ImpactAlpha, February 8 — The Bay Area Donor Impact Fund and the Colorado Donor Impact Fund, backed by donations from 35 philanthropic organizations, will support seven nonprofit organizations working to improve economic mobility in underserved communities.
The funds are using a type of pay-for-success structure called an “impact security” to help nonprofits raise flexible working capital. Investors in the performance-based debt securities get repaid from the donor impact funds when the agreed-upon impact outcomes are achieved.
Inclusive economy
Among the nonprofits is 10,000 Degrees, which is supporting low-income community college students; Mission Asset Fund, an organization that provides financial services for Hispanic and Latinx communities; and Rivet School, which provides online degree programs for low-income adult learners.
The others: ActivateWork, Bridge House Ready to Work, CrossPurpose, LaMedichi Savings Club. Four of the organizations are led by women; three are BIPOC-led and/or founded.
Funding will support housing the homeless people, living wage jobs for low-income individuals and help Hispanic and Latinx immigrants build emergency savings in Colorado. In the Bay Area, the nonprofits will provide financial services for low-income credit-invisible individuals and help low-income working adults complete baccalaureate degrees.
Innovative finance
The “impact security” structure was developed by the women-led impact advisory firm NPX. “If successful, the program will not only help people living in poverty build a bridge to economic security, but also prove out a model that could dramatically impact the field,” said Sara Vernon Sterman of Reinvestment Fund, a partner of NPX.
