Bridging the Gap Between Philanthropy and Impact Investing

Bridging the Gap Between Philanthropy and Impact Investing

Many philanthropists would like to dip a toe into impact investing, but they’re not sure where to start.  Below are a few organizations and projects that combine the best of nonprofits and social enterprise.  Many can accept both donations and investments (not all are currently accepting investments).

  1. Impact Assets – make a tax-deductible charitable donation and they will invest your donation in the social enterprise of your choice – investment returns grow the pool of investable assets
  2. SheEO – make a tax-deductible charitable donation and then help choose women entrepreneurs that will receive investment out of the the donated funds
  3. Force for Good Fund – 501(c)(3) investment fund offering eight-year revenue sharing notes – investing in social enterprises with a focus on women and people of color
  4. Economic Development and Financing Corporation – a nonprofit CDFI in Mendocino that raised money from the general public in California to invest in a start up wool mill
  5. RSF Social Finance – nonprofit offering investment notes to the general public – considered very low risk
  6. Nia House, a school in Berkeley – offered notes to the families it serves to build an addition; used community notes to leverage grants and institutional loans
  7. Beneficial State Bank is a for-profit bank whose stock is owned by a nonprofit foundation – bank profits go to the foundation so that it can make community grants – a great place to park your money!

Please share your examples!

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Jenny Kassan Consulting is now a Certified B Corp!

Jenny Kassan Consulting is now a Certified B Corp!

My company was recently certified as a B Corp.

Certified B Corporations are leaders of a global movement of people using business as a force for good. They meet the highest standards of overall social and environmental performance, transparency and accountability and aspire to use the power of business to solve social and environmental problems. There are almost 2,000 Certified B Corporations in over 130 industries and 50 countries with 1 unifying goal – to redefine success in business.

I chose to become a B Corp because I believe that businesses working for positive change in the world is what we need to create a just and prosperous world for all.

In order to become a B Corp, I worked with my friend Carolina Miranda of Cultivating Capital who helped me complete the assessment process and gather materials like supplier and charitable donation policies.

One of my favorite parts of the B Corp movement is the “Declaration of Interdependence” that all B Corps sign.

The declaration says in part “We are each dependent upon one another and thus responsible for each other and future generations.”

I just love being part of a movement of businesses that recognizes that we are all in this together and must care for each other.

I did a little research and learned that others have also written declarations of interdependence starting as early as the 1930’s.  Here is an excerpt from a recent one from David Suzuki: “At this turning point in our relationship with Earth, we work for an evolution from dominance to partnership; from fragmentation to connection; from insecurity to interdependence.”  Amen!

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Insights from Hint Water Founder Kara Goldin

Insights from Hint Water Founder Kara Goldin

Kara Goldin started Hint Water 11 years ago because she was passionate about encouraging more people to drink water instead of unhealthy sweetened drinks.

She financed the company with her own funds for the first two years but soon realized she would need outside funding to continue her early success.

Her first investor was a wealthy family that was passionate about her mission and willing to be patient because they knew that the brand represented a whole new product category and would take some time to gain traction.

When she needed to raise more money, she listed her offering on the online angel investing platform, AngelList.

Hint Water raised $2.5 million in two weeks! It turned out that a lot of the investors on AngelList drank Hint Water and were huge fans of the brand. They especially loved the mission of the company. By the end of the raise, Hint Water had added about 100 new equity investors! Kara made sure to talk to every one of them before allowing them to invest to make sure there was values and personality alignment. Kara’s advice: don’t accept any investor that you wouldn’t want to go out to dinner or go on a hike with.

These investors purchased non-voting common stock. This means that there were no rights associated with the stock – no preferred dividends, no liquidation preference, no right to elect a board member, etc. Kara does make sure they receive cases of Hint Water every month! She also sends them quarterly financial reports. Some of the investors have asked for more detailed information or have asked her to present specific company to information. She has had to decline these requests and reminds them that it would be impossible to accommodate these kinds of requests for all 100 of her investors! She feels the best way to serve her investors is to build a great company and brand, and not to spend time responding to individual investor requests for information.

Many of the investors come from the world of tech and have been willing to offer advice on Hint Water’s online strategy.

After 11 years in business, Hint Water is on track to have its first profitable quarter.

I asked Kara what her plans are for the future of the company. She isn’t certain at this time, but said she would be interested in exploring an IPO. She knows that being the CEO of a public company can be a very tough job, especially since it is not a world known to be very friendly for women, but she is up for the challenge!

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Spotlight on a Successful Social Enterprise: Equal Exchange


From the Equal Exchange YouTube channel

Financial Success and Core Values
One of my favorite examples of an organization that has been able to raise millions of dollars of capital while staying in control and true to its values is Equal Exchange.

Despite posting enviable growth, this company has successfully retained its mission to create mutually beneficial relationships between farmers and consumers and support worker democracy and fair trade throughout the world.

Try some of Equal Exchange’s teas, coffees, chocolates, and fruit. You’ll be hard pressed to find goods of this quality anywhere else, and you’ll feel awesome that what you’re consuming is good for you and good for the world.

So what’s their secret?
How has Equal Exchange been able to grow and thrive for over 25 years while maintaining its mission and values?

Equal Exchange stipulates from the outset that investors have no voting rights. Investors are sufficiently confident in the worker-owners of the company to steward its resources. And investors have never been disappointed – they have received generous dividends every year, resulting in a return that exceeds a comparable investment in the S&P 500.

Notably, Equal Exchange’s structure prevents any investor or owner from profiting from the sale of the company.

Equal Exchange’s structure and investor agreements ensure that only values-aligned investors will be interested. The controls placed shareholder participation have never proven a hurdle to gaining investment. Demand exceeds supply every time. Equal Exchange offers its preferred stock.

Values-Driven Business
Equal Exchange is not successful in spite of its commitment to its mission but because of it. A majority of investors and consumers want to do business with values-driven companies and Equal Exchange meets that demand.

There is plenty of room for more companies to do the same!

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What is a Social Enterprise?

What is a Social Enterprise?

CORE Foods team

A social enterprise is a business (for-profit or nonprofit) that, in addition to striving to be profitable, takes actions that in some way make the world a better place. Such actions could include paying a living wage, using environmentally friendly practices, supporting improvements in the business’s community, and so on.

I often refer to such businesses as socially responsible, heart-centered, or mission-driven enterprises. In fact, if you read my blog posts or get to know me to any degree, you’ll often hear me use the terms interchangeably.

While it may seem like a delicate balance to pursue profit while also contributing to a better world, plenty of organizations have been successful in pursuing this business model. And so can you! In fact, evidence exists to support the notion that socially responsible businesses can actually be more profitable than businesses focused solely on profit.

Structurally, as I mentioned, social enterprises can be organized as for-profit or non-profit companies. Depending on the country or locality in which they are established and the preferences of their founders, they may choose to organize themselves as co-operatives, traditional corporations, limited liability companies, benefit corporations, community interest companies, or charitable organizations, to name just a few possibilities. Some create “hybrids,” combinations of two or more entities that work together to achieve the business’ goals.

These days, because of growing public outrage over socially irresponsible companies, many businesses say they are socially responsible. But are they really?

The truth is, many companies add socially responsible activities to their operations because they perceive that, by doing so, they will make their overall conduct more palatable to consumers. In other words, social responsibility does not drive the mission of these organizations. Such activities are added as icing on a cake to make it sweeter to the consumer. From a terminology standpoint, such companies are not social enterprises but merely organizations that operate various “corporate social responsibility” programs.

True social enterprises place mission at the center of everything they do. Many codify their missions into their charter documents. When they raise money from investors, they ensure, through properly drafted agreements, that the investors will not interfere with the long-term pursuit of the company’s mission.

There are infinite ways in which social enterprises can be structured and investor agreements drafted. And there are many wonderful examples of companies that have designed very creative structures to ensure long-term fidelity to mission, even after bringing on investors. Here are a few great examples:

It is a great time to be a social entrepreneur!

Many organizations have already led the way, and you can stand on their shoulders.

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