The KH Impact Fund
An Impact Investment Fund for the People of Israel
The
Challenge
Despite growing government and philanthropic investments
social problems are not being solved
A new generation of donors wants sustainable and
innovative solutions
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The
Solution
Impact Investment: an investment with a “double bottom
line” = financial return + social result
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The
Investment Spectrum
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Growing
Market
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A Variety of
Financial Tools
Equity Loans Social Bonds
Housing
Venture Capital
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A Variety of
Financial Tools
KETZEV – Social Businesses Loans Mitzpeh – Social Housing Housing
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Why?
What is in it for me
New Exciting approach to solving social problems
Results are measurable
Thinking and acting like a business
Evergreen Philanthropy
Tax deductible
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How?
The KH Impact Fund
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Product &
Deal Flow (1)
Venture Capital for the Elderly
Subject and social need
A not-for-profit public organisation, which develops tools to improve the lives and increase the life
expectancy of elderly people and those with disabilities.
Purpose
Financing the initial production of the electronic device which was developed by the organisation to
enable people with cognitive decline (dementia) to find everyday objects in their home. Market research
found strong demand for the device (estimated world total market potential is over US $33bn).
The Loan
> A loan of $145K is requested in two installments
> 10 monthly payments (interest + principal)
> 1.6% rate of interest
> Receipt of equity in the venture will be possible if the company becomes commercial.
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Product &
Deal Flow (2)
Social Impact Bond: Reducing Recidivism
Subject and social need
43% of 6,500 prisoners released annually are expected to return to prison within 5 years of release.
This high recidivism rate is one of the primary unsolved social issues worldwide with extensive social
and economic implications.
The intervention program
500 participants overall, from 3 prisons will receive up to two years of intensive intervention,
including:
vocational training, workshops, group and individual sessions and assistance in ad hoc issues.
Measurement
Reincarceration rates 4 years post release, compared to predicted incarceration rates.
The Bond
> Outcome payers: The Ministry of Public Security
> Investment terms: 8 years (semi annual draw-down)
> Repayments: Pay-for-Success, beginning at the end of the fifth year
> Target return: Projected returns annualized IRR 6.4%, Cap annualized IRR 13%
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Product &
Deal Flow (3)
Social Real Estate: Affordable Housing for the Periphery
Subject and social need
Working to fulfill the potential of the Negev and Galilee, in regards to population, social progress, economic
prosperity, and infrastructure. The strategy is working to transform the periphery with an all-encompassing,
inviting and motivating housing process, accelerating the integration of new families in those regions.
Purpose
Construction of 303 units (46 rentals) in Sderot will take place between the first quarter of 2019 and the end of
2021. Total cost of project – US $81M. Equity investment – US $10M. Total estimated revenues – US $90M.
The Investment
> Project Finance of US $250K
> Investment period: 10 years – first distribution after 5 years, second distribution after 10 years.
> Target return: Target IRR 5%
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The
Donation / Investment
US $50,000 Investment / Donation
Membership in Investment Committee
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Israel has proved, more than any other place
outside of Silicon Valley, that it has the sort of
entrepreneurial spirit to be able to move from
start-up nation to impact nation.
Sir Ronald Cohen
Co-Founder, Social Finance Israel
Chairman, Global Steering Group for Impact Investment
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“Of the eight levels of TZEDAKAH the highest is that of assisting the poor
with a loan or a partnership to enable them to provide for themselves –
help them until they no longer need the assistance of others”
Maimonides
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Thank
You
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