We are the Church’s partner in Impact Investing. Through the combined work of Significant Matters and SAT Catalyst Fund, we provide a number of valuable services and benefits:
- Business as Mission Consulting. How does a church make the transition from toxic Charity to Sustainable and Transformative solutions of human flourishing?
- We help. Church Impact Investment solutions and implementation. That is what this is all about.
- Business as Mission development. We work with churches, non-profits and businesses to create sustainable business solutions based upon local needs.
- Due diligence. Every deal must be evaluated and vetted to make sure that it is viable and meets the investment criteria we have set forth. See section on Investment Criteria.
- Business Coaching. For projects we have helped create or vetted, we will provide coaching to that business to help them succeed.
- Investment structure. The terms of the investment must work for all parties involved. We work with the parties involved to create the right structure.
- Legal structure. Our LLC structure helps protect churches from liability.
- Monitoring and Reporting. Once an investment has been made, we monitor the investment.
- Engage us with a phone call to discuss your current missions’ program to ascertain where you are in the process of change. If there is desire, but resistance, Significant Matters can help navigate the obstacles and create consensus.
- The church must make a decision to allocate a portion of their missions’ budget towards an enterprise solution.
- This new approach is presented to the congregation. How it is presented is crucial to the program success. If not presented right, some people will feel as though money is being taken from the soup kitchen which feeds hungry kids to fund greedy businesses. We help you craft the message. There are two asks: for funds to match the commitment the church is making and leadership participation.
- An account is opened under the legal umbrella SAT Catalyst Fund and the funds raised are deposited into this account. The account is named by the church to reflect its mission. For example, it could be “The Community Church Impact Fund.”
- The SAT Catalyst Fund will deposit to the account an amount equal to the church mission budget contribution. With the addition of congregational funds and SAT Catalyst funds, the account will be at least triple what the church budgeted, resulting in substantially greater possibilities.
- An investment steering committee is formed. The members of this committee consist of one member from the board or missions committee and the rest from members of the congregation who have invested in the fund. This is crucial and what gives buy-in to the whole plan. They have several roles:
- Develop an investment policy, which we will work with them on that.
- Select one or more qualifying, pre-vetted Impact investment opportunities to invest in. Later, we can co-create opportunities if desired. But, due to the time and expense involved, we recommend starting with an out-of-the-box opportunity.
- Decide how to invest new funds and reinvest funds when they are returned.
- Communicate with the Church leadership and congregation.
- Investment is made in the venture.
- Significant Matters monitors and reports on the investments.
- As the fund grows, Significant Matters will work with the steering committee to create new personalized and local contextual impact investments.
- As participation increases, there may be a need to create additional funds within the church, to maintain engagement. If twenty people want to be involved, that becomes unwieldy for management. Yet, you want their engagement. Therefore, it is better to create multiple funds, which function somewhat like investment clubs.
- As investments payback their principal, the first dollars are used to repay the contribution by the SAT Catalyst Fund so they can be redeployed to incentivize other churches.
In order to participate in our program, a business must meet several criteria:
- Missional Impact. A business must either directly or indirectly be involved in expanding the Kingdom of God. We interpret this as providing a positive social benefit with gospel proclamation or supporting a Christian family or ministry. However, we recognize that churches have varying criteria for understanding this, to which we are sensitive.
- Profitability. If a business cannot be profitable, then it is not sustainable and is not feasible long term.
- Legal. It must be possible to establish and run the business within the regulatory environment of the locality in which it exists.
- Environmentally friendly. We do not want to invest in businesses that harm the environment and hence the people therein.
- Business acumen. The persons running the business must have the knowledge, skills, character, and personality necessary to make it work.
Q: How do Significant Matters and The SAT Catalyst Fund make money?
A: Significant Matters is a 501(c)3 organization and receives some of its revenue from donations. It also makes money from workshops and events, such as SATtalks and charges fees for consulting. The SAT Catalyst Fund makes money from the interest earned on investments made.
Q: Who does the money belong to?
A: Technically, the funds belong to the SATCatalyst Fund, LLC, a wholly-owned subsidiary of Significant Matters, Inc. However, by a legal agreement, the funds contributed by the church and its congregation will be returned to the church upon demand, as liquidity permits, I.e., as distributions are received.
Q: Why should we go through The SAT Catalyst Fund instead of doing it directly?
A: The IRS has several guidelines pertaining to making “Program Related Investments” and “Mission Related Investments.” Your Church bylaws may conflict with the IRS rules for these types of investments, which could jeopardize your tax exemption. In addition, certain investment opportunities could create Unrelated Business Taxable Income (UBIT), creating a tax liability. Finally, investing directly in businesses opens the church up to potential liability if something should go awry. The way we have structured this with the SAT Catalyst Fund, circumvents all of these land mines, protecting the church.
Q: How large can our Impact Investing Fund get?
A: There is no limit. In fact, we help churches set a goal. For example, if the initial mission commitment is $10,000 per year, with the matching leverage, the fund could easily be $200,000 in ten years. Think of the level of impact you are making then!
Q: Can we lose money?
A: Yes! Business investments always carry risk and losses will be incurred no matter how carefully they are vetted. However, whatever you get back, even if it is not 100%, is more than what you are getting back with your current Charity approach, which is a -100% financial return.
Q: Working around the world, you cannot do all of this yourself. Who do you partner with?
A: You are right. It is not possible for us to be the eyes, hands and feet everywhere. Therefore, we have created strategic alliances with other organizations for this purpose. Some of their work is in sensitive areas of the world and they have requested that we not publish their names for their protection and the safety of those in the ground. We also want to create partnerships with the mission work you are already involved in, bringing a higher level of sustainability to those missions.
Q: What kinds and sizes of businesses do you invest in?
A: We do not restrict to industry or size as long as they meet our investment criteria. We normally do not usually make “micro-loans,” but rather tend to focus on small to medium size businesses.
Q: How is the investment paid back?
A: This varies with the investment and how the is structured. Some loans may be as short as one year and others as long as six. Repayments may be made monthly, quarterly or at other intervals. Principal repayments will be allocated 50/50 between the church impact fund and the SAT Catalyst Fund until the SAT Catalyst Fund investment has been returned. Thereafter, 100% of principal repayments will go to the church investment fund.
Q: At what interest rate are loans made?
A: This varies by country and locality, type of business, individual borrower factors and SAT Catalyst Fund costs. We always charge a below-market rate. Rates are typically in the 3% to 10% range.
Q: What are the fees and costs involved in investing through the SAT Catalyst Fund?
A: Impact Investing, when done properly, is very expensive. Our fee is 1.95% per year of the value of the investments made. In addition, we request that churches and donor’s consider an up-front contribution to the ministry of Significant Matters.