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Maximizing Your Investment:
How nonprofit intermediaries can help you make safer, socially responsible investments
On October 14, the Maximizing Your Investment panel was hosted by The Seattle Foundation and co-sponsored by PRI Makers Network and Philanthropy Northwest. Impact Capital Senior Program Officer Jon Clarke presented to the group on why foundations should consider investing in intermediaries like Impact Capital.
Speakers included Tracy Kartye from the Annie E. Case Foundation, Janet Ozarchuk from the Local Initiatives Support Corporation (LISC), and LaVerne Woods of Davis Wright Tremaine, LLP. The moderator, PRI Makers Network's Director Peter Berliner, lead the discussion that focused on how to have a greater impact on social issues by investing in local and national intermediary organizations.
“Intermediaries like Impact Capital provide the expertise to negotiate investments, underwrite nonprofits, monitor the progress, and report back to the funder. Besides accomplishing the foundation’s mission-related goal, an intermediary organization also returns the investment – many times with interest,” said Jon Clarke of Impact Capital. “It can be a win-win for a foundation looking to address an issue like affordable housing or targeted economic revitalization. Instead of giving a grant where the money is used up, their investment comes back, and can be used over and over to help several organizations tackle the issue.”
According to Ms. Kartye, the Annie E. Casey Foundation’s Program Related Investments in intermediaries are often outperforming their other investments. “We expect the annual return of 3.3% for our entire portfolio, which is mostly PRI’s.”
“Intermediary can accumulate and concentrate investment dollars in target locations to leverage the amount and types of projects to maximize neighborhood impact,” said Janet Ozarchuk during her presentation. Additionally, they count towards the 5% payout requirement foundations must adhere to. “Program-related investments: defined in Internal Revenue Code since 1969, are loan or equity investments (not grants) whose primary purpose is charitable and would not be made but for relationship to exempt purposes,” explained attorney LaVerne Woods, who specialized in nonprofit tax law. “PRI’s can also have no significant purpose to generate income or appreciation in value.
Attendees asked several questions to clarify how these investments are made and what issues foundations should consider before investing in intermediaries. “It comes down to manpower. Most foundations don’t have the staff to initiate, underwrite, and monitor deals. That’s what intermediaries do best,” says Magda Herrera, Impact Capital Senior Fund Development and Communications Officer. “Impact Capital reduces the risk for foundations– our 100% loan repayment rate proves it.”
Click here to read the speaker biographies, and click on the links below to view the PowerPoint presentations from the panel.
Tracy Kartye, Annie E. Casey Foundation
LaVerne Woods, Davis Wright Tremaine, LLP
Thank you to our presenters, moderator and The Seattle Foundation for hostng the event!