Socially responsible investing is gaining traction as an investment strategy that combines the motivations of building wealth and creating social change. What could be better than creating positive impact in your community just by redirecting some of your investments? The way you invest can then help bring about positive change without neglecting your financial goals. Each dollar invested will allow your nonprofit do more. It’s truly an impact investment that can be a WIN for all involved (you, your nonprofit, and the community).
Where does my investment money go?
Your money goes to your nonprofit you support and elect to invest in.
Do I receive a return on my investment or is this essentially a contribution?
You are participating in an investor which means you will receive a return as the nonprofit makes payments on the loan you helped to fund.
Does my investment realize tax advantages like a nonprofit donation?
No, this is not a gift. Instead, you are making an investment and the interest earned is not tax-free. There would be no charitable deduction unless you elect to forgive a portion of the investment or give back some interest earned to the nonprofit.
What is the structure of the investment I would be making to fund my nonprofits loan?
The investment is a payment dependent promissory note investment. Payment dependent means that a return is directly tied to the nonprofit actually making the required payments on the loan.
How can I access information on my investment?
Each investor will have a private login to access information on their investment including the ability to generate statements on activities. Further, for investments held in taxable accounts, tax documents are mailed yearly.
Can I use retirement accounts to make my investment?
Yes, it is important to be aware of the fact that you can invest in your favorite nonprofit organization while receiving the tax advantages of participating through a self-directed IRA. As long as your retirement funds are held in an individual retirement account or can be transferred into one, those funds are viable.
How do I set up a self-directed IRA?
A. Depending on the nonprofit initiative, it is possible to work with any IRA custodian that will hold the nonprofit investment. The online lending platform is set up so you can easily be walked through the process of setting up a self-directed IRA account through Goldstar Trust Company (goldstartrust.com).
Who is Goldstar Trust Company?
GoldStar Trust Company is one of the nation’s leading Self-Directed IRA custodians with over twenty years of experience. GoldStar specializes in allowing its account holders access to a wide range of investment options such as precious metals and other alternative investments.
NOTE: The duties of an IRA custodian are very limited, and include setting up the IRA account; ensuring assets are titled correctly, processing your instructions as directed, issuing periodic statements and fulfilling the IRS reporting requirements. An IRA custodian does not advise on investments or profit in any way from the investment decision you make.
Is there a cost associated with the using IRA funds to invest?
All IRA custodians typically charge fees for holding non-traditional investments in the form of an annual fee and/or service fees. Goldstar charges an annual fee of $65 per year which is very cost effective compared to other custodians.
How can I fund my IRA account?
There are two basic ways you can fund an IRA account. If you currently have retirement savings in either a 401(k) or IRA, you may be able to allocate funds from your current account to an IRA with the custodian services. Alternatively, you can fund your account directly with an eligible annual contribution.
For those who currently have a 401(k) or IRA with another financial institution:
•401(k) / 403(b) / 457 Rollovers – if you have a retirement plan with a previous employer, you can roll over those funds to a new or existing SDIRA Services account.
•IRA Transfer – you can transfer funds from another IRA to fund a SDIRA Services account.