Midland Area Community Foundation: Impact Investing Overview
Since 1973, the Midland Area Community Foundation has approached philanthropy in a simple yet meaningful way: Invest our assets and distribute a portion of the returns to local nonprofits doing transformational work. As a community foundation, we often promote our grantmaking work. But underlying our ability to make grants, we must wisely invest the funds entrusted to us to allow foundation assets to grow. While we spend significant time on our fund investing strategy behind the scenes, we don’t often promote it beyond keeping our fundholders and donors aware of our annual return on investment.
In 2016 we announced our decision to invest a small percentage of our assets (2% of total assets, or around $2.6 million) in projects we call impact investments, which benefit our community directly. These are investments made in local for-profit companies, nonprofit organizations, and projects to generate measurable social and/or environmental impact alongside a financial return.
Through impact investing, we can deploy capital locally instead of making investments in more typical capital markets, where the dollars flow all over the world. When communities need more resources, many community foundations are seeking ways to have their endowment fund investments put to work to accomplish their mission and financial target goals.
The benefits of impact investing to the Midland community include promoting infrastructure/business growth and attracting entrepreneurs into our County. Impact investing is one tool to help create a vibrant community.
In all things, we’re here to champion causes our donors and supporters care about and support our community by being a trusted steward of funds. Your community foundation will continue to enrich and improve the quality of life in Midland County – for good, for ever, for all.
Q: What types of investments does the Foundation make in local businesses and nonprofit organizations?
A: As a part of impact investing, the Midland Area Community Foundation can be involved by making an equity investment in local businesses, providing a loan, or a loan guarantee. To avoid concentration risk, a maximum of $500,000 can be invested in any single entity or project, subject to review and recommendation of the Impact Investing Committee and approval of the Board of Directors.
Q: What are the requirements/criteria for businesses or organizations seeking impact investing dollars?
A: The Impact Investing Committee will consider a proposal that has the potential of returning invested capital plus an agreed-on rate of return and that meets certain requirements.
- Impact investing proposal requires a minimum investment of $50,000 from the Foundation.
- The proposed project is in Midland County with an emphasis on the Downtown and Center City districts.
- The project is in coordination with other local development initiatives and has a defined timeframe.
- The applicant has a proven track record of structuring, managing, and monitoring cash, and repaying invested capital or is an entity led by a management team with such experience.
- The applicant has an identified source of income or asset base for repaying the investment.
Q: How does a business/organization apply for impact investing dollars from the Foundation?
A: If you are interested in applying for funding, please submit your application via e-mail to Kyle Fahrner firstname.lastname@example.org. Once received, the Foundation will review the application and reach out to the applicant if any additional information is needed. Proposals that meet the criteria of the program will then be reviewed by the Impact Investing Committee at the Midland Area Community Foundation.
Q: What are the costs/fees associated with the application process and underwriting process?
A: There is no cost to submit an application to the Foundation. If the project funding is approved by the Committee, fees associated with the processing the investment include, but are not limited to legal fees, appraisal fees, environmental assessment fees, and relevant administrative fees incurred by the Foundation. These costs may be paid in a number of different ways including, but not limited to, the investee paying the cost upfront or building it into the principal amount of the underlying program-related investment.
For more information about the Midland Area Community Foundation’s Impact Investing program, please reach out to Kyle Fahrner at (989) 839-9661 or via e-mail at email@example.com .