How It Works
The Impact Security brings together donors, impact investors and nonprofit organizations to fund impact in a new way.
Participants
Nonprofit Organizations
Raise the capital necessary to fund long-term, high-impact initiatives
Donors
Make impact-based donations to nonprofit organizations
Impact Investors
Invest upfront risk capital and realize financial returns based on impact
Step By Step
Private Donors Make a Pledge
Private donors pledge to donate to a nonprofit organization if specific impact metrics are achieved.
Impact Investors Buy Nonprofit Issued Impact Security
Impact investors commit upfront capital by purchasing the Impact Security.
Nonprofit Leverages Capital for Impact
The nonprofit organization uses the capital obtained from the sale of the Impact Security to achieve impact.
Independent Evaluator Verifies Impact
Impact is verified by an independent third-party.
Impact Metrics Are Achieved
Private Donors Fulfill Donation Pledge and Impact Investors Are Paid
Private donors fulfill their pledge to donate. Impact investors are repaid principal and interest at variable rates based on impact.
Impact Metrics Are NOT Achieved
Private Donors Do Not Donate and Impact Investors Write Off Loss
Private donors do not fulfill their pledge. Impact investors are not repaid and write off their capital loss.
Capital In Action Example
Private Donors
pledge to donate to a nonprofit organization if specific impact metrics are achieved
Impact Investors
commit upfront risk capital using the Impact Security
Nonprofit Organization
uses the investment capital to achieve the impact goals as verified by an independent third-party auditor
Private Donors
fulfill their donation pledge to the nonprofit organization as impact is achieved
Impact Investors
are paid, principal plus interest, as impact is achieved
Technical Details
The Impact Security is a debt security issued by a nonprofit organization, government or supranational entity, featuring variable returns that are contingent on the achievement of pre-determined impact metrics.
The Impact Security combines the contingent returns concept found in pay-for-success financings such as Impact Bonds with an established, scalable and tradable capital markets structure, a debt security. Because the Impact Security is issued by a nonprofit, government or supranational entity, the offering is exempt from SEC registration requirements.