Lecture 6: Financing for impact Flashcards
(15 cards)
What is one reason for why the nonprofit sector has not developed its own lexicon of funding models?
running a nonprofit is generally more complicated than running a comparable size for-profit business.
What has still not been identified when a nonprofit found a way to create value for beneficiaries and why?
it has not identified its economic engine, because the beneficiaries (for whom the value is created) are not the ones paying for it
What makes that non-profit organizations are 2 business in 1?
- Program activities – creation and delivery of their value proposition
- Fund raising – raising charitable donations and obtaining subsidies
Which 4 general types of funders can we distinguish?
- Individuals – range from many individuals making small contributions to large donations from a single or a few wealthy persons (or from their charitable foundation)
- Governments - single or combined sources, from local, city, regional or national funding agencies.
- Corporates – foundations, special program contributions, as well as materials / in kind
contributions based on their business area / products / services - Mixed – single and multi-individuals contribution models, corporate and institutional contributions
What 10 non-profit funding models are there according to Foster et al. 2009?
- Heartfelt Connector
- Beneficiary Builder
- Member Motivator
- Big Bettor
- Public Provider
- Policy Innovator
- Beneficiary Broker
- Resource Recycler
- Market Maker
- Local Nationalize
Within each non-profit funding model we can find … (3)
- Funding source
- Funding decision maker
- Funding motivation
What 3 types of non-profit funding motivations do we distinguish?
a. Altruism - simply fulfils a societal need not being met
b. Collective interest – we benefit / positive externalities
c. Self-interest - if you do it, then we do not need to.
(Reduce waste, operational efficiency, marketing, ESG
contribution)
An important theme throughout this type of research is that there is a need to specifically match the funding model with the …. (5)
- type of value being created
- for whom the value is being created
- where the value is being created
- the funder interests / motivation
- the source: individual, institutional, business
What is impact investing?
Impact investing is a combination of traditional giving and traditional investing
Investors seek a double bottom line return: social and financial.
it’s Innovative and Disruptive
Social and Environmentally focused enterprises require financial resources both to ….
Social and Environmentally focused enterprises require financial resources both to start-up and to grow.
What do we see on the left side of the investment spectrum and what do we see on the right side?
left side: primary driver is to create social value / impact only (charities)
right side: primary driver is to create financial value / financial only (traditional business)
What is the most hybrid form of business that can be seen in the investment spectrum?
socially driven busines: profit distributing socially driven (still falls under social purpose organizations (SPO’s))
What are the three major themes that emerge when it comes to Investment finance related challenges, according to Lyons & Kickul (2013)
- measuring or quantifying impact
- investor expectations
- transparency issues
Hybrid or blended value enterprises may find it difficult to obtain investments if public subsidies or/ and philanthropic donors are concerned that their investments
end up as ….
concerned that their investments end up as profits for private investors
What are the two impact investment categories (middle of investment spectrum)?
- financial first
- impact first
