A Cambridge, Mass., nonprofit is pooling donations from major donors to provide seed money to early-stage companies, The Boston Globe reports.
The idea is that philanthropists may be better suited than traditional investors to support certain types of companies, like clean-energy businesses, that may be slow to produce revenue. Donors can support the companies in three ways: through a for-profit investment that isn't tax deductible, through a grant that could return its principal plus interest to be re-invested in other charitable causes, or through a “program-related investment,” from which donors may still receive a charitable break.
So far, Prime Coalition has pooled $1 million, including from actors Will and Jada Pinkett Smith, to invest in Quidnet Energy, an energy-storage startup. The nonprofit identifies young companies that are doing social good and then locates investors — including individuals, foundations, and donor advised funds — to support them.