© 2016 by Robert Kim.

Power of Collaboration: Philanthropy and Investing

February 1, 2017

Most of us have two pockets: one for "philanthropy" and another for "investments".  In recent years, a few circles of Christian philanthropists started asking if and how they can use their "investment" pockets to serve communities and God's Kingdom, typically taken care of by “philanthropy” pockets.  I believe this question stems from a belief that the "investment" pocket also belongs to God and that God can do amazing and creative work when both pockets become available to Him.

 

 

Collaboration

 

 

Great synergy can happen when these two pockets begin to collaborate with each other.  Each pocket has its own unique strengths and can complement the other's shortcomings, achieving an outcome greater than if pursued alone.  Philanthropic capital, for example, can afford to reach communities at the bottom of the pyramid while investment capital may not be able to do so given its primary objective to generate financial return.  Investment capital on the other hand has the ability to create a self-sustaining engine that can meet many needs of low-income communities.  Let me illustrate this point through a real-life example of a real estate investment.  We’ll call this investment “Imagine Fund” for anonymity’s sake.

 

 

Greater Outcome

 

Imagine Fund buys, renovates, and leases single-family homes in the Mid-West to low-income families.  Due to a large population of refugees and disabled veterans in need of housing, Imagine Fund has been experimenting with various partnership ideas to provide housing without sacrificing financial return.  Recently, the Fund engaged in partnering with local non-profits - backed by philanthropic capital - that serve the refugees and disabled veteran community.  Under this partnership, the non-profits would help identify potential tenants for Imagine Fund and subsidize rent for a certain period while the tenants' situations stabilize.

 

What is the non-profit organizations' strength in this case?  They have the network and resources to understand the various levels of needs and credit-quality of refugees and disabled veterans.  However, they don't have the expertise to finance and manage rental properties.  Imagine Fund has the expertise in real estate investing but leans on the non-profits to identify future tenants and subsidize rent during transition period.  This is a beautiful example of philanthropic and investment capital working together to create a solution that meets the needs of underserved community. 

 

 

New Possibilities

 

Let’s stretch our imagination further.  What if the non-profits in the example above were a local church or faith-based organization?  Would there have been an opportunity to share the gospel?  I believe many opportunities like this can be created and realized if we start imagining a world where philanthropy and investment can partner together.  A new paradigm of financial, social, and gospel-led spiritual impact is at our doorstep.

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