Making and Structuring Deals
- Due Diligence - In general, the essential factors include capacity and tenure of management, financial position (capitalization, debt, cash flow), and financial track record. Legal due diligence also starts at this point.
- Structuring Investments - If the investment is a loan, the parties agree to the terms: amount, interest, limitations on use, repayment schedule, collateral, and reporting procedures. A foundation may also structure a series of covenants that govern ongoing monitoring and reporting.
- Monitoring and Reporting - Most foundations require recipients to report on key financial indicators (available cash, amount of debt, and net worth). "If you’re going to put covenants and other stipulations on use of funds into the loan, you’re going to need to monitor them."
Takeaways are critical, bite-sized resources either excerpted from our guides or written by Candid Learning for Funders using the guide's research data or themes post-publication. Attribution is given if the takeaway is a quotation.
This takeaway was derived from Program-Related Investing.
