In venture capital, a “zombie” investment is an investment into a perfectly good company, one that earns revenues and pays it payroll and bills, but which isn’t growing quickly and thus isn’t worth more than the investment capital.
Some loans to SMEs (small and medium enterprises) can be zombies too, if the company is breaking even, earning enough to pay the payroll, rent, and other bills, but not enough to also pay back a loan.
Normally, an investor sits on these investments “forever”, until either many years down the road giving up on ever being repaid, taking a tax deduction, and moving on. Often, investors fret over the tax implications in case they are wrong and the company bounced back into full life or gets acquired.
Normally investors have no good choice other than waiting patiently.
Realize Impact has an alternative. Donate the investment to us. Take the charitable tax deduction on the current value of the investment, and the capital loss on the rest. We’ll sit patently to see if this investment ever turns into something more. If so, we’ll donate 50% of the proceeds into your donor advised fund.
