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Education

How Inspirit Foundation does impact investing

By | Education

A Conversation with Jory Cohen: Inspirit Foundation

At Tapestry, we’re on a mission to help the not for profit sector more effectively pursue sustainable financing for their iconic community projects. To accomplish that goal we’re endeavouring to speak to as many stakeholders as possible!

This includes both people who have created iconic projects, and those who fund those projects. One of the key partners that help to bring these projects to life in the not for profit world is foundations.

We spoke with Jory Cohen, Director of Social Finance and Investment at Inspirit Foundation, to get his perspective on what makes for a worthwhile investment. Jory leads Inspirit Foundation’s finance and investment strategies. He is a leader in the Impact Investment field, and with the support of the Inspirit Foundation board, is leading Inspirit to a 100% impact investment portfolio. Before Inspirit, Jory was the Managing Director of Youth Social Innovation Capital Fund (YSI), an impact investing fund.

The full audio of our interview with Jory can be found at the end of this post.

About Inspirit Foundation

Inspirit is a public foundation based in Toronto. They work to build more pluralist societies–one where multiple groups can coexist. Inspirit works towards this mission through granting, impact investing, and working to make systemic change through young change leaders. The foundation’s granting activities are focussed on the main priorities of reconciliation and addressing islamophobia through a media and arts lens.

Our main interest in speaking with Jory was exploring the criteria that Inspirit Foundation uses to evaluate organizations from an impact investment perspective. The conversation was wide-ranging, but he provided three key takeaways that organization should consider when positioning themselves for investability.

 

Key Lessons Learned

“There is a higher likelihood of financial profitability alongside higher levels of impact (or), at least the intent of impact…”

There is sometimes an aversion in the non-profit world towards thinking of organizations like a business. Whether knowingly or unknowingly, this can result in short-term decision making that prioritizes direct program delivery over the long-term health of an organization. What Jory has found through impact investing, is that impact and profitability do not have to be mutually exclusive, and in fact, can go hand and hand.

As Jory explains, an investor can decrease their volatility by investing in organizations that have a focus on impact. The chances of a crisis arising, and a subsequent dramatic drop in the company’s value, is lessened when social good is at the centre of their business practice. This is part of the reason why Inspirit has moved towards 100% impact investing. It’s just good business.

To learn more about Inspirits impact investment practices, click here.

 

“We don’t like investing under $250,000.00 because investing is a lot of work. Every investment takes a few months from start to finish.”

Inspirit Foundation does not have a large team of people assessing investments. For that reason, Jory has to be selective about the types of investments that the foundation chooses to take on, and any opportunity under $250,000.00 will likely be too low for consideration.

In positioning an organization for investability, it’s important for organizations to be conscious of not asking for too little. While an organization may think that a smaller ask makes them more attractive because the amount is more accessible, it can actually have the opposite effect.

 

“Quite honestly, most (organizations) come to us. Canada is a small market for impact investing still and I think we’ve got the word out that we’re active impact investors, active in the sense that we like making investments.”

Inspirit doesn’t need to seek organizations out.

While the ecosystem is small, Canada still provides a healthy pipeline for investors seeking impact investment opportunities. What that means for not for profits developing investible projects is that they need to be proactive in seeking organizations out. This means more than just putting up a website.

Get your pitch ready, have your financials in order, and set up some meetings!

 

Full Interview Audio

If you’re interested in learning more about Inspirit Foundation, what they look for when investing in Community Bonds specifically, and how they approach impact investing more generally, check out the full audio of our conversation below.

If you’re interested in reading about Jory’s journey towards 100% impact investing, you can view his blog, Impact Invest with Me, by clicking here.

And, if you want to receive more stories like this directly to your inbox, signup for our newsletter The Threadby clicking here.

Where do Community Bonds sit on the Investment Continuum?

By | Education

What are Community Bonds?

Community Bonds are an innovative social financing tool issued by a non-profit, charity or co-operative organization to finance projects that have a community impact. Figure 1. demonstrates the social investment continuum of financial instruments used by various organizations. The left side of the continuum is dominated by grants and philanthropic mechanisms, while the other end consists of instruments typically used by for profit corporations when pursuing growth opportunities. These instruments on the right side of the continuum are typically supported by the securities market trade.

Figure 1: Investment Continuum

The Investment Continuum Defined:

  • Donations: capital given by anyone for charitable purposes and to benefit a cause.
  • Grants: funds given by a specific granting body, particularly the government, corporations, foundations, educational institutions, businesses, or an individual. To receive a grant, an application is required.
  • Forgivable Loans: a form of loan in which its entirety, or a portion, can be forgiven or deferred for a period of time by the lender when certain conditions are met.
  • Social Enterprise Investments: investment funds that can be accessed by social enterprises.
  • Community Loan Funds: a fund that provides loans to the community usually for the purpose of financing a community project.
  • Social Impact Bonds: a tool based on the pay-for-performance principle where the government agrees to repay investors for the improved social outcomes of the project/program.
  • Community Bonds: an interest-bearing loan with a face value, fixed term and set interest rate. Community bonds always generate a social or environmental return, in addition to a fair financial return.
  • Debt: money that is owed or due to another institution or individual.
  • Corporate Bonds: a debt security tool issued by a corporation and sold to investors in order to raise capital for a variety of reasons. In return, investors receive repayment in terms of financial capital.
  • Equity: equity financing is the process of raising capital through the sale of shares. By selling shares, the company sells ownership in their company in return for cash.
  • Venture Capital: capital that usually takes monetary form but can also be technical or managerial expertise. Investors provide to startup companies and small businesses that are believed to have long-term growth  This type of financing usually comes from accredited, high net-worth investors, investment banks and other financial institutions.

Community Bond Benefits

Community bonds sit close to the centre of the continuum. They are more closely aligned with tools typically used by for-profit organizations, but still very much rooted in community engagement and support. In recent years, Community Bonds have emerged as an innovative financial tool used by non-profits, co-ops and charities to attract capital beyond traditional philanthropic sources. This tool enables organizations to receive funding from citizen investors to finance a project in their community. At Tapestry, we ensure that the issuers we work with are giving their investors a world-class experience by providing all of the necessary information on the bond before they make an investment decision, at the time they purchase a bond, and throughout the entire term of their Community Bond. Since a Community Bond is an interest-bearing loan, at the end of the term, investors get paid back their capital investment, a fair financial return on that invested capital, and a tangible social return in the form of the community benefit.

As one tool among many on the social finance continuum, it is important for organizations to closely evaluate the purpose of the financing when determining what combination of tools would be best suited for their goals and the vision of their organization.

Are community bonds the right fit?

Some of the questions that organizations can ask when making this determination are:

  1. What type of organization do you represent?
  2. What is the nature of the project in need of funding (operational, capital development, research, etc.)?
  3. How much funding is required for the project?
  4. Do you already have funding from other sources?
  5. Does your organization have a revenue generating business model?
  6. How quickly is the financing required?

These questions are not definitive or exhaustive, but in answering them organizations can have a better sense of what finance tool is most appropriate for their purposes.

If you think community bonds may be among the tools that make sense for your project, fill out the below qualifier survey and get in touch. We want to hear from you!

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