nonprofit entity. Although that money is never returned to the donor (as long as the nonprofit meets the conditions of the gift), the nonprofit can either use a donation to fund its current programs or invest it in an endowment or in activities which meet the organization’s mission, such as loans to a micro-entrepreneurs in the developing world, and enable the organization to “recycle” the donor’s gift , using it multiple times. More and more, thoughtful donors think of their donations as “investments” which, over time, should accomplish “a return” for society even though they are not investments which generate a financial return to the donor.
Impact investments are financial investments designed to generate both social impact and a financial return for the investor. Philanthropists expect to see their initial capital paid back, and, in most cases, to receive a financial return on this investment, although the return is often less than the market rate. Millenials are expect to include impact investments in their portfolios. (Read more here)
- Investments in for profit businesses with a primarily social mission (including ones owned by nonprofits)
- Loans to nonprofits (including Community Investment Notes)
- Investments in micro-finance institutions
- Social impact bonds
- Investments in certain community development or fair trade businesses
- Funds that invest exclusively businesses that provide drinking water, clear energy, etc.
Read Harvard Business School’s “The Promise of Impact Investing” and our interview with an Impact Investment pioneer, Spotlight on George Overholser – Social Impact Bonds and Philanthropic Equity.