Change is a collective effort. As we reimagine new, equitable economies as an intermediary, we have learned that the systems and lexicons we navigate across funders and social enterprises are typically silo-ed, and thus unfamiliar. We stand at the helm to guide, educate, and advocate alongside donors and funding institutions as well as movement leaders and community members to bridge new frameworks, terminology, and community-centered language in order to shift towards just practices.

With that in mind, we share with you, The Possibility Labs’ Lexicon, a growing glossary of terminology that we’re learning with our partners across funders, activists, and other trailblazing changemakers, as well as the existing structures that we are reimagining to be more radical in how they are activated towards social change.

Language is ever evolving and in the spirit of humility, agility, and accessibility, we will regularly update this lexicon as we learn and grow alongside you.

Financial Capital: People refer to financial capital as the liquid money a business has available on a daily basis. Financial capital also can refer to all the money and assets available at a given moment, inclusive of grants, funds, investments, loans, etc.

Collaborative Funds: A group of stakeholders who collaboratively resource, govern, and lead all funding decisions for a fund benefiting a specific cause and its intersections. This group can include: members of various organizations, individual funders, collectives of community leaders, or institutional funders who want to house a fund separate from their organization.

Community Governed Loan Fund: A community governed loan fund (or community loan fund) is led by a community or as part of an organization’s programmatic work to disburse loans directly into the specific community where the governing board or organization is located. This gives the community access to high-risk and first loss capital to support multiple local projects.

Donor Advised Funds (DAFs): Donors make charitable gifts to a sponsoring organization (like Possibility Labs) and then recommend how to redistribute those funds to organizations and movements. The sponsoring organization conducts due diligence on donor funding decisions and provides the resourcing infrastructure, lowering the inefficiencies of checkbook giving.

Ecosystem Weaving: Interconnection of a diverse ecosystem of movement leaders, businesses, intermediaries, donors, and funders to collectively shift capital and build power. In our case, these networks are designed to help propel BIPOC and low-income communities.

Employer Identification Number (EIN) Form: The EIN (or Federal Tax Identification Number) is like a social security number unique to your US-based business (including US territories). It is provided by the IRS and is necessary for all business tax forms (also identified as a TIN – Tax Identification Number). To apply for your organization’s EIN visit this IRS page.

First-loss Capital: The capital invested in a project or initiative that takes the first economic loss in cases of financial difficulties. A donor or investor can agree to bear the first loss of an investment so it does not become the financial responsibility of the movement or organization.

Fiscal Sponsorship: Communities, movements, grassroots organizations, or other projects may need tax-exempt status from the IRS but may not have or want it as an independent tax-exempt organization. Intermediaries who are tax-exempt (like Possibility Labs) help these organizations obtain donations by becoming their fiscal sponsors and acting as the legal entity receiving and deploying funds on their behalf. Fiscal sponsorship can include other administrative support as well, such as human resources and compliance oversight.

High-risk Capital: Money or assets that face increased likelihood of being lost or decreasing in value. It is typically offered when there are opportunities for investors to make a higher rate of return, but at the same time with the possibility that they might lose all their capital.

Impact Investing: Investing that supports long-term social and environmental change, while helping donors obtain and measure the positive financial and social/environmental return on their investment. Donors are guided to understand impact measurements, define metrics for their return on investment, and assist with investment reporting to increase accountability and transparency.

Incubation: An incubator supports early or idea-phase leaders as they solidify their strategies, adapt their business models, and define their corporate and fundraising structure. Through incubation, organizations are primed for long-term sustainability and scalability with coaching, ideation, fundraising education, training, and access to mentors and consultants, among other benefits.

Infrastructure: Possibility Labs’ infrastructure empowers partners with comprehensive financial dashboards and data analytics, user-friendly administrative tools, educational resources, and direct support to help groups to successfully navigate existing economic power structures.

Integrated Capital: Integrated capital offers organizations a combination of different capital tools like grants, loans, investments, guarantees, and related, non-financial resources like advising and networks. These funding strategies help communities, movements, and donors obtain the diverse capital necessary to effect systematic change and transition to a new economy.

Integrated Capital Investment Portfolio: Diverse capital offerings and tools are combined to create a comprehensive investment portfolio. These customizable funding strategies let donors make their own deployments while meeting mission-alignment criteria and partnering with external advisors.

Intersectionality: Term originally created by Professor Kimberlé Crenshaw which focuses on the intersection of race, gender, disability and sexuality and the implications these identities have for socially marginalized individuals and inequality as a whole.

Participatory Funding: A funding practice fostering civic engagement, increased equality, and that empowers communities to participate in local grantmaking or investment decisions. Community leaders and on-the-ground organizations help ensure their initiatives receive the funding needed to evolve and grow.

Payout: The amount you expect to receive (or get paid out) as a return from an investment or when an investor will see their originally invested amount recuperated. Payout can also refer to the percentage (5%) of an endowment that foundations are required to distribute in grants annually. DAFs (donor-advised funds) do not have a mandatory payout rate, however Possibility Labs requires a minimum 10% annually.

Pooled Funds: Pooled Funds (or Pooled Investment Portfolios) allow funders to join together to pool or group their DAF (donor-advised fund) money towards a specific initiative.

Regenerative Capital: The penultimate step for Just Transition for Philanthropy’s ideal spectrum of resourcing strategies, which helps bolster communities facing long-term economic inequality so they, as grantees, can have the resources and capital to financially back their most pressing community needs.

Restorative Capital: Capital focused on making sure donations or investments take on an active role in addressing historic community harms and inequalities, as well as transitioning to an economy that centers the visions and leadership of marginalized groups. Through a restorative focus in Possibility Labs’ capital tools, we ensure all transactions prioritize the needs of BIPOC communities and not just those of donors or sponsoring organizations.