Social Impact Investing: A New Tool for Fundraisers? R. F. “Rick” Shangraw, Jr. Arizona State University Enterprise Partners

Topics What is Social Impact Investing? Why Should Fundraisers Care about Social Impact Investing? What are Some Real Examples of Social Impact Investing in lieu of Traditional Fundraising?

Investment Spectrum Source: OECD, 2019

Lots of Activity

Some Definitions Social Impact Investment – An investment by individual or institutional investors made with the intention of generating both positive, measurable social impact AND a financial return. Program-Related Investment (PRI) – An investment furthering an organization's exempt purpose most often made from assets designated for charitable qualifying distributions. Mission-Related Investment (MRI) – An investment furthering a private foundation’s mission made from assets that are NOT designated for charitable qualifying distributions.

Some Definitions Recoverable Grant – An investment from a private investor with the expectation that the grant will be paid back (sometimes with interest). Social Impact Bond (Pay for Success) – A bond where repayment to investors is contingent upon specific social outcomes being achieved.

Create positive social impact.* Create some level of financial return Common Features Create positive social impact.* Create some level of financial return An investable program: Must generate revenue Is auditable and separable from other programs Must create measurable social impact * “Social impact” is broadly defined and can include environmental, educational, or community outcomes.

Who Invests? Individuals Private Foundations and Family Offices Development Finance Institutions Investment Banks Pension Funds Non-Governmental Organizations

The Ecosystem Source: SoPact, 2019

Why Care? Move from traditional philanthropy fundraising to broader resource raising. Move from affinity-based initiatives to cause-based initiatives. Identify a new set of philanthropy prospects through social impact networks. Demonstrate market support for programs.

Some Examples Health Care Education Community Services Environment Orphan Drug Development Reducing Health Emergencies (PFS) Health Care Specialized Online Programs Fee-Based After School Programs Education Grocery Store in Food Desert Affordable Housing Community Services Solar Energy in Rural Areas Sustainable Seafood Company Environment

Our Story: Project Attainment

The Challenge Expand higher educational opportunities to employees – reinvent the tuition assistance benefit offered by many employees. Build on the very successful Starbucks partnership. Secure resources to expand the Starbucks program to other large employers: Business development University partners Employee engagement platform

The Concept

Lessons Learned Complete buy in from key stakeholders – it is a challenging journey. Willingness to evaluate and report financials in a for-profit structure (and acceptance that the investors will make money on the transaction). Use of a Letter of Intent to align expectations before resources are spent on a transaction. Assuring the social mission is valued (use of a B-Corp structure, measurable social goals for investors, alignment on social mission). Ability to execute.

Questions & Comments Thank You !