Americas Quarterly

2
Funds &
Target Sectors

Funds target diverse social and environmental needs. Depending on the nature of the investment, some funds provide support and services to the projects they invest in, from business development training to marketing.

e development train

This is when the investor decides where, how and what he or she wants to invest in. The funds allocate capital to for-profit companies with social missions in areas such as low-income housing, health, fair trade and microfinance.

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Investments
3For a more complete list of unds and sectors, see page 75.

The funds detailed on page 75 use different means to raise capital and invest it. Much depends on the status of the fund/organization and whether it is a for-profit or a nonprofit. Among the most common tools are blended debt, bonds, commodities, community development venture capital, debt investment, deposits, equity hybrid structures, guarantees, linked deposits, private equity, quasi-equity, real estate, social impact bonds, and trade finance guarantees.

Financial Products

Below is a basic glossary of the most common financial products used to direct investments.

Blended debt
Commonly used to refinance
previous loans. A new loan
is established with an
interest rate higher than
the old loan, but lower
than the future rate.

Bonds A note sold to an investor. The bond rate is not a fixed interest rate.

Commodity Purchase or support of bulk goods and raw materials, such as grains, metals, livestock, oil, cotton, coffee, sugar, and cocoa. Often used as a way to support agriculture and fair trade.

Community development
venture capital
Capital raised by local
communities to support
entrepreneurs and projects
in low-income areas.

Debt investment Purchase of bonds instead of stock.

Deposit

Capital deposited in a bank for a specific destination—in this case for a social mission.

Equity hybrid structures
Specific securities that
flow between debt and
equity. Also known
as hybrid security or
hybrid instrument.

Guarantee Issued to guarantee investors or buyers the timely payment of interest and principal.

Linked deposit Deposit with a financial institution to induce support for specific projects.

Note

A short-term debt security, usually with a maturity of five years or less.

Private equity Direct investment in private companies, often from retail or institutional investors.

Quasi-equity Debt taken on by a company that has some traits of equity, such as having flexible repayment options or being unsecured.

Real estate A piece of land, the air above and under it, and any buildings or structures on it. For impact investment, affordable housing and sustainable development.