The Impact Security

How It Works

The Impact Security brings together donors, impact investors and nonprofit organizations to fund impact in a new way.

Participants

NPX-Client-Circle

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

  1. Private Donors Make a Pledge

    Private donors pledge to donate to a nonprofit organization if specific impact metrics are achieved.

  2. Impact Investors Buy Nonprofit Issued Impact Security

    Impact investors commit upfront capital by purchasing the Impact Security.

  3. Nonprofit Leverages Capital for Impact

    The nonprofit organization uses the capital obtained from the sale of the Impact Security to achieve impact.

  4. Independent Evaluator Verifies Impact

    Impact is verified by an independent third-party.

  5. 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

More Examples

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.

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