Glossary of key fundraising-related terms (1 of 3)
Term
Description
Individuals who provide early stage capital for a business start-up, usually in exchange for equity
Angel investors
or convertible debt
A certification provided for a fee by an NGO named B Lab. Unlike a benefit corporation, a B Corp
B Corp
is not a legal structure
For-profit entities that wish to consider society and the environment in addition to profit in their
Benefit corporation
decision making process
Bonds are debt securities (loans), under which the issuer agrees to pay the holder back the
Bonds
money (principal) plus interest. The issuer is typically obliged to pay interest periodically
Government development banks and nongovernmental micro-finance organizations, that match
Development Finance
grants to attempt to promote community development, decentralization of power, and local
Institutions (DFIs)
empowerment
Investors share the risk in performance-based projects. Nonprofits use private investor capital to
implement projects, and donors pay returns to investors once the nonprofit has achieved
Development impact bonds previously agreed impact targets. This means handing over donations to investors, but in return,
investors provide capital up-front, bearing the risk that the nonprofit may not achieve impact
targets, and donors pay only for results.
Family Office
A private company that manages investments and trusts for a single family
A Calfiornia legal corporate structure whose first priority may be a special purpose (as distinct
Flex C Corporation =
from a general PUBLIC benefit which a benefit corporation must pursue). The special purpose
"flexible purpose
must have a positive effect on employees, suppliers, customers, creditors, the community and
corporation"
society OR the environment.
Foundation
A foundation is a non-governmental entity that is established as a nonprofit corporation or a
charitable trust, with a principal purpose of making grants to unrelated organizations, institutions,
or individuals for scientific, educational, cultural, religious, or other charitable purposes. This
broad definition encompasses two foundation types: private foundations and grantmaking public
charities.
Product of Medicines360 ACT team Spring-Summer 2014
Glossary of key fundraising-related terms (2 of 3)
Term
Gender-lens investing
Grants
High impact philanthropy
Description
Investors use gender as a category of analysis in company diligence, prioritizing bets on value
opportunities in three types of firms: companies led by women, companies that promote gender
equity, and companies that benefit women through products and services
Funds given to charitable organizations, that do not have to be repaid and are usually one of two
types: 1. General Purpose or Operating Support Grants and 2. Program Development or Project
Support Grants
High impact philanthropy begins with a philanthropist’s personal commitment to making a change
in the world and caring enough about a particular issue to remain engaged in the long-term and
focused on best practices that make a difference
Investment in for-profit companies that have social impact potential
Impact Investment
Investment thesis
Not-for-profit (also called
nonprofit) NFP
Private equity funds
Profit-status
Investments intended to create positive impact beyond financial returns
The goal of an investor with respect to how they weight financial return and social and/or
environmental impact in their investment goals, e.g., balancing both financial returns and impact
or optimizing one while maintaining a minimum target (or “floor”) for the other.
A not for profit organization is one where money donated to it, or that it earns, is used in pursuing
the organization's objectives. Not-for-profit organizations can apply for a tax exempt status and
donations made to a tax exempt not for profit organization may also be tax-deductible for the
donor. A not-for-profit organization has no equity - automatically excluded from equity funding
sources
Pools of capital managed professionally by a regulated financial institution (e.g. asset
management company)
The status of a company or fund as forprofit or non-profit.
Product of Medicines360 ACT team Spring-Summer 2014
Glossary of key fundraising-related terms (3 of 3)
Term
Program Related
Investment (PRI)
Search funds
Social impact bonds
Social Enterprise (also
called Impact business)
Social Venture Capital
Venture Capital Funds
Venture Philanthropy
Description
A PRI is a low-cost loan (or sometimes an equity investment or a guarantee), provided at belowmarket rates, to strengthen the recipient’s mission-focused work. The lending foundation is
reasonably confident of repayment of its full principal amount with some limited returns. The goal
of the PRI is full return of its investment, with limited return on its investment, so that the pool of
PRI capital remains intact for re-lending to support the foundation’s charitable and programmatic
goals into the future.
Investment vehicle in which investors financially support an entrepreneur's efforts to locate,
acquire, manage and grow a privately held company. The model offers relatively inexperienced
professionals with limited capital resources a quick path to managing a company in which they
have a meaningful ownership position.
Government has the obligation to repay investors only if the program succeeds – otherwise
investors lose their monies. This means that investors take full execution risk. As a compensation
for assuming this risk, investors receive a small interest payment and a share of the non-financial
benefits linked to promoting social goods. Therefore investors require transparency and a strong
say in the process to mitigate this risk (e.g. the ability to replace the program manager).
A financially-sustainable enterprise that operates with a social and/or environmental mission
Social venture capital is a form of venture capital investing that provides capital to businesses
deemed socially and environmentally responsible. These investments are intended to both
provide attractive returns to investors and to provide market-based solutions to social and
environmental issues.
Pools of capital managed professionally by a regulated financial institution (e.g. asset
management company)
Typically used to describe venture capital organization investments in non-profits, deploying a VC
strategy such as taking a seat on the board of directors and offering hands-on guidance. In a
second model, the funds come from a NFP (e.g. MS Society's Fast Forward Fund) to fund novel
science at for-profit startups.
Product of Medicines360 ACT team Spring-Summer 2014