1. A Signature Program of the Indiana Philanthropy Alliance

2. Understanding impact investment: basic terminology
March, 2016

3. Intro Session Scope Historical Context Definitions
Setting the Stage for Broader Discussion
Examples

4. Rapidly Expanding Field

5. “Impact Investing” – The Umbrella Term
Broadly defined as financial investments that advance mission while recovering principal or earning a return
Create opportunities for funders to deepen social impact – not through grantmaking alone – but by using the entire toolbox
Complement effective giving and other philanthropic activity to shape, accelerate, deepen and scale desired outcomes

6. Historical Context Systemic market failures
Structural racism and income inequality
Redlining
Community disinvestment
Financial responses to market failures
Community Reinvestment Act for Financial Institutions
Insurance industry accountability
Community Development Industry Formalization
CDFIs/Nonprofit financial institution designation
Tax credit market emerged
PRIs

7. IRS Definition
PRIs emerged as a formal philanthropic activity in response to the Tax Reform Act of It is an IRS designation for private foundations.
PRIs substantially contribute to programmatic goals
Financing terms typically below market, on a risk-adjusted basis
Does not support lobbying
Must be investigated, documented and monitored

8. Program Related Investments
Investments at or below market rate that achieve programmatic goals but also have a return of capital of some kind. Some examples of PRIs include loans and lines of credit.
* Per Mission Investors Exchange

9. Mission Related Investments
Investments at or above market rate that contribute to achieving the mission of the organization. Some examples of MRIs include fixed income bonds and private equity investments.
* Per Mission Investors Exchange

11. Maximizing the Bottom Line
Double Bottom Line
Triple Bottom Line
Single Bottom Line
Graphic by Triplebotline

13. Why Impact Investing Now?
Innovation gaining traction
More foundations engaged
More investment vehicles available
Wide scale emphasis on comprehensive corporate responsibility throughout the organization
Returns on impact portfolios outperformed rest of endowment investments during economic crisis
Achieve mission goals with all resources available to the foundation
Maximize options with fewer resources
The economic crises and its restrictions on traditional grantmaking has provided the best incentive yet for investing philanthropically in this manner.
For some foundations, it has been a stable component with little variability. In the beginning of the economic downturn, for some it was the only portfolio that made $ after all the down turns.
There are examples of all sizes of foundations making PRIs. The notion is that it is revolving, goes toward your payout and brings back in funds for redeployment. The Columbus Foundation is taking social investing very seriously. A NY-based family foundation – the Bodner Family Foundation with assets under $18M made 44 PRIs in This was the largest reported for a single foundation in a two year period. They made loans ranging from $30K to $400K to Jewish agencies and synagogues.

14. Choosing a Vehicle – Risk Valuation and Underwriting
Use a Grant:
Affordability gap vs. financing gap
Extremely high risk level
Smaller $ amounts
No repayment source/repayment relies on fundraising
Use Impact Investing Tools when:
True financing gap
Reasonable risk level
Larger $ amount
Obvious and reliable repayment source
Stable competent management and board leadership

15. Various Applications Cash Deposit Accounts
Latino Community Credit Union
Revolving Loan Program
Marion Knott Foundation
Low Interest Loans
Meyer Memorial Trust
Loan Guarantees
Gaylord and Dorothy Donnelly Foundation
Real Estate
Conservation and Preservation
Incubators
Equity Infusions
Annie E. Casey Foundation 15

16. Nonprofit Intermediaries (CDFIs)
Other Indiana-based community loan fund options:
Accion, CIFI, Brightpoint, IFF, Evansville Small Business Loan Pool, Flagship Enterprise, Indianapolis Neighborhood Housing Partnership, Cinnaire Lending, Community Homebuyers Fund in South Bend

17. $33MM Maywood Superfund Solar Redevelopment – Southwest Indianapolis
Forbes Rated #1 for Social Responsibility
More LEED Certified/Green Buildings than any company on earth
Consistent Outstanding CRA Rating
Offers Impact Investing Filters on Portfolio Management
Staffs up Community Development Banking locally helping to structure and invest in community based projects and loan funds
$33MM Maywood Superfund Solar Redevelopment – Southwest Indianapolis

18. Rachel McIntosh
PNC Bank NA
Community Development Banking e:
PNC Corporate Responsibility Report can be found at:

19. Understanding impact investment: basic terminology
OPEN Forum – Questions - Discussion