Sooner or later, everything old is new again.
This phrase is often tossed around when it comes to fashion or music. But did you know it also applies to philanthropy and, more specifically, impact investing?
So, let’s talk about impact investing—how it’s been around for longer than you may think in one form or another, what makes it different this time around, and why it might be right for you.
The idea of being thoughtful about where your money goes has been around forever. In the mid-20th century, some religious organizations encouraged followers not to be involved in companies that manufactured weapons, alcohol or tobacco. That was a form of investment screening.
For years on college campuses, students and faculty have joined together and encouraged their universities to remove investments or divest from certain things. This is called socially responsible investing (SRI).
Another approach is specifically seeking out companies that prioritize conservation of the natural world, the needs and rights of their labor force, and transparency and inclusivity in their leadership. This approach is environmental, social and governance (ESG) investing.
Impact investing is another way to be thoughtful about how your money is invested. It focuses on generating both positive measurable social impact and financial return. It’s an intentional marriage of profit and values.
Want a local example of successful impact investing? A low-interest loan from the Omaha Community Foundation’s (OCF) new Community Loan Fund enables Native360 Loan Fund to assist Native American-owned, small business owners in our community like Hedgewood Tree Services LLC. The family-owned Bellevue business started in 2015 with one employee and minimal equipment. With support and technical assistance from Native360, Hedgewood was able to purchase new equipment, restructure, and scale the business to grow from handling one tree a day to four or five trees per day.
“With great success comes growth,” said Pete Upton, executive director for Native360 Loan Fund.
OCF and its generous fundholders are supporting other local residents and businesses through our Community Loan Fund. Beyond Native360, OCF has made significant investments in Nebraska Enterprise Fund and Midwest Housing Development Fund.
Supporting these mission-driven organizations is creating jobs, building affordable housing and supporting small businesses in underserved neighborhoods across Omaha and southwest Iowa. When the loans are repaid, OCF can reinvest this philanthropic capital into new projects, expanding our impact beyond traditional grantmaking.
This fund makes impact investments structured as flexible, affordable loans. When loans are repaid, we can reinvest this philanthropic capital into new projects. Then we repeat the process over and over to create a cycle of good.
It’s a simple, sustainable idea. We broke it down into six steps:
1. Donor Investment. Using an OCF fund, fundholders partner with OCF to invest in the Community Loan Fund, which provides a structure for loaning capital to local nonprofits.
2. Identifying Opportunities. OCF identifies potential local investments grounded in equity and aligned with community needs.
3. Due Diligence. A detailed due diligence process ensues between OCF, our advisors and the potential nonprofit borrower to determine mission fit, terms and partnership opportunities.
4. Community Investment. Loans are made to qualified local nonprofits.
5. Returns. Loans are repaid by the nonprofit borrowers, which also report social impact metrics to OCF and our fundholders.
6. Repeat. Funds can be reinvested into the Community Loan Fund or returned to your personal fund at OCF.
Are you ready to make an impact in our community?
Reach out by emailing email@example.com or by calling (402) 342-3458 to learn more about this innovative new philanthropic tool.