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Loan Fund Program Informational Meeting

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Loan Program Informational Meeting that describes the process for moving forward with the introduction of available capital for entrepreneurs that would augment traditional financing streams.

Loan Program Informational Meeting that describes the process for moving forward with the introduction of available capital for entrepreneurs that would augment traditional financing streams.

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Loan Fund Program Informational Meeting Presentation Transcript

  • 1. May 28, 2014 Loan Fund Informational Meeting
  • 2. Agenda I. Introductions II. Community Foundation Overview III. Impact Investing and Legality IV. Planning Roadmap and Implementation V. Case Studies VI. Discussion Loan Fund Informational Meeting
  • 3. Foundation Finances $9.8 Million $7 Million $300,000 Investment Pool Endowment Grantmaking The mission of the Community Foundation of South Lake is to provide leadership to enhance the quality of life in South Lake County by identifying community needs and seeking philanthropic support as permanent funding to meet those needs.
  • 4. Community Foundation Business Model Old Model New Model Traditional Investments Investment Income Community Impact Grantmaking Traditional Investments Impact Investments Community Impact Investment Income Grantmaking
  • 5. “The way we deploy capital and the assumptions and approaches we use to do so can in themselves make a difference. We plan to invest 100 percent of our endowment—as well as other forms of capital—for mission. Beyond money, we are obligated to deploy all of the resources at our disposal—capital, revenue, ideas, talents, influence, and natural allies—toward the broad, multi-sector approach, which will be necessary for the pursuit of goals that are, admittedly, much bigger than those we have pursued in the past.” - FB Heron Foundation Impact Investing
  • 6. “by providing innovators and entrepreneurs from both the for-profit and not for profit sector greater access to capital, they will develop and create facilities, products, and services that will meet the needs of people and communities not adequately served by the existing marketplace. Neither new nor novel, impact investing is a tried and true set of practical tools that can complement your established programs and strategies. Impact investments are being used by foundations of all types and sizes, national and regional, local and urban.” - Community Foundation Field Guide to Impact Investing Impact Investing
  • 7. A geographically specific stream of capital intended to augment traditional financing available from banks, venture capitalists, and equity investors. Loan Fund
  • 8. Legality of Impact Investing IRS Guidelines state, Program Related Investments are those in which: 1. Primary purpose is to accomplish one or more of the Foundation’s exempt purposes 2. Production of income or appreciation of property is not a significant purpose *Aspen Institute, Supporting Economic Growth and Entrepreneurship
  • 9. Legality of Impact Investing* Loans must have some form of social purpose: • Any non-profit entity • Creating jobs in economically distressed areas • Creating/retaining/improving jobs for low-income workers • Low-income business owners • Diversifying the local economy to promote economic stability • Critical community issues (e.g. healthcare, food, energy) *Aspen Institute, Supporting Economic Growth and Entrepreneurship
  • 10. Legality of Impact Investing* Rates and terms must reflect charitable intent: • Below market rates for the risk incurred • Must fill a financing gap Reasonable expectation of repayment • Due diligence • Collateral (below bank standards) Appropriate servicing and collecting *Aspen Institute, Supporting Economic Growth and Entrepreneurship
  • 11. Planning Roadmap* • Identify Champions • Determine goals, success measures • Foster program and finance team • Engage Committee and financial advisors • Assess interests • Investment Policy • Determine deal size & structure • Determine credit culture: risk tolerance, pricing, performance benchmarks, intermediary vs. direct investment • Internal education • Deal sourcing • Financial due diligence • Deal approvals • Legal structure, documentation • Portfolio monitoring, reporting • Financial performance • Social impact innovation • Leverage collaboration • Evaluation, learning, reporting • Communication Initial Strategic Planning Operating Systems Design Program Management Impact Investing Policy Decision *Developed by Lisa Richter of GPS Capital Partners
  • 12. Phased Implementation Plan Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Monitoring Develop budget and implementation plan with timeline and structure Develop lending criteria, policies, tracking software, loan products, and legal documentation Develop initial business plan to include marketing, funding, legal framework, and loan request flow chart Prepare and underwrite first loan Develop application form, evaluation tools, invoicing system, and present findings and recommendations
  • 13. Organization Structure Investments Funder Established Marin Community Foundation 501c3, Managed In House Non-profit Loans Investment Pool, DAFs 1994 Social Enterprise Fund Separate Limited Partnership Social Enterprises Private and Public Investors 2010 Innovation Fund America 501c3, Managed In House High Tech Startups Private Donations 2011 Arizona Community Foundation 501c3, Outsourced Non-profit Loans Bank CRA Loans 2013 Case Studies
  • 14. Investor Asset Class Amount Investee Org Type Grand Rapids Community Found Loan $462,000 Dwelling Place, Inc 501c3 Community Foundation of Jackson County Loan $500,000 Jackson County Learning Center 501c3 Seattle Foundation Note $1,000,000 Enterprise Community Partners Intermediary/CDFI Rhode Island Community Foundation Equity Converts to Debt $2,000,000 Neighborhood Health Plan of RI For Profit Greater Cincinnati Foundation Equity $500,000 CincyTech USA Public/Private Investor Case Studies
  • 15. How is success defined? Who is eligible for a loan? How can the business community be supportive of this idea? What risks has the business community identified? What are potential challenges to overcome? What are potential funding sources? Questions