NPX Advisors, a San Francisco-based nonprofit finance firm, has announced the launch of a fund focused on maximizing the impact of every dollar donated to it.
A proprietary financial product, the Impact Security fund will bring together donors and investors to fund nonprofits based on their impact. To date, donors to the fund include the San Francisco, Perkins Hunter, Lobeck Taylor Family, and Krishnan-Shah Family foundations, Lulie and Gordon Gund, and Virgin Unite, while Omidyar Network is among its investors.
The Last Mile, a nonprofit based at San Quentin State Prison in California, is the first organization to issue an Impact Security, through which it raised $800,000 in investment capital from eleven investors and $900,000 from sixteen donors. The $800,000 will support a Last Mile initiative to create what it describes as the first Web development shop inside a U.S. prison. Over the next four years, as the initiative makes progress toward its impact goal of "inmate hours worked," the fund will disburse up to $900,000 to repay investors. If the initiative falls short of its impact targets, investors may lose some or all of their investment and donors will deploy the remaining funds to other nonprofits.
"Despite their role as key drivers of impact worldwide, nonprofit organizations have largely been left out of the impact investing movement," said Scott Wu, partner and head of investments at Omidyar Network. "As a philanthropic investment firm at the forefront of impact investing for the last fourteen years, we have seen very few ways to truly invest in a nonprofit organization and earn a financial return tied to impact. We are thrilled to be able to invest in the Last Mile's innovative workforce development program using the Impact Security."
"The social and environmental issues we face today are massive, and nonprofits can't scale to solve them without access to more capital over longer timelines tied to impact performance," said NPX co-founders and co-CEOs Lindsay Beck and Catarina Schwab. "Financial engineering isn't a silver bullet, but finance matters, and the status quo is broken. We believe that unlocking the true potential of the nonprofit sector is possible with one simple change: linking capital with performance."