Private Philanthropy Firm?

What is a private philanthropy firm, and how is it different from a private foundation?

A private philanthropy firm is a private equity firm that specializes in investment strategies designed to promote collective prosperity. A private foundation is a tax-exempt organization, whereas the private philanthropy funds we manage have the same legal structure as a typical for-profit private equity fund. This means that these funds have three main structural advantages over tax-exempt private foundations:

1) They can avoid all overhead costs associated with maintaining tax-exempt status;

2) They can pursue development and implementation strategies that are closed to tax-exempt organizations;

3) By capitalizing for-profit enterprises designed to be ethically disruptive, they can raise standards in the for-profit sector through natural competitive forces, thereby promoting more sustainable practices and value propositions market-wide in ways entirely beyond the reach of traditional nonprofit organizations.

Another critical difference between Fairpoint Mutual and traditional philanthropy is that we provide philanthropists considerably more financial flexibility. If tax deductions are a primary concern, our funds can allow you to manage your deductions more strategically than traditional philanthropy. If you are interested in maintaining a perpetual philanthropic endowment, our funds offer more options than traditional philanthropy. Or, if you are interested in maximizing your impact while minimizing losses (or even profiting from your investment), our funds can target those goals as well in ways that traditional philanthropy simply cannot.

How is Fairpoint Mutual different from impact investing?

Impact investing usually implies that the investor’s priority remains to profit but to do so in a way that generates a positive social impact. While we can design funds to satisfy these interests, our primary focus is to provide an alternative to traditional philanthropy, not to provide alternatives to traditional investments. Our platform was designed first and foremost to maximize the impact potential of philanthropists by opening up strategies unavailable to traditional nonprofits.

How is Fairpoint Mutual different from a donor-advised fund?

Donor-advised funds have a similar structure to our private philanthropy funds, but the significant difference is that they are managed by tax-exempt nonprofits who allocate those funds within the constraints of their tax-exempt purposes. Fairpoint Mutual is not a tax-exempt organization and therefore is not restricted in the kinds of philanthropic allocations it can make. Our investors’ tax benefits come from capital losses, not deductible donations to tax-exempt organizations.