This is a GREAT step forward, as comparative yields are often one of the bigger deterrents to mobilizing capital in RSF’s focus areas. While RSF should never try to win “hot” capital that is simply chasing yield, striking a balance between organizational goals, investor returns, and borrower needs will, ultimately, drive more capital to the companies and organizations that need (and deserve) it. Besides, what does LIBOR or Fed Funds really mean anymore?!? I’d argue that RSF’s new formula is far more grounded in reality than those two hyper-manipulated, politically-motivated, blunt instruments of financial mismanagement!

All the best,
-David

I don’t think we have any expectations around other financial organizations following suit on this. Our goal is really to engage our own community of investors and borrowers in direct relationships that can be financially beneficial and personally transformative. We trust that if we do this well, it will attract other like-minded investors and borrowers to join our community, and that in turn may spark wider interest in the model. I’d also note there are other models that, while not quite the same, are based on similar values of direct association between stakeholders, such as Community Supported Agriculture, peer-to-peer lending, and cooperatively-owned businesses. So we see our effort as one of many heading in the same ultimate direction of building mutually-supportive economic and financial communities.

Thanks for your comment! We do describe in the post that: “A 4% spread (used to fund RSF’s operations) is then added to this customized SIF rate to determine the base rate for borrowers in our Core Lending program.” So right now the RSF Prime rate for borrowers is 5%, and that information will always be posted on our Core Lending page along with a description of how the rate is set: http://rsfsocialfinance.org/services/lending/core/.

It is certainly our intention for RSF Prime to bring more visibility to all parts of the financing equation, so any suggestions on how to more effectively communicate the model (visually, verbally, or otherwise) are always welcome. And it’s great to know that we are re-connecting with practices from the early days of RSF, it really affirms that we’re working from the organization’s core values. Thanks again for all your support!

-Gary