Foundations Hold The Key

Become a Good Returns partner and leverage your asset portfolio for impact.

The Trend

Foundations play a pivotal role in the effort to attract private capital for developing solutions to humanity's greatest problems. Progressive foundations, along with major global humanitarian institutions like the UN, have begun to understand the necessity of the private sector in creating sustainable, large-scale impact. This realization has led to foundations to explore ways to leverage their assets to generate participation from the private sector.  

The Instrument

The concept of Program Related Investments, or PRI's, have created a whole new mechanism for foundations to connect organizations that fit their mission statement with investment from the private sector. One particular form of PRI, commonly referred to as a loan guarantee, acts as a catalyst within the Good Returns model. Foundations that form a partnership with Good Returns allow valuable capital to cycle among sustainable impact organizations and scale proven solutions. 

The Process

Foundations form a yearly partnership with Good Returns, committing to guarantee a percentage of or the entire Good Returns portfolio for cycling. At the end of the year in service, the Foundation will grant the entire loan guarantee amount to Good Returns. Any amount that is needed to cover defaults by impact organizations will be applied. All remaining funds will be placed into a permanent "Guarantee Fund" to allow future capital to cycle through the model. This has a compounding effect that becomes substantial over time. Here's an example:

  1. Foundation A provides $500k guarantee in year 1.
  2. Good Returns cycles $500k to member impact organizations during year 1.
  3. Impact Organizations repay Good Returns at conclusion of year.
  4. Foundation grants Good Returns $500k and applies the grant towards its 5% annual requirement.
  5. Good Returns repays participating companies full loan amounts and covers any amount of default by impact organizations.
  6. In this case all impact organization loans were paid properly so the default rate is 0%.
  7. $500k is placed into the Good Returns Guarantee Fund.
  8. Foundation A provides another $500k guarantee in year 2. 

The $1MM aggregate guarantee in years 1 and 2 allows $1.5MM to be cycled through the model. This effect continues year over year allowing more private capital to enter the model and scale solutions and promote awareness among substantial consumer bases. 

 

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