Impact Security: Reimagining Funding in the Nonprofit Sector

In 2018, NPX Advisors (NPX) reimagined funding in the nonprofit sector by introducing the Impact Security, a private pay-for-success model. The pay-for-success model has most commonly been used with government funding; investors provide money up front to a nonprofit, and if the nonprofit meets the targeted impact, the government pays the investors back with interest. With the Impact Security, if the impact is proven, a collection of donors pays the investors; if the impact is not proven, however, the donors instead redeploy their money into a new pledge. This model blends together traditional forms of investment in the nonprofit and for-profit sectors and provides a more flexible vehicle of investing in the nonprofit sector.