Do you have questions about the Philanthropic Investment Grant (PHIG) service? This page answers the most frequently asked questions.
1. Is it really as simple as it looks?
Yes. You recommend a donation from your DAF (or family foundation, or make a fresh donation of cash or shares). You fill out the the online form. Realize Impact does everything else.
A.
Make a grant from your donor-advised fund, foundation, or your own funds, recommending an impact investment.
B.
Realize Impact does the diligence, reviews the terms, and makes the debt, equity or revenue-based investment.
C.
We donate 99% of the investment returns to your recommended DAF, foundation or other 501(c)(3) nonprofit.
2. Are there any other fees beyond the $500?
No. Just add $500 to your initial donation. There are no annual fees. No maintenance fees. No fees beyond that $500. We’ll return 99% of whatever cash is returned to Realize Impact from the investment to your DAF (or family foundation or another recommended 501(c)(3) charity).
This sharing of the results provides an incentive for Realize Impact to collect the investment returns. We chose this model to align our interests with yours, to get the capital back to you so that you can use it again and again to make more impact.
3. Are there any restrictions on the investments I recommend?
Yes. All investments must be both prudent and impactful. “Prudent” is the regulatory standard for any investment made by a public charity. “Impactful” is the higher requirement set by Realize Impact, to better ensure our work is making a positive impact on the world. The effort by the investee must be doing something measurable by the UN Sustainable Development Goals.
Compliance with these restrictions is determined by Realize Impact’s investment committee.
4. Do I need to do due diligence before making the recommendation?
No, Realize Impact’s investment committee diligences all the recommended investments.
But is it fine if you do your own diligence too, as you may have a different threshold of risk than the investment committee or a more narrow definition of impact.
Realize Impact’s diligence focuses first and foremost on the impact of the investment, then on the prudence of the investment structure and terms. The committee has approved investments that promise to lose at least 2% of the capital invested, where the use of capital was 0% loans into the Global South for pandemic-mitigation. The committee has also approved investments into impact-oriented venture capital funds aiming to double the capital invested.
Or in other words, impact investing covers a broad array of impact, risk, and return. If your focus is on one corner of that continuum rather than the whole space, then please let us know in the recommendation form when you fill it out.
5. Does Realize Impact share its due diligence reports?
No. Realize Impact is not an investment research company nor an investment advisor.
6. How does Realize Impact make the recommended investments?
Like any other investor. Realize Impact is a not-for-profit corporation incorporated in Washington State (with 501(c)(3) tax status from the IRS). Realize Impact is an accredited investor, as per the U.S. Securities Act.
Realize Impact signs the same investment documents as the other investors. Our debt looks like any other private debt. Our equity is just one more row on the capitalization table. We’ve invested using convertible notes and SAFEs when others are signing those documents. We’ve invested as limited partners in impact venture capital funds alongside other investors.
The only novelty is that for a small minority of investees, our investment is made as a recoverable grant. Typically in those cases we are the only investor in the investment round, and typically the donor has recommended that structure to us as part of the recommendation.
7. Has Realize Impact done _____ before?
Probably. The PHIG service launched in February 2020, before the pandemic was daily news. A few years later, with $0 spent on marketing, over $50 million had been recommended and invested, arriving from many hundreds donor-investors, invested into hundreds of investees.
The donations arrived from dozens of donor advised fund sponsors including: Fidelity Charitable, Schwab Charitable, Vanguard Charitable, Impact Assets, and Tides, plus a variety of community foundations including: Silicon Valley CF, Seattle Foundation, CF of Utah, Berkshire Taconic CF, Marin CF, Orange County CF, Chicago CF, and from a variety of bank-run donor advised funds such as: The Morgan Stanley Charitable Trust, Bessemer Trust, and the equivalents at JP Morgan, US Bank, and others.
That is far from a comprehensive list. Donor advised funds are expected to donate to 501(c)(3) public charities, and that is what Realize Impact is.
8. Is Realize Impact a DAF?
No. Realize Impact does not accept donations that do not also include a recommended investment. If you don’t have an investment recommendation to make today, then donate your capital into a DAF today and when you are ready to invest, recommend a donation out of the DAF to Realize Impact then.
9. Does Realize Impact invest outside the U.S.?
Yes. Realize Impact has made investments both inside the U.S. and outside the U.S.
10. How do I pick an investment?
If you want to recommend an impact investment but don’t know where to source investment opportunities, start by visiting The Liist for a list of impact funds and companies raising money now, or peruse the latest blog posts to see what we’ve recently invested in. Many of the recent investees need more capital.
11. What happens if the investment fails?
The typical use of donor advised funds is a grant to a 501(c)(3) public charity. When you make those grants, you are guaranteed that 0% of your capital will be returned. In investing we call this a -100% return.
Worst case, your recommended investment has no return, the same as a grant. Hopefully in those cases some impact has taken place, similar to a grant to a nonprofit.
You already received a tax deduction back when you donated into your DAF, so there is no additional write-off if the investment fails.
12. What happens if the investment is a success?
99% of the results of the investment (principal, interest, capital gains, dividends, etc.) is donated back to your DAF (or to some other 501(c)(3) you recommend). For details on how this works, read the distribution FAQ.
Our hope is that you recycle that into yet-another recommended impact investment, to create even more impact from the same capital again.