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Your Place-Based Nonprofit Organization May Be Just What Impact Investors Are Looking for

Sometimes nonprofit leaders ask me: What does my organization need to do to get a Program-Related Investment (PRI) from a foundation?

The truth is the process varies from funder to funder and there are many considerations (and I'm looking forward to addressing this further in another post). It’s also true, though, that your nonprofit organization may already be an attractive investee for an impact investment from a foundation or a major donor. You may be just what they are looking for!

Similar to your grants, the amazing impact your organization is making is just what your funder needs to realize their goals. After all, they can’t be successful without nonprofit organizations to invest in.

Here are some of the qualities that I am seeing impact investing funders interested in:

Hyper-Local. Especially with place-based foundations, geographically-defined community foundations, and local donors, your focus on your rural, tribal, or urban community may make you very attractive to funders. As donors and funders continue to narrow their focus in order to better measure their impact (and it sometimes feels like they are constantly updating their strategies), your geographic focus may align well with theirs.

Place-based investing is certainly a trend in impact investing. This summer's report from the Impact Investing Alliance takes a deep dive into community investing including some of the barriers and some promising trends. For nonprofit loan funds and even individual organizations, there are new entrants into the impact investing market that are bringing more available capital that needs to be placed. In addition to traditional impact investing players like private foundations, corporate investors and donor-advised funds are growing sources for local impact investments. If they can take on a position with more risk, or combine loans and grants, corporates and DAFs may unlock new funding for local loan funds and investees.

Community-Driven. Do your stakeholders influence your decision-making? Do you have a board or leadership that is representative of the community you serve? Then you may be exactly what impact investors are looking for. Funders are finally increasingly investing in organizations led by the people they aim to serve and they are making a conscious effort to seek these organizations out. After much criticism about funders driving local efforts instead of following the community's lead, foundations are ready to lesson their grip of the wheel and invest in community-led groups. If your organization has been doing this forever like many have, you can make your resident-led or community-driven strategy front and center in your materials.

Multiple Impact Areas. Over the last decade or so many funders have begun to recognize that a variety of conditions and factors influence the impacts they are attempting to achieve. For example, many health-focused funders have shifted from supporting only health services and health care to funding social determinants of health. This means that organizations that provide housing, transportation, workforce development, food security, and more can position themselves to receive health funding when they communicate their impacts in terms of healthy-community outcomes. Similarly, the funders who have traditionally funded only economic opportunity or only the arts may now be funding the creative economy, or economic development from the arts and creatives. Make sure you can effectively communicate all of the ways your organization makes an impact, whether it’s by way of the UN Sustainable Development Goals, or by the various ways you measure your own success.

Racial Equity. Over the last year the nonprofit sector has experienced gifts from corporate funders like never before. Much of this funding has been focused on racial equity. And while it remains to be seen if these giving levels can be sustained over time or are just a blip, nonprofits that address racial equity in their mission are well-positioned for attracting impact investments from funders and corporations that are now beginning to use racial-equity lenses. Also, BIPOC led and serving organizations, regardless of their missions, may now have opportunities to solicit investments from corporate funders like never before.

While there are many steps your organization may need to take to get prepared for an impact investment, many of the assets and values that your organization already exhibits may be all that you need to start the conversation with impact investors.

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