CFFP Impact Investing Vocabulary

Finding common language is one of the invisible hurdles to collaborative work between foundations and individual investors. To assist in the creation of a shared vocabulary we offer these definitions for consideration, with the understanding that they are neither complete, intended for use outside the domain of this project, nor set in stone.

  • An investor is any foundation, individual, or other organization deploying funds through this project.

  • An investment is a deployment of any type of capital.

  • A purely financial investment focuses only on achieving growth of the funds that are deployed.
  • A purely philanthropic investment is a grant or recoverable grant that is calculated to achieve a desired social, environmental, or policy change.
  • An impact investment is any capital deployment trying to achieve an improvement in an environmental, social or governance metric, as well as a financial return. This includes PRI loans and credit enhancements.

  • A deal is an opportunity to support a specific enterprise through any type of investment.

  • A social enterprise is any organization (e.g. business, non-profit) that applies commercial strategies to improve human and/or environmental well-being.

  • Business development and technical assistance both help provide training and services to positively increase the impact or viability of a social enterprise.

  • Values-based supply chains, or value chains, are sets of relationships in which businesses treat each other and their workers as strategic partners in creating financial, social, and environmental value, rather than as easily replaced suppliers and consumers.

  • Sustainably grown food refers to food that is produced by processes that do not diminish the capability of future generations to feed themselves from the same land.  Sustainable growing practices will, among other things, preserve or improve soil fertility, depth, and nutrient levels, as well as maintaining water quality and quantity within the region.

  • Healthy foods are those providing essential nutrients and energy to sustain growth, health, and life while satisfying hunger. Healthy foods are often fresh or minimally processed, naturally dense in nutrients, and do not contain ingredients that negatively impact the consumer. A standard for measurement of what comprises healthy food are the Dietary Guidelines for America. To complete the definition of healthy food, they should also be produced and processed with regard to the wellbeing of all the workers in the value chain.

  • Foodshed is a geographic region that produces the food for a particular population. The term is used to describe a region of food flows, from the area where it is produced to the place where it is consumed, including: the land it grows on, the route it travels, the markets it passes through, and the tables it ends up on.

  • Cascadia Foodshed is the geographic region, primarily Washington and Oregon, where food is grown to feed residents of the Pacific Northwest.

  • Food System refers to the interconnected social, economic, ecological and physical processes involved in feeding a population.  It includes all inputs and outputs from water and soil through harvest, processing, retail sales, waste disposal, and nutrient recycling.

  • Stacked Capital/Layered Capital is an approach to financing a project by combining different sources of capital with different risk tolerances, impact goals, and return expectations.  For example, a farmer may combine her own personal savings (high risk) with a loan (low risk, due to federal guarantee) to acquire farmland. She may then add to the stack with an unsecured operating line of credit (higher risk), and a government agency grant to build infrastructure on the land.  In the context of this project, we are intentionally creating capital stacks to benefit single enterprises by combining the different types of resources available from the various project participants.

  • Revenue Based Financing is a type of project finance where the investor receives a fixed percentage of cash flow from the business, rather than a fixed percentage of interest from the loan.  The payments continue until the entire investment and agreed upon yield is returned to the investor. There is lower risk of default because payments are reduced when cash flow is tight.

  • Due Diligence represents all the tasks investors undertake prior to deploying capital in a deal to satisfy their concerns around viability, impact, governance, etc.

  • Underwriting is primarily a financial assessment of risk of a given capital deployment.

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