GETTING DOWN TO BUSINESS

I love Polar Bears. If marrying Polar Bears was legal, I would solve all my parent’s worries….But, it’s not. While I continue the good fight to make it legal (did you get my letters congressman?) they are being threatened both as a species and by the environment (abnormal heat = no ice caps = no polar bear = grumpy Bhavin). Which brings me to the title of this blog. In case you haven’t made the connection, the non-profit I work with focuses on wildlife and conservation projects (read: they save Polar Bears and Ice Caps!). That’s what we in consulting call a win-win! One slight problem though… turns out that the organization needs lots of money to help the bears. So how exactly does a Banking & Capital Markets consultant help? By helping them find innovative ways to raise money!

Non-profits operating in the development sector are reliant on donor funding to run their operations and projects. If they are lucky to be part of a global organization, chances are they are obtaining some “network funding” from some of the more developed (and generous) countries such as the U.S., U.K. for example.

Individuals are the primary donors to these types of organizations, and often times individuals want to ensure that their money is going to a very specific cause. When they donate money for a specific cause (like saving the dolphins), their money is termed “restricted”, which is to say that the organization can only use those funds for saving dolphins. When Individuals donate without any stipulation of how the funds should be used, those funds are termed “unrestricted”. Unrestricted funds are important because it allows the organization to use the dough in accordance to their greatest needs - not only on conservation projects, but also to pay salaries of their staff, rent for their space, and to have fundraising events to generate even more money and make an even bigger impact!

As part of the growth strategy for this organization, my co-worker and I will be designing an investment security to generate income for the organization. Here’s how it works:
Investors purchase an investment security. The proceeds that the organization receives from the sale of the security are then applied to fundraising projects. The monies generated by those fundraising projects are used to re-pay the investors, with interest. Sounds simple, right? Oh, if you only knew…

The concept is exactly like a stock or a bond, though we’re designing something that is a hybrid of both, and creates the right incentives for all parties involved. In addition to raising money, the structure of the product is important because the organization is looking to use it as a tool to shape some behavior within the organization. I will write more about that another time…. All indications are that this has never been done before, and when we pull it off, we will for sure revolutionize just how this organization (and others) obtains capital. The possibilities are exciting. I’ve considered writing a paper on this after all is said and done. Time will tell…
There. Now you know exactly what my work here entails, class is dismissed!