February, 2012Nonprofit Finance Fund (NFF) released today an updated report of its ongoing comprehensive philanthropic equity campaigns, which, on average, have nearly tripled revenue and grown program delivery by 370 percent for participating nonprofit organizations since 2006.
The impact presented in NFF Capital Partners’ Portfolio Performance Report provides concrete evidence of the value of philanthropic equity investments, which are typically significant, multi-year investments that a nonprofit organization uses on the path to sustainable growth or change. Since 2006, NFF Capital Partners has supported 18 campaigns for philanthropic equity, totaling $326 million in financial investments.
When done right, philanthropic equity acts as an early-stage investment in an organization for investors seeking social, rather than financial, returns. With the infusion of this one-time growth capital investment that is distinct and separate from annual revenue that pays for program and operating costs, nonprofits can focus on building their organizations to better address the social problems they seek to solve. Using transparent and shared reporting systems, the expectation is that the funding will be used to transform an organization in a way that sticks, allowing them to grow and build.
“Often, the scale of a nonprofit isn't up to the scale of the problem it seeks to address. Often, great programs get stuck in the day to day and cannot make the leaps required to affect real change,” says Craig Reigel, Managing Director of NFF Capital Partners. “At a time when nonprofits are facing an uphill battle to solve our nation’s social problems, philanthropic equity allows nonprofits to build the businesses required to implement effective business models, scale impact, and create lasting change.”
The NFF performance report measures the comprehensive philanthropic equity campaigns for which multi-year data are available. Among NFF Capital Partners’ nine multi-year campaigns, business model revenue excluding philanthropic equity investments has expanded by $63 million compared to pre-campaign baselines. This growth allows organizations to sustain their programs over time.
Late in 2011, portfolio member VolunteerMatch reached 100 percent sustainability. In doing so, they achieved one of their core goals of applying philanthropic equity.
"Raising Growth Capital gave us the flexibility we needed to invest in scaling our model and becoming a sustainable social enterprise" said Greg Baldwin, President of VolunteerMatch. "By securing philanthropic capital up front, and using it strategically, we've been able to nearly double our social impact while eliminating our dependence on big grants to keep the lights on. Thanks in part to NFF Capital Partner's insight and support, VolunteerMatch has grown up and last year was able to independently cover the costs of operating a social network that unlocked over $600 million worth of volunteer service.”
To view the full report, please visit: http://nonprofitfinancefund.org/capital-services/2011-portfolio-performance-report
To read "Philanthropic Equity: Promising Early Returns" by NFF's Craig Reigel in the recent issue of The Nonprofit Quarterly, please click here.
About Nonprofit Finance Fund
Nonprofit Finance Fund (NFF) is a national leader in nonprofit, philanthropic and social enterprise finance. Founded in 1980, NFF provides loan financing, access to capital and direct advisory services that build the capacity and the financial health of nonprofits. A leading community development financial institution with over $80 million in assets, NFF has provided over $235 million in loans and access to additional financing via grants, tax credits and capital in support of over $1.3 billion in projects for thousands of nonprofit clients nationwide. NFF has a staff of 70 serving nonprofits nationally from offices in New York City, Philadelphia, Newark, New Jersey, Boston, Detroit, San Francisco, and Los Angeles.