Nonprofits and philanthropic organizations testing out 'impact investing'
July 19, 2012
Nonprofit organizations and foundations have traditionally been characterized by their decision to not generate revenue and bypass profits, but that may be changing slightly with the rise of 'impact investing,' according to The Washington Post. Philanthropic organizations in the Washington, D.C. area are at the forefront of this trend, and have started adopting investment plans that enable them to do just that in order to repay loans.
Impact investments are made with two considerations in mind, according to The Huffington Post. One is that funding is contributed with the aim of yielding social or environmental impacts. Investors will also expect financial returns on their investments, and these results must be quantified, the source explains.
"I would say the entire nonprofit community is moving beyond a frame of charity," said Chuck Bean, executive director of The Nonprofit Roundtable of Greater Washington. "When nonprofits talk to their funders, they need to make the case for investment not just because it pulls on the heartstrings, but because there’s a social return on investment."
The way philanthropic groups launch campaigns is changing. More organizations are using web-based platforms to raise money online, while others are testing out crowdsourcing opportunities. Nonprofits that want to engage in impact investing might benefit from a fund accounting
program that enables them to demonstrate quantifiable results.