SEE Core L6 Financing for Impact CVS

Question 1

Explain the hybrid spectrum.

Answer 1

From left to right:
Traditional non-profit & Non-profit with income generating activities –> Value creation logic

Social venture & Socially responsible business –> Trade-off: creation and capture

Corporation practicing social responsibility & Traditional for-profit –> Value capture logic

Question 2

What are the two business models for non-profit models?

Answer 2

1) Program activities: Creation and delivery of their value proposition
2) Fund-raising: Raising charitable donations and obtaining subsidies

Question 3

What are the 4 different types of funders for non-profit models?

Answer 3

1) Individuals: one or more individuals that make donations
2) Governments: single or combined sources from different funding agencies
3) Corporate: foundations
4) Mixed: a mix of the above types

Question 4

What are the three motivations that regards funding a non-profit?

Answer 4

1) Altruism: simply fulfils a societal need not being met
2) Collective interest: we benefit / positive externalities
3) Self-interest: if you do it, then we do not need to reduce waste, ESG contribution, operational efficiency

Question 5

What is an impact investing?

Answer 5

Investments made with both financial return and social and environmental return

Question 6

What are the three challenges that exist from an investor point of view regarding impact investing?

Answer 6

1) Measuring or quantifying impact
2) Investor expectations
3) Transparency issues

Question 7

What is the “attribution problem”?

Answer 7

When other enterprises are also active to achieve the same goals/mission - measuring individual enterprise contributions can be challenging

Question 8

What is considered as the seed stage?

Answer 8

The seed stage is when grants, subsidies, philanthropy, crowdfunding happens.

Question 9

Why would a hybrid or blended value enterprise have difficulties with obtaining investments?

Answer 9

Public subsidies or/ and philanthropic donors are concerned that their investment end up as profits for private investors

Question 10

What is the difference between financial first investors and impact first investors?

Answer 10

Financial first investors: seek to optimize financial returns with a floor for social/environmental impact

Impact first investors: seek to optimize social or environmental returns with a financial floor