But some don't fit quite our investment criteria."
FOOD FUNDED
JEDI Fund
HOW YOU CAN PARTICIPATE
You can use philanthropic capital for funding. It’s a tax-deductible donation for you. The fund invests the aggregated donations.
Yes, you can use tax-deductible donations to fund for-profit businesses, if they have a mission serving the greater good – which all FOOD FUNDED entrepreneurs have been curated for.
WHO WILL GET FUNDED
The investments are allocated to enterprises with a JEDI impact who have previously presented at a FOOD FUNDED showcase. They are selected by a diverse team of impact investors, partners, food makers, and advisors. See examples of recent presenters with a JEDI mission.
If the business does well as planned, it will return money back into the fund, and you can invest it again!
THE FUND
The vehicle used for these investments is a Donor Advised Fund (DAF).
You don’t have to be an accredited investor.
If you already have a DAF or a foundation, you will be able to grant from it to the JEDI Fund.
If you don’t have a DAF (as most of us don’t), you’ll receive instructions about making your tax-deductible donation. Grants and donations go to CataCap, the JEDI Fund’s administrator.
Questions?
What is Donated Capital, and How is It Different from Regular Angel, VC, or Friends and Family Investors?
Donated capital refers to funds contributed to a foundation or Donor Advised Fund (DAF) for philanthropic purposes, and these funds can then be used for impact investments. Unlike regular angel, VC, or friends and family investors who are primarily motivated by financial returns, donated capital operates under different incentives:
- Tax Deduction Benefit: The individuals or organizations contributing to donated capital (via foundations or DAFs) receive an immediate tax deduction. As a result, they aren’t focused on maximizing personal financial returns but on creating social or environmental impact.
- Higher Risk Tolerance: Because these investors have already secured their financial gain through tax benefits, they are often more willing to take on higher risks with their investments than traditional investors who expect a return on their capital.
- Patient Capital: Donated capital is more patient, meaning the investors are less concerned with quick exits or short-term financial returns. They are typically willing to support long-term projects that align with their values or missions.
- Purpose-First Approach: While traditional investors may look at return metrics and scalability, donated capital is primarily invested with a focus on making a positive impact. These investors prioritize purpose over profit.
In contrast, angel, VC, or friends and family investors are usually looking for financial gains and returns on their investments within a specific timeframe. They tend to have lower risk tolerance, expect quicker exits, and are motivated by personal financial gain rather than purely philanthropic objectives.
In summary, donated capital provides a flexible, mission-driven alternative to traditional investment, often with greater tolerance for risk, a longer-term perspective, and less pressure on financial returns.
Who would consider funding social enterprises with philanthropic capital?
The FOOD FUNDED JEDI Fund may be atractive to these funders:
- Investors Who Would Otherwise Say No:
- Scenario: These individuals like the mission but may have declined to invest due to financial risk or other concerns.
- Pitch: The JEDI Fund is an alternative option by offering a philanthropic approach through grants or DAFs. This allows them to support the cause without financial risk, while still making a meaningful social or environmental impact.
- Risk-Averse Investors:
- Scenario: These individuals love the mission but find it too risky for traditional investment.
- Pitch: Emphasize the grant or DAF option, allowing them to support the initiative without financial risk while still achieving significant social impact through their charitable donation.
- Current Investors Looking to Increase Contributions Without Using Personal Funds:
- Scenario: These investors have already contributed but want to expand their involvement without dipping into their personal accounts.
- Pitch: Using philanthropic capital, such as grants from their DAF or foundation, can increase their investment. This approach allows them to grow their commitment while maintaining their personal financial security.
- Category-Focused Donors:
- Scenario: These donors already give significant amounts to causes within a specific category like your investment (e.g., Gender Equity, climate change, BIPOC communities, underserved communities).
- Pitch: The JEDI Fund is an innovative way to invest in their area of interest, maximizing the impact of their contributions through cutting-edge, mission-driven investment opportunities that align with their philanthropic goals.
- Investors Who Want to “Dip Their Toe In” or Invest Smaller Amounts:
- Scenario: These investors may be interested in contributing but are not ready to commit large sums or may find the minimum investment amount too high.
- Pitch: Offer them the option to contribute via philanthropic capital, where they can invest smaller amounts (as little as $250 through CataCap) to test the waters and support impactful ventures without the higher financial commitment required by traditional investment minimums.
The JEDI Fund is particularly suited for donors and investors who want to see their contributions go further by combining philanthropic capital with social or environmental impact investments, offering flexibility and accessibility to a wide range of supporters.
Why would a company want to raise investor capital from a Foundation, DAF, or Direct Donation?
Raising capital from foundations, Donor Advised Funds (DAFs), or donations offers unique advantages for companies seeking impact-driven investments. Here’s why:
- Untapped Capital: There is a vast pool of over $1.6 trillion in philanthropic capital available, much of which is underutilized for investments.
- Patient Capital: Since investors in DAFs or foundations receive a tax deduction upfront, their focus shifts away from personal financial gain, allowing them to provide patient capital that prioritizes long-term growth and impact.
- Higher Risk Tolerance: These investors are often more willing to take on higher risks compared to traditional personal capital investments, as their personal returns are already secured through tax benefits.
- Purpose-First Investments: Donated capital is often directed toward investments that align with the values and causes donors care about, providing a strong sense of purpose in their financial support.
- Flexible Capital: Investors using DAFs or foundation capital are generally more flexible regarding the type of investment, its duration, and the expected returns, offering founders greater adaptability in structuring deals.
- Amplification: Impact investments backed by philanthropic capital often gain greater visibility, as they are easier to share with and supported by your biggest fans, helping to amplify both the investment and the social mission it serves.
This combination of untapped resources, patient and flexible capital, higher risk tolerance, and mission-aligned investment provides a compelling case for companies to consider raising capital from foundations, DAFs, or donations.
What is a Donor Advised Fund (DAF)?
What are the expected investment terms in the JEDI Fund, and how are they determined?
The investment terms for donor/investors using donated capital are generally aligned with the terms of any ongoing fundraising efforts your company is conducting. This ensures consistency with other investors. If you are not currently fundraising, you have the flexibility to set the investment terms, ensuring they are attractive and relevant to donor/investors, who are often impact-focused.
Key factors to consider include:
Type of Investment: Donor/investors can invest through various structures such as private equity, private debt, venture capital, loans, project finance, real assets, and more, depending on what suits your business model.
Term Length: Typically, donor/investors have a longer-term horizon, as they are more focused on sustainable impact rather than quick exits.
Expected Return: While a financial return is expected, donor/investors tend to be more flexible compared to traditional investors. The primary focus is on social or environmental impact, but returns allow them to reinvest in other impact investments or make charitable grants to nonprofits.
Impact Metrics: Donor/investors will be most interested in ventures that have clear, measurable social or environmental outcomes. Impact metrics should be defined as part of the terms.
By setting terms that reflect both the financial and impact goals of the donor/investors, you can ensure a productive and aligned partnership that supports long-term growth and positive change.