{"id":33186,"date":"2021-09-29T15:48:14","date_gmt":"2021-09-29T19:48:14","guid":{"rendered":"https:\/\/test.greenmoney.com\/2025\/?p=33186"},"modified":"2021-09-30T20:49:18","modified_gmt":"2021-10-01T00:49:18","slug":"innovative-fundraising-options-for-impact-investment-funds-targeting-community-challenges","status":"publish","type":"post","link":"https:\/\/test.greenmoney.com\/2025\/innovative-fundraising-options-for-impact-investment-funds-targeting-community-challenges\/","title":{"rendered":"Innovative Fundraising Options for Impact Investment Funds Targeting Community Challenges"},"content":{"rendered":"
>> Back to October 2021 Issue<\/a><\/div>\n
Above: Capital UNTAPPED! How Professional Athletes are using their Innovation, Investing and INFLUENCE Capital to drive Impact and Business Ventures, and how the Family Office investor community can partner to elevate their projects and Return on Investments. Photo of Athletes Panel at the Opal Group Conference in July 2021 in Newport, RI with (left to right) Rick Davis of LOHAS Capital, Udonis Haslem, Shawn Springs, Daniel Puder, Santia Deck, and Tim Hardaway. Courtesy of LOHAS Capital<\/h5>\n

\"\"Fundraising for traditional investment funds is trying under the best of circumstances. The degree of difficulty for social and environmental impact funds seeking investment during uncertain times can be far higher. Nonetheless, there are innovative, albeit less traveled, paths to investment that may be well suited for impact funds.<\/p>\n

These creative fundraising approaches come as the challenges that communities face are increasing (or, at least, are becoming better recognized), whether those are the issues of localized groups, or communities of underserved populations, or broader social concerns that cut across race, gender, and geography. A few innovative fundraising options are explored below, including Banks<\/strong> (under the Community Reinvestment Act), Donor-Advised Funds<\/strong>, and (perhaps most promising) Fiscal Sponsor Programs<\/strong>.<\/p>\n

Banks and the Community Reinvestment Act<\/h2>\n

Potentially the least utilized fundraising strategy within the world of impact investing, the Community Reinvestment Act (\u201cCRA\u201d) can be a tool for select impact funds to seek investment from banks. Among the many regulatory requirements for banks in the U.S., CRA obligations ensure that banks participate positively in their communities, including lending to underserved populations or businesses in the areas that the bank serves. Not meeting CRA benchmarks can lead regulators to impede certain bank activities (like acquisitions).<\/p>\n

While CRA requirements are typically met through traditional loans, impact funds that invest in solving similar societal challenges can become \u201cCRA certified\u201d which opens the door (through a specialized third-party structure) to accepting investment directly from banks that can come either in the form of loans or equity investment and which can help satisfy the bank\u2019s CRA obligations (while positioning the bank to make attractive returns).<\/p>\n

Most banks may be unaware of these types of innovative solutions to their CRA requirements, but as an example<\/a> Western Alliance Bank made a recent investment in FVLCRUM Fund<\/a>, a private equity fund focused on building wealth for minority business owners. Notably, Western Alliance Bank received regulatory approval from the Federal Reserve for its investment in FVLCRUM Fund, paving the way for CRA credit and thereby satisfying the bank\u2019s regulatory requirements while also generating both financial and social impact returns (ideal selling points for impact fund managers).<\/p>\n

Donor-Advised Funds<\/h2>\n

As most readers already know, donor-advised funds (\u201cDAF\u2019s\u201d) are philanthropic and social impact investment tools that allow individual, family, and corporate donors to fund special accounts through DAF \u201csponsor\u201d organizations. Donors receive immediate U.S. income tax deductions and maintain allocation privileges over the fund\u2019s distribution. Due in part to their simplicity as a tax management strategy, DAF\u2019s have exploded in use in recent years, with well over $100 billion in assets now in DAF\u2019s.<\/p>\n