Press Releases

NPX Announces Four “Pay For Success” Financings In Colorado That Aim To Drive Upward Economic Mobility

February 3, 2022

15 investors invested $4.4 million in four nonprofit organizations -- ActivateWork, Bridge House Ready to Work, CrossPurpose and LaMedichi Savings Clubs -- with financial returns tied to impact performance

DENVER, CO - February 3, 2022NPX, a company transforming the way nonprofits are funded by explicitly linking capital with results, announced today the closing of $4.4 million in “Pay For Success” investments by four nonprofit organizations in Colorado -- ActivateWork (formerly ActivateIT), Bridge House Ready To Work, CrossPurpose and LaMedichi Savings Club.

The nonprofits raised investment capital from 15 accredited and institutional investors seeking both financial and social returns through NPX’s “Pay For Success” financing structure, known as an Impact Security. The Impact Security, developed by NPX and Anna Pinedo, partner and co-leader of the global capital markets practice at Mayer Brown, is a performance-based debt security that links payment obligations to impact. The investment capital raised provides the nonprofits with multiple years of flexible working capital to run their programs.

As outcomes are achieved by the nonprofits and independently verified, funding is released to the nonprofits from an outcomes fund -- the Colorado Donor Impact Fund (DIF) -- supported by donations from 13 philanthropists and foundations.

The Impact Security is similar to a social impact bond (SIB), but with private philanthropists serving as the outcome payor instead of the government.

Funding in this way incentivizes impact. By measuring and rewarding outcomes, all parties -- nonprofits, donors and investors -- are aligned in order to maximize impact.

“Having invested in several Pay for Success projects over the years, we are excited to partner with NPX on this project that goes beyond the traditional public sector payor model to leverage the power of donations,” said Sara Vernon Sterman, Chief Program Officer at Reinvestment Fund. “If successful, the program will not only help people living in poverty build a bridge to economic security but also prove out a model that could dramatically impact the field.”

The four nonprofits that received funding represent a wide-range of organizations -- from start-up to established in urban and rural geographies across the state. Of the four nonprofits, two (50%) are BIPOC-led and/or founded and three (75%) are women-led.

Nonprofits appreciated several unique aspects of this funding model, including flexible capital tied to outcomes, trust from funders on how to spend money to drive outcomes and large amounts of funding over long timelines.

If successful, the funding will result in the following in Colorado:

  • 50 individuals experiencing homelessness stably housed and employed
  • 45 low-income individuals secure and retain living wage jobs
  • 500 Hispanic and Latino/a immigrants in rural Colorado build an emergency savings fund

This financing model mobilized new funds to the nonprofits. Of the 15 accredited and institutional investors participating in the deal, over 70% had never before funded these nonprofits and over 50% of the investments came from out-of-state investors.

“NPX launched its work in Colorado to achieve three goals: pioneer a new results-based funding model with broad applicability, catalyze more money to nonprofits and drive long-term impact,” said Lindsay Beck, Co-Founder and Co-CEO of NPX. “We’ve achieved the first two goals and look forward to seeing the impact that nonprofits can have when given long-term, flexible, outcomes-based funding.”

To learn more about this deal, please refer to the Colorado Economic Mobility Case Study.

Partners

Thank you to our partners who provided support and expertise:

Mayer Brown LLP
Morgan, Lewis & Bockius LLP
BPM LLP
First Republic
OMNI Institute
QREM
US Bank

About NPX

NPX is transforming how nonprofits are funded by explicitly linking capital with impact. Learn more at www.npxadvisors.com.

Press Contact

Rubenstein
Alex J. Stockham
astockham@rubenstein.com

15 investors invested $4.4 million in four nonprofit organizations -- ActivateWork, Bridge House Ready to Work, CrossPurpose and LaMedichi Savings Clubs -- with financial returns tied to impact performance