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A New Investment Idea for Nonprofits

A New Investment Idea for Nonprofits. A New Idea. Human Capital Performance Bond. Human Capital Performance Bond. What is it? State bond that funds human services Who buys it? Financial investors seeking market rate of return

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A New Investment Idea for Nonprofits

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  1. A New InvestmentIdea for Nonprofits

  2. A New Idea Human Capital Performance Bond

  3. Human Capital Performance Bond What is it? • State bond that funds human services Who buys it? • Financial investors seeking market rate of return • Social investors seeking market rate aligned with social interests

  4. Human Capital Performance Bond Why does it work? • High performing nonprofits create Social Benefit • Social Benefit creates Economic Value (Higher tax receipts & Lower entitlement spending) • Economic Value> Bond Debt Service (interest, principal repayment, administration)

  5. Human Capital Performance Bond How does it work? 1 CASH BOND State External Investor

  6. Human Capital Performance Bond 2 CASH CASH Performance Pool BOND State External Investor

  7. Human Capital Performance Bond 3 CASH CASH Performance Pool BOND LOAN State Nonprofit External Investor Working Capital Fund

  8. Human Capital Performance Bond 4 PERFORMANCE PAYMENT CASH CASH Performance Pool BOND LOAN REPAID State Nonprofit External Investor Working Capital Fund

  9. Human Capital Performance Bond 5 ONGOING REPORTING TO DEMONSTRATE ECONOMIC VALUE PERFORMANCE PAYMENT CASH CASH Performance Pool BOND LOAN REPAID State Nonprofit External Investor Working Capital Fund

  10. Human Capital Performance Bond ONGOING REPORTING TO DEMONSTRATE ECONOMIC VALUE PERFORMANCE PAYMENT CASH CASH Performance Pool BOND LOAN REPAID State Nonprofit External Investor Working Capital Fund 6 CASH RETURNED TO STATE BASED ON INCREASED TAXES AND LOWER STATE COSTS

  11. Human Capital Performance Bond ONGOING REPORTING TO DEMONSTRATE ECONOMIC VALUE PERFORMANCE PAYMENT CASH CASH Performance Pool BOND CASH LOAN REPAID State 7 Nonprofit External Investor Working Capital Fund CASH RETURNED TO STATE AND INVESTOR BASED ON INCREASED TAXES AND LOWER STATE COSTS

  12. www.investinoutcomes.org

  13. Coming February 2012

  14. Human Capital Performance Bond What are the benefits? • Incremental investment • New market rate investment for social benefit • More effective and efficient spending • Greater confidence

  15. A New Idea Human Capital Performance Bonds

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