NORTHAMPTON, MA/ACCESSWIRE/October 13, 2022/ GreenMoney Log:

by Timothy Freundlich, ImpactAssets

Donor Advised Funds (DAFs) had approximately one million accounts hosted at 1,000 community foundations and nonprofit sponsors, with $160 billion in assets at the end of 2020. With a compound annual growth rate of 17% over the past five years, DAFs are growing much faster than private foundations as a pool of philanthropic assets. And, historically, they sell more than 20% of the assets each year. But what about the remaining philanthropic capital? Where does he sleep at night?

Impact investing has gained a foothold in donor-led funds. From wealthy individuals and families to community foundations and corporations, donors take a close look at the investment side of their philanthropic capital and invest charitable assets in ways that provide immediate benefits to those who most need.

As the Catalytic Capital Consortium puts it, this is an investment that is: “…patient, risk-tolerant, concessional and flexible…to support impact-driven businesses and organizations that lack access to capital on appropriate terms through the conventional market…strengthening communities, expanding opportunity and economic growth, and spurring innovation…”

Catalytic capital seeks to attract additional investors who otherwise would not join, and to engender innovation in structures that need early support. Examples include first-time funding of various venture capital fund managers to reach underrepresented entrepreneurs; fund impact-driven start-ups that need risk-tolerant capital to grow; and first-loss capital financing for community development financial institutions (CDFIs) that channel small business, affordable housing and microfinance loans to struggling communities that are often excluded from the banking system.

Read Tim’s informative article herehttps://greenmoney.com/tapping-the-catalytic-capital-potential-of-donor-advised-funds

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