IMPACT Central Indiana is a limited liability company created by Central Indiana Community Foundation, The Indianapolis Foundation and Hamilton County Community Foundation (collectively, the “Foundations”) to facilitate social impact investments into businesses, funds and not-for profits that are generating positive, measurable social impact and financial returns. Specifically, IMPACT Central Indiana will make loans, equity investments and grants that further the charitable mission of the Foundations. What sets philanthropy through IMPACT Central Indiana apart from traditional grant-making is that in addition to furthering a charitable purpose, the donor can also expect a financial return back into his or her IMPACT account, which can then be redeployed for subsequent impact investments.
An IMPACT account functions similarly to a donor-advised fund—it’s funded with charitable dollars, affording donors the same tax advantages of traditional charitable giving, and the donor has advisory privileges over where those dollars go. However, unlike a donor-advised fund that can only grant to 501(c)(3) public charities, IMPACT accounts can invest in for-profit and not-for-profit enterprises so long as they have a social or charitable component. The investments available to IMPACT account holders come about in one of two ways:
Donor-Directed Investments
The donor identifies the for-profit or not-for-profit entity for investment that has the potential for both a social and financial return. The donor then brings that deal to IMPACT Central Indiana’s staff, who does some basic due diligence. Once the due diligence has been completed, the parties agree to some basic terms with the entity including interest rate and repayment schedule, and assets are deployed from the IMPACT account as an investment in that entity.
Focus Area Investments
IMPACT Central Indiana has established four focus areas for sourcing potential investments: people of color and marginalized populations, housing, inclusive economic growth, and philanthropic innovation. IMPACT Central Indiana will source deals that fall into one or more of these categories—again, these can be for-profit or not-for-profit companies—and offer them to IMPACT account holders to choose whether or not they would like to co-invest alongside other IMPACT accounts, and in some cases, with the Foundations. These deals will be thoroughly vetted, monitored and reported on by IMPACT Central Indiana staff.
Like donor-advised funds, there is no minimum contribution required to open an IMPACT account. Minimum investment contributions from IMPACT accounts will be assessed on a deal-by-deal basis.
With either investment model, returns on a loan or equity investment flow back into IMPACT Central Indiana and are unitized back to each IMPACT account invested in the specific deal. Those funds can then be redeployed on another investment within IMPACT Central Indiana at the donor’s recommendation.
IMPACT Central Indiana’s first investment is a partnership with the Indy Chamber’s Business Ownership Initiative and its Rapid Response Loan Fund. Businesses in need can receive loans of $1,000 to $25,000, which can be used to pay employees, make insurance premiums or as a bridge loan while waiting for funding through the CARES Act or the Small Business Administration. IMPACT Central Indiana’s $500,000 infusion of capital will be targeted to businesses owned by people of color and members of marginalized communities in Marion and Hamilton counties. Learn more about IMPACT Central Indiana’s partnership with the Indy Chamber in the Indianapolis Business Journal here.
For more information about how IMPACT accounts can provide a new charitable tool to your clients, contact:
Sarah Weaver, J.D.
Senior Gift Planning Advisor & Assistant Legal Counsel
615.513.3897
SarahW@cicf.org
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