ImpactAlpha, May 8 – Impact investments from donor-advised funds helped seed the growth of Beyond Meat, the plant-based meat company that staged a successful public offering earlier this month. Commercial real-estate investor Mark Van Ness, and Honest Tea’s Seth Goldman, now executive chair at Beyond Meat, invested in the company from their donor-advised funds, tax-advantaged accounts originally designed for grant-making.
The $1.1 million combined pre-IPO investment from the accounts of Van Ness and Goldman are valued at more than $30 million as of yesterday’s close, according to ImpactAssets. The windfall pushed “DAF” assets managed by Bethesda-based ImpactAssets above $700 million.
The outcome suggests donor-advised funds could represent the kind of risk-tolerant catalytic capital needed by early-stage impact companies. “I do make investments out of my own portfolio,” Goldman said in 2017. “But I will take more of a risk with the donor-advised fund, because whether it succeeds or not, I’m not getting any money back personally.”
- Growing market. DAFs are public-charity giving vehicles that allow donors to take immediate tax deductions, then make grants over time. A growing number of DAF donors are making impact investments as well; returns may be reinvested or regranted. Assets in donor-advised funds jumped 27% to $110 billion in 2017.
- Untapped opportunity. Still, DAF investing is largely an untapped opportunity for the impact investing space, says ImpactAsset’s Tim Freundlich. “Particularly in the early stage segment, it can aggregate many small commitments from individual donors into one meaningful check, and create a new source of capital for entrepreneurs.”
- Investment vehicles. ImpactAssets has helped donors make nearly 600 impact investments since 2011. Commercial sponsors like Fidelity Charitable, Schwab Charitable, Vanguard Charitable and National Philanthropic Trust are dipping their toes into DAF-originated impact investments. Community foundations, including Chicago Community Trust and Philadelphia Foundation, are pointing DAF capital toward local, place-based investments.
Note: ImpactAssets is a program partner at SEED, the San Francisco gathering of impact ecosystem support for early stage ventures. Sign-up now with code SEEDPromoPartner to receive a 30% discount.