Coastal Ventures Limited Partnership: Balancing a Sustainable Investment Strategy with a Social Mission

Case Solution

Guy Stuart
Harvard Kennedy School ()

Nat Henshaw, president of CEI Ventures Inc. (CVI), a subsidiary of the nonprofit Coastal Enterprises Inc. (CEI), participated in a balancing act. He was the manager of a for-profit venture capital fund, Coastal Ventures Limited Partnership (CVLP), with a social mission that valued quality jobs, employee involvement, and environmental awareness. Henshaw and his board of directors were also considering the next venture capital fund they wanted when they began closing the current fund. Did you have the right balance between profit and social responsibility? Could you invest the remaining 60% of CVLP funds over the next two years in a way that strikes the right balance? And did they have enough of a track record to attract investment in a new fund? Many students will not be familiar with this type of institution, and the case provides enough detail about the institutional structure of a community development venture capital fund and how it works to serve as an introduction to the topic. It shows how the fund is designed, both institutionally and operationally, to nurture both a profitable investment and a social mission. However, the Fund has significant problems maintaining this balance. The case can then serve as a platform for the discussion of the effectiveness of said institution in promoting the economic development of the community. More generally, this case can be used to teach students about the “double bottom line,” where the bottom line is a company that is a subsidiary of a nonprofit organization that the company founded primarily as part of its efforts to achieve your mission. These arrangements are becoming more common in the US nonprofit sector, raising questions about the legitimacy of for-profit subsidiaries and blurring the line between the for-profit and non-profit world. Case number HKS 1669.0

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