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Donating money can be a little like paying taxes: You write the check knowing that it’s supposed to improve some aspect of society, but you often aren’t sure if the funds end up accomplishing anything.
A nascent organization in Denver is aiming to make charitable contributions more efficient, accountable, and maybe even profitable for both donors and recipients. Impact Finance Center (IFC) is a joint project started by the University of Denver’s Daniels College of Business and the Sustainable Endowments Institute, which is part of Rockefeller Philanthropy Advisors, which manages more than $200 million in annual giving.
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Since 2012, the IFC’s mission has focused on uniting philanthropists and investors with funds, nonprofit and for-profit organizations in and around Colorado. Right now the group is feverishly working toward its inaugural Colorado Impact Days on March 3–4, 2016. The event will bring together area organizations (selected via a pitch competition) and investors in a “farmer’s market” format. “Our three-year goal is to bring $100 million of that money to impact investing, and year one is about creating the ‘phonebook’ for that,” says IFC founder and director Stephanie Gripne, a research fellow at DU.
The idea is to pair these organizations with like-minded financiers who want to see results from their donations. “Impact investing looks different to different people,” says IFC philanthropic advisor Cindy Willard. “It could be anything from job creation to environmental sustainability. We want to capitalize the stuff that works to the fullest.”
Among the ways the IFC can help is by showing investors how to share due diligence costs. If the March event, say, attracted 10 investors and 50 projects pursuing water-related causes, the investors could split the due diligence process equally—thus saving themselves money and avoiding unnecessary repetition of efforts—and figure out more easily which of the 50 investments are most promising.
The organization also encourages investors to rethink donations. For example, instead of giving a promising student a scholarship to cover part of her college costs, a benefactor (or benefactors) could give that same student a lower-interest loan that she couldn’t get through other channels. This way, the student’s entire educational expense is covered and the donor ends up getting a small return on its investment.
Another common IFC practice is helping nonprofits restructure their debt. “Up to 30 percent of our philanthropy has been redoing high-interest mortgages and loans,” Gripne says. “Many nonprofits don’t realize they can save about 10 percent to 30 percent of their costs by just doing that.” She adds that this type of giving—framing it as more of an investment than a traditional donation—has been particularly appealing to the more libertarian-minded bootstrap set that prefers giving a “hand up” to a handout. “We get the most traction with conservatives,” Gripne says. “I don’t even talk about the ‘heart’ piece of it; I just talk about 101 percent returns and I’m brilliant.”