Foundations Hold The Key
Become a Good Returns partner and leverage your asset portfolio for impact.
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 foundations to explore ways to leverage their assets to encourage participation from the private sector.
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.
Foundations can elect to form a yearly partnership with Good Returns, committing to guarantee a percentage of the Good Returns portfolio for cycling. At the end of the year in service, the Foundation will grant any amount needed to cover defaults by impact organizations. If all loans are repaid by the Impact Organizations the foundation will have no financial requirement, allowing the "guarantee" funds to be used for other mission-aligned purposes of the foundation. The guarantee, however, still facilitated the Good Returns interest-free loan deployment to Impact Organizations around the globe.
Here's an example:
- A foundation provides a financial guarantee to Good Returns for a specified amount. In most cases, this guarantee can qualify as a Program-Related Investment (PRI).
- Good Returns cycles no-interest loans to member impact organizations for 1 year.
- Impact Organizations repay Good Returns at the conclusion of the year.
- Good Returns assesses default amounts, if any, and spreads cost across all participating foundations proportionally.
- Foundations make corresponding grants to cover the entire default amount.
- Good Returns repays participating companies full loan amounts and the process begins again.
In the event that all loans are repaid by Impact Organizations there is no financial requirement for participating foundations. This means that foundations are able to facilitate the movement of private capital into the social sector without any cost.
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