Entrepreneurship

The Next 25 Social Enterprise Stars: Education & the Arts

March 16, 2015

RSF_SocentStarsLOGO-300dpi (2)As part of our campaign to add 25 social enterprise stars to our loan portfolio over the next year, we’re looking for new borrowers in all three of our focus areas: Food & Agriculture, Education & the Arts, and Ecological Stewardship. These are broad categories, but because it’s not always obvious whether an enterprise is a fit for us we’ll delve into what we look for in each area over the next three months. Up this month: Education & the Arts.

We support many different types of enterprises under this umbrella, including:

Marimi common mealOne of our current borrowers provides a great example in the last category: Camphill Communities California (CCC), a Santa Cruz supportive life-sharing community where volunteer caregivers and individuals with developmental disabilities live and work in a cooperative and rewarding environment. CCC offers everyone the opportunity to learn, grow, and live up to their highest aspirations. CCC is a model and inspiration for how to address the needs of the whole person: body, soul, and spirit. RSF has provided CCC with mortgage and construction loans to expand and improve their facilities.

If you know any enterprises in any of our focus areas that could expand their impact with greater access to capital, send them to Wanted: Social Enterprise Stars. General criteria for borrowers includes:

  • Incorporated in the US or Canada
  • Funding needs ranging from $200,000 to $5 million
  • Enterprise is profitable, or can demonstrate a clear path to profitability in 12 months
  • Annual revenue of $1 million or greater

Please pass it on to your network! The more #SocentStars posts there are on Twitter, Facebook, and LinkedIn, the more social enterprises we can reach and assist. Many thanks to all those who’ve been tweeting and posting so far.

Here are a few post ideas:

Are you an arts or edu enterprise looking for #funding? @RSFSocFinance has loans for #socents: bit.ly/1tH0ytE #SocentStars

Does your #socent need capital to grow? @RSFSocFinance provides loans up to $5M: bit.ly/1tH0ytE #SocentStars

@RSFSocFinance is #funding the next 25 #SocentStars. See if you qualify: bit.ly/1tH0ytE #socent

Growth Financing for Social Enterprises: 5 Options and How to Make Them Work for You

February 19, 2015

Originally published on TriplePundit

A regional food hub funded by RSF, Common Market in Philadelphia has grown rapidly through a series of integrated capital financings.

A regional food hub funded by RSF, Common Market in Philadelphia has grown rapidly through a series of integrated capital financings.

by Don Shaffer

Social entrepreneurs seeking growth funding often get caught up in the culture of venture capital: They position their enterprise as a rocket business, look for a miracle angel investor and start giving away equity. They’re not thinking about how the investors will get their money back, or whether other options might better support their goals.

At the same time, conventional funders often see social enterprises as too risky or too hard to understand, especially if they’re building a new supply chain, sacrificing some profit to maximize social value or using a hybrid business model.

Fortunately, there are ways around traps and barriers like these for social enterprises that are past the bootstrapping stage. First, here are a few general guidelines:

  • Before you seek financing, define what you ultimately want to do. Are you planning to sell this business? Do you see it as a legacy business that you’re building to last? A long-term, slow-growth plan won’t nix your chances for funding; you’ll just need to look at different kinds of funding.
  • Seek out funders that focus on social enterprises and that have expertise in your field. They’ll have a better understanding of the market opportunity, and they won’t expect your business to compromise its mission in order to grow.
  • Expect a funder to add value beyond financing, such as connections to a network of advisors or technical assistance.

Below are the ins and outs of five funding options — some top of mind, and some you may not have considered.

1. Debt financing

Borrowing money over a defined period of time — from a bank or an alternative lending institution — allows you to maintain your ownership position and thus retain control of the enterprise. This is a good option for enterprises that have the cash flow to make payments and the assets to secure the debt.

Debt financing takes a variety of forms, each with its own underwriting standards: working capital lines of credit, asset-based loans (secured by account receivables, inventory and other assets), equipment loans, mortgages and so on. You will want to seek advice on the best structure. The key questions to ask at the outset are: How will I be able to pay back the loan, and what is the lender likely to do if things go sideways?

Read the full article here

Don Shaffer is President & CEO at RSF Social Finance

Seeding Economic, Social and Environmental Change

December 18, 2014

Recently, a handful of RSF activities were highlighted on a new site that offers online tools and community resources for people looking to challenge the status quo of Philanthropy. The site, called Indie Philanthropy Initiative, features RSF’s Shared Gifting program, the RSF Seed Fund, and our Social Investment Fund amongst many other organizations that offer inspiring stories for creative grantmaking and collaborative funding models.

The below article about the RSF Seed Fund was originally published by the Indie Philanthropy Initiative and Kindle Project.

 

IPI-Kindle-1-RGB

How do you do your funding? Please describe your organization’s approach and process, explaining how it is different from conventional philanthropy.

The RSF Seed Fund is a small grant making program which funds new initiatives that further the field of social finance, or address issues within our focus areas of Education & the Arts, Food & Agriculture, and Ecological Stewardship.The process we follow is similar to conventional philanthropy, in that we have grant guidelines and review proposals, but what is different is that we are looking for new and emerging ideas without requiring “proof of concept” or commitments to and reporting on metrics of success. We try to keep the grant process simple because we know grantees have to jump through a lot of hoops to get funding, and we want to leave them flexible to explore and experiment in their early stages of growth. Another aspect that sets this fund apart is our rotating staff review committee. Each year, we invite RSF staff to be a part of this decision making process by selecting three to four interested people from different departments to join the philanthropic services team in reviewing the grant proposals.

What made you realize this funding style would be important for what you were trying to achieve?

One of the reasons we have this small grantmaking program, with $250 to $5,000 sized grants, is that we don’t have any other unsolicited grant programs. We want to have an opening so that new ideas, organizations, or people can become visible to RSF.

How does your funding practice affect the overall impact you are able to achieve?

Funding new ideas that need initial grant funding gives us the opportunity to support work at the beginning of its growth. It’s the beginning of a spectrum of funding we call ‘integrated capital,’ which is the coordinated and collaborative use of different forms of capital, including grants, direct investments, and loans, to support enterprises working to solve complex social and environmental problems. With these grant dollars we are willing to take risks with projects that may not have a demonstrated track record.

One of our 2009 Seed Fund grantees was People’s Grocery in Oakland. They then went on to participate in our first Shared Gifting circle and we have made an investment in their Direct Public Offering for People’s Community Market. It’s been incredible to see how we can support people and projects throughout the arc of their growth.

What is the most important insight you gained specifically through funding in this way? What’s the best piece of advice you’d give to a funder curious about doing something similar?

The nature of gifts and gifting is something we talk about a lot at RSF. We ask ourselves, “what are gifts best suited for? what can they make possible in the world?” Gifts are a different kind of transaction than say purchase or lending transactions. Our insight is that gift money is best suited for risks and for researching innovation.

My advice to other funders would be to understand the importance of funding new ideas. You have to be open to failure, and you have to be open to trust in the people and projects.

In addition, giving our staff members the experience of being a part of a grantmaking process is really powerful. As I said before, we invite new staff to participate in the Seed Fund process and it’s made a huge impact on people.

Finally, sometimes you need to let go of all the impact assessment and analysis to determine if grant funds are being effective. We talk about something called intuitive grantmaking. It is okay to trust your instincts about how the money can flow into the world.

Why does Indie Philanthropy matter to you?

This particular program fits under our Philanthropic Services purpose, which is to cultivate giving as the source of economic life. We want to transform gifts into being seen as an important part of the economic process. We understand gifts to be at the beginning of the economic process. Personally, that idea of intuitive grantmaking got me more interested in Indie Philanthropy. My experience with the RSF Seed Fund led me to explore the field and ultimately sparked the creation of our RSF Shared Gifting program, which exists to transform the power dynamic present in philanthropy. The RSF Seed Fund ignited that interest in me.

View the original article here

 

 About the Indie Philanthropy Initiative

Indie Philanthropy is a creative disruption to the status quo of funding that gives a common name to decentralized, daring alternatives poised to reshape the field of philanthropy. The Indie Philanthropy Initiative includes the launch of a suite of new online tools and offline community resources to help curious funders looking for dynamic grantmaking practices and allies. www.indiephilanthropy.org

Spreading the Word About the Next 25 Social Enterprise Stars

December 12, 2014

Word continues to spread about our campaign to add 25 social enterprise stars to our loan portfolio over the next year—over 1700 enterprises and referrers had checked out our campaign page by the end of November. Now it’s time to give thanks.

Thanks to 3BL Media, B Lab, Justmeans, SOCAP, Social Earth, and all of our other partners and friends who have been talking about the 25 #socentstars campaign on Twitter and elsewhere.

Thanks also to Alissa Sears, Amanda Kemp, Jocelyn Demirbag, and others we’ve reached out to who have dug through their contacts and introduced us to some great candidates.

And thanks to everyone who suggested potential stars in comments on our previous blog posts. The lending team is following up on all these suggestions. Keep them coming!

Our campaign is still going strong. We’re seeking for-profit or non-profit enterprises that are doing groundbreaking work in food and agriculture, education and the arts, or ecological stewardship—and could significantly expand their impact with a loan of about $200,000 to $5 million. (See the Social Enterprise Stars campaign page for detailed criteria).

To illustrate, here are a couple of examples from our current roster of borrowers:

training program 2 largeDC Central Kitchen is earning growing recognition for its work to create economic opportunity in the food industry for low-income and at-risk communities while addressing issues of food insecurity and food waste. The enterprise’s Meal Distribution program provides 10,000 healthy meals per day to local schools, homeless shelters, and other social service non-profit organizations. All meals are prepared by students and graduates of the Culinary Job Training program for unemployed people, many of whom are homeless, have been incarcerated, or have struggled with addiction. Find out more about DC Central Kitchen in this NPR story.

playworks-stories-playgroundPlayworks provides structured recess in public schools. Its programs improve school climate, reduce bullying, and increase student engagement through play and physical activity. Playworks provides public schools with trained, full-time coaches who use recess and play to support learning, and it provides training in structured recess for educators and youth workers.

Know any loan candidates like these? Please send them to Wanted: Social Enterprise Stars.

And please keep spreading the word! The more #SocentStars posts there are on Twitter, Facebook and LinkedIn, the more social enterprises we can reach and assist. Here are a few post ideas:

RSF_SocentStarsLOGO-for website@RSFSocFinance wants to fund the next 25 #SocentStars. Are you one? Apply: bit.ly/1tH0ytE #socent

Have a breakthrough social enterprise? @RSFSocFinance has #funding for the next 25 #SocentStars: bit.ly/1tH0ytE

Successful #socent with funding woes? See if you qualify for an @RSFSocFinance loan: bit.ly/1tH0ytE #SocentStars

 

Who Are the Next 25 Social Enterprise Stars? We’re Still Looking to Meet Them

November 12, 2014

RSF_SocentStarsLOGO-300dpi (2)Our campaign to add 25 social enterprise stars to our loan portfolio over the next year is introducing RSF to hundreds of social enterprises striving for outsized impact—about 1,600 enterprises and referrers had checked out our campaign page by the end of October.

Why is this important? Most growing businesses face challenges raising capital at some stage in their development. But for social enterprises, which use the power of business to directly improve society and our environment, the funding obstacles tend to be tougher and more persistent. By definition, they upend the expectations of traditional investors, lenders, and donors. RSF provides the kind of flexible, mission-aligned capital that meets social enterprises’ needs—but they’re often operating in isolation and don’t know we exist.

So please keep spreading the word! The more #SocentStars posts there are on Twitter, Facebook and LinkedIn, the more social enterprises we can reach and assist. Here are a few post ideas:

Are you one of the next economy’s #SocentStars? @RSFSocFinance can fund your growth: bit.ly/1tH0ytE #socents

Every #socent needs a savvy funder. @RSFSocFinance has loan money for the next 25 #SocentStars: bit.ly/1tH0ytE

Do you know any #SocentStars? @RSFSocFinance has loans for the next 25. Send them here: bit.ly/1tH0ytE #socent

Not sure who would be a good fit? We’re looking for more enterprises like these new RSF borrowers (also see details on the Social Enterprise Stars campaign page).

Liberty Source staff young woman stockLiberty Source

Liberty Source, a public benefit corporation and subsidiary of existing RSF borrower Digital Divide Data (DDD), employs military spouses in U.S.-based business process outsourcing work. Although founded just this summer, Liberty Source already employs over 90 people at Fort Monroe in Virginia. The more than 700,000 military spouses in the U.S. have a higher rate of post–high school education—80 percent—than the general population, but are four times as likely to be unemployed or underemployed because of frequent moves and the limited number of job opportunities near military bases.

“Without support from RSF, we would not have been able to get Liberty Source off the ground,” said Deborah Kops, Board Chair, Liberty Source and Board Member, DDD. “The RSF loan provided us the seed money to hire staff and buy equipment. Only a mission-aligned lender understands both the social impact and the imperative to operate a commercially viable company.”

Stefan Hartman - SK- Black River Organic FarmEastern Carolina Organics

Eastern Carolina Organics (ECO) is a farmer- and employee-owned food hub distributing fresh, seasonal, organic produce to retailers, institutions, distributors, and restaurants across North Carolina. RSF provided a line of credit through our PRI Fund to help ECO bridge the time between payments to farmers and sales receipts from customers.

“Food hubs like ECO have the ability to connect producers with growing market demand, which holds incredible promise for positive impact on the local economy, social equity, and the environment,” says Kate Danaher, RSF Senior Lending Associate.

Know any loan candidates like these? Please send them to Wanted: Social Enterprise Stars.

Search for Social Enterprise Stars Off to Great Start

October 14, 2014

PrintOur Next 25 Social Enterprise Stars campaign is off to a great start—less than a month after our launch at the SOCAP14 conference, nearly 1,000 social enterprises and their referrers had visited our campaign page to check out borrower criteria and other details.

To recap, we’re looking to add 25 social enterprise stars to our loan portfolio over the next year—and we need the help of everyone in our community to find them. We know there are exciting enterprises across the U.S. and Canada that could grow with our help, but they may not know about us—and we may not know about them.

Please keep spreading the word! The more #SocentStars posts there are on Twitter, Facebook and LinkedIn, the more social enterprises we can reach and assist. Here are a few post ideas:

How much social impact could your #socent have with $800K? @RSFSocFinance has loans for #SocentStars: bit.ly/1tH0ytE

Pass it on: @RSFSocFinance is looking to fund the next 25 #SocentStars. Get details and #loan quals: bit.ly/1tH0ytE

Growing a #socent & need capital? @RSFSocFinance has loans for the next 25 #SocentStars: bit.ly/1tH0ytE

Not sure who would be a good fit? We’re looking for more enterprises like these new RSF borrowers (also see details on the Social Enterprise Stars campaign page).

facebookPACT Apparel

PACT, a Boulder, Colorado–based apparel company, makes supersoft organic cotton essentials that are ethically produced and easy on the environment. Here’s what they say about themselves: “We’re out to change the apparel industry and that change starts with your underwear. At PACT we care about our clothes so much that from seed to shelf, we pretty much follow them everywhere they go.”

RSF is providing a line of credit that allows PACT to build inventory to meet growing demand. It’s a natural fit: “PACT is more than just a sustainable brand,” says Mike Gabriel, RSF Lending Manager. “They are really fostering a community—suppliers, producers, intermediaries, and consumers—to accelerate change in the fashion industry.”

truckHummingbird Wholesale

Hummingbird Wholesale, a bulk food distributor based in Eugene, Oregon, delivers high-quality organic, local, and regional food crops to wholesale customers from Bellingham, Washington, to San Francisco. RSF financing allowed Hummingbird to purchase an environmentally friendly freight truck.

“Hummingbird exemplifies the type of organizations we look to support at RSF. It tries to make a positive impact in every aspect of its work—from ensuring local farmers are connected to markets to employing a zero-waste strategy,” says Kate Danaher, Senior Lending Associate at RSF.

Cocafa1Madécasse

Brooklyn-based Madécasse is the only company making high-quality, hand-wrapped chocolate and vanilla products in Africa from bean to bar. Unlike traditional chocolate manufacturing, which creates only minimal income for cocoa farmers, every process in Madécasse’s chocolate production happens in Madagascar. A line of credit from RSF allows Madécasse to finance inventory purchases and cover cash-flow gaps throughout the year.

“Companies like Madécasse take the concept of fair trade to another level,” says Danaher. “By turning raw materials into finished products in-country, they provide skilled jobs and economic opportunities to people who have few options.”

Know any loan candidates like these? Please send them to Wanted: Social Enterprise Stars.

Clients in Conversation: Protecting our Planet, One “A-ha” Moment at a Time – Part II

September 23, 2014

This article was originally published in the Summer 2014 RSF Quarterly.

Interview with Mike Gabriel, Lending Manager

Tim Brownell is the co-founder of Eureka Recycling, an RSF borrower and one of the largest non-profit recyclers in the US. Ben Gordon, an RSF investor, works with Global Student Embassy to empower youth to become environmental stewards and community leaders. In both cases, social transformation is at the core of the environmental change they seek.

Click here for Part I

Mike: Tim, Eureka is a successful non-profit in a field that’s dominated by one or two large players. Can you give us some idea of how difficult it is to fight the good fight in this situation?

Tim: It’s important to understand that we are not competing against any of the large waste businesses. We’re actually competing against a paradigm of wasting. I think that’s the challenge for us, that we are bringing forward the idea and the reality that waste is a choice.

We run our non-profit as a mission-driven financial organization. We are driving strategies that have to work and compete against a different economic structure, one in which waste is subsidized, one in which health and environmental costs are externalized.

We are within a paradigm that requires making money in order to run a business. We’re a non-profit but we’re also a social venture, and we participate in this business with no subsidies. That’s very intentional. We don’t take grants that anybody else could take. We borrow money at market rates, so that we can demonstrate that zero waste is an economically viable alternative, not just an environmental and social imperative.

Ben: I used to work in community development banking. One of the most important lessons I learned during that time was that budgeting is about more than financials, and that is especially true for mission-driven organizations. The decisions being made in a mission-driven organization are to allow for greater positive outcomes for people and planet.

This economic structure, Tim mentions, requires a change in financial perspective—a new focus on lowering costs of all types, rather than increasing revenue. In our current economic paradigm, a lot of revenue that we look at requires consumption. We really need to constantly question how to do things differently with less financial revenue, but with greater environmental and social outcomes.

Mike: If there’s one thing that speaks most directly to the impact that you’re having, what would it be?

Tim: I grew up in a time when no one spoke about “zero waste,” and recycling was a small idea. Today, recycling is common, and people have an understanding of its benefit. We exist to expand awareness and consciousness so that the next generation feels the same way about zero waste.

Eureka is a zero waste lab—we are learning how to get to zero. We’re determined and committed because we know how urgent it is to get there, and it requires transforming our relationship with our planet. Our work as a social enterprise is focused on demonstrating the steps, actions, economics, and policies necessary to get there, and our vision is to see this movement as a global transformation.

Ben: We call all of our projects “demonstrations” because the most critical part of what we do is getting people involved.

Our small staff, board, and friends can lead a demonstration to set up a school garden in a semi-rural or urban area pretty quickly. But when we think about broad impact that doesn’t really achieve the larger change we’re going for. Sure, we have this small garden, but alone it’s not going to put a dent in our food system. The real value is in having a demonstration that is created by a large number of hands. So that those hands will be inspired and find another site to do it on—to continue the transformation one person at a time.

Tim Brownell is CEO of Eureka Recycling, the only organization in Minnesota that specializes in zero-waste. He was one of the original founders of Eureka, coming to Minnesota in 2000 to assist in its development. Prior to his joining, Mr. Brownell worked for more than ten years in the recycling field in designing, developing and operating the residential recycling programs in San Francisco, CA and Ann Arbor, MI.

Ben Gordon serves a Board Member and volunteer with Global Student Embassy, an environmental and youth empowerment non-profit. Prior to GSE, he worked in community development banking at Charles Schwab Bank and Merrill Lynch. He currently works in Oakland, CA, Chacraseca, Nicaragua, and Bahia de Caraquez, Ecuador. Ben graduated with a Bachelors of Arts from Brown University in 2006.

Clients in Conversation: Protecting our Planet, One “A-ha” Moment at a Time – Part I

September 17, 2014

This article was originally published in the Summer 2014 RSF Quarterly.

Interview with Mike Gabriel, Lending Manager

Tim Brownell is the co-founder of Eureka Recycling, an RSF borrower and one of the largest non-profit recyclers in the US. Ben Gordon, an RSF investor, works with Global Student Embassy to empower youth to become environmental stewards and community leaders. In both cases, social transformation is at the core of the environmental change they seek.

Mike: What role does community engagement play in achieving your organization’s mission?

Tim: Eureka’s mission is to demonstrate that waste is completely preventable. We do that through engaging the community and involving people in the planning and the design of our initiatives and our programs. Community engagement is at the core of what we do to create a movement towards zero waste.

For example, we have a commercial composting program working with restaurants, businesses, and farmers’ markets. We work with everyone within the business, from the point of purchase all the way through the discard, to engage with them to gain a full understanding of what it takes to achieve zero waste.

Ben: I like how you’re talking about community engagement being so core to your organization. That’s much the same as what we do at Global Student Embassy. With any organization focused on environmental outcomes, social change is critical to the environmental change that we want to see. We’re all a part of building larger movements and empowering people to see that the actions and the things that they do make a difference. In our case, those people are the students. They are very much a part of their community and they are great to engage with because they are naturally in a learning mode and they have a lot of time and energy for ecology work.

Mike: How have the individuals and communities you’re engaging with been affected by your work?

Ben: We’ve had three to four years of working with high schools. And, over the last two years we’ve developed relationships with twelve universities. Most of those relationships were initiated by students who wanted to continue the work that they had done in the Ecology Action Club in high school in their new university setting. And beyond that, now these university students are starting to plan for student-run environmental programs in local middle schools and high schools. Each student helps the movement grow.

Tim: One of the things we do is zero waste events that hundreds to several thousand people attend. In many cases people walking into that space have never really thought about their discards beyond trash and recycling. At the events we make sure vendors are committed to offering products that are either reusable, recyclable, or compostable. When attendees are getting ready to dispose of an item, in many cases they are holding a product in their hand that historically has been something that they have thrown away. We have people working at the disposal station who try to create a conversation around this, to transform their relationship to that product.

At every single event we do, we see people have a very distinct “a-ha” moment, when they see that there’s something else that can actually happen. Waste is not inevitable, it’s a choice, it’s a design issue, and it’s something they can impact within their lives and spheres of influence.

Ben: These “a-ha” moments help people realize that there’s a lot of small actions we can all take to make a real difference. Our job is to provide opportunities for people to have these transformative experiences, whether it happens on an afternoon in Minneapolis or anywhere in the world.

Click here for Part II

Tim Brownell is CEO of Eureka Recycling, the only organization in Minnesota that specializes in zero-waste. He was one of the original founders of Eureka, coming to Minnesota in 2000 to assist in its development. Prior to his joining, Mr. Brownell worked for more than ten years in the recycling field in designing, developing and operating the residential recycling programs in San Francisco, CA and Ann Arbor, MI.

Ben Gordon serves a Board Member and volunteer with Global Student Embassy, an environmental and youth empowerment non-profit. Prior to GSE, he worked in community development banking at Charles Schwab Bank and Merrill Lynch. He currently works in Oakland, CA, Chacraseca, Nicaragua, and Bahia de Caraquez, Ecuador. Ben graduated with a Bachelors of Arts from Brown University in 2006.

How Can We Fix Our Broken Food System? Start With the Base of the Supply Chain

August 7, 2014

Originally published on TriplePundit

Triple pundit food systemsby Don Shaffer

Social equity in the food supply chain was a strong thread running through the annual Sustainable Agriculture & Food Systems Funders forum this June in Denver. If we’re going to fix our broken food system so that it delivers healthy food to the whole population while enabling farmers to make a decent living, we’ll need new models and alternatives across the entire supply chain.

The most potentially transformative enterprises, however, often face the greatest funding hurdles. The forum’s theme, “Stronger Together,” reflects a growing recognition that collaborative funding strategies involving investors, foundations and communities are essential to getting these types of enterprises off the ground.

We know this approach can work. A growing number of social enterprises supported by what we call ‘integrated capital’ are successfully addressing problems related to food production, processing, aggregation and distribution in ways that contribute to social equity and agricultural sustainability. They’re flying under the media radar, but they’re worth examining as models for the field.

Real progress on tough challenges

Problems at the beginning of the supply chain — dwindling agricultural land, fewer farmers, lack of access to production facilities, and missing distribution links between metropolitan areas and their surrounding farms — are among the most difficult to solve. But several enterprises we’ve worked with in these areas have made real progress.

Viva Farms: Cultivating new farmers

In terms of food production, the biggest hurdles are affordable access to land near consumers and the need to encourage and train more people as farmers (the average age of farmers in the U.S. is 57). Viva Farms, an incubator program operating on 33 acres in Washington state’s Skagit Valley, addresses both issues, working with a mix of highly skilled migrant farm workers who have no access to land or capital and young, educated urbanites who have little agricultural experience. Viva Farms gives these new farmers training in sustainable farming practices, small land parcels with shared infrastructure and marketing support.

The goal is to transition the farmers from incubator to farm ownership with secure long-term prospects. Once farmers establish stable agricultural enterprises at the incubator, Viva Farms helps them relocate to new land and expand operations via a loan fund that provides affordable start-up and growth capital. Start-up costs for beginning farmers in the Valley can range from $30,000 to $500,000; with Viva Farms’ support, farmers’ costs drop to less than $5,000.

The program, launched in 2009, has provided training to about 250 people and launched 15 farm businesses that produce on more than 70 acres.

The primary challenges for the Viva Farms model are maintaining and expanding capital for land purchases and national immigration policy. Migrant farm workers who have the skills and desire to be the next generation of farmers often are hindered by their immigration status. Even if they personally have legal status, an immediate family member may not, and the ever-present possibility of deportation makes it difficult to invest for the long term.

Read the full article here

Don Shaffer is President & CEO at RSF Social Finance

Integrated Capital for Social Enterprises

July 17, 2014

Originally published on the Stanford Social Innovation Review

Don Shafferby Don Shaffer

A thriving social enterprise sector is essential to increasing community resilience and improving the lives of those who’ve been marginalized by the global economy. Social enterprises—which are in business to solve social and environmental problems—are willing to tackle complex systemic problems, build new infrastructure, and develop products and services that address pressing needs even if their profit potential is not obvious or will develop only over a long term.

These enterprises’ ability to succeed is hampered, however, by the current division of capital resources into overspecialized sectors, such as venture investing and charitable foundations, that fund only narrowly defined types of enterprises at particular stages. This situation won’t produce the breadth of social enterprises we need to solve systemic problems, because these enterprises confound the expectations of conventional funders in many ways:

  • They may have to build a supply chain or other systems (rather than just plugging into an existing infrastructure), which results in relatively high up-front costs.
  • They may have slower revenue growth or relatively low profit margins—by definition, they aim to maximize social value before profit.
  • They may have hybrid business models that put them outside conventional for-profit and nonprofit funding models (for example, a revenue-generating business with nonprofit charitable status).
  • They think about growth as a way to serve their mission, not as an end in itself. They may intend to remain rooted in a community and serve as a model to others, for example, rather than pursuing rapid and far-reaching expansion.

To build a thriving social enterprise sector, we need to rethink the purpose of capital and employ an integrated capital strategy. Integrated capital is the coordinated and collaborative use of different forms of capital (equity investments, loans, gifts, loan guarantees, and so on), often from different funders, to support a developing enterprise that’s working to solve complex social and environmental problems.

Read the full article here

Don Shaffer is President & CEO at RSF Social Finance

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