Closing the Financing Gap For Mission-Driven Businesses
March 2, 2016
RSF Social Finance was recently featured in the January/February issue of Conscious Company Magazine. They sat down RSF President & CEO Don Shaffer to discuss shifting the paradigm of the financial industry and what companies typically need to scale successfully. Here is an excerpt from the conversation.
Conscious Company Magazine: How did you develop the three focus areas that RSF typically concentrates its investments on?
Don Shaffer: We focus on food and agriculture, education and the arts, and ecological stewardship. These came directly out of the work that Rudolf Steiner did in the early 20th century in Eastern Europe. He was a philosopher, scientist, and all around Renaissance person. The brand-name things that Rudolf Steiner brought to the world are Waldorf education and biodynamic agriculture, but he also made contributions to architecture and economics. The founders of RSF read his lectures on economics from 1922. Just as a biodynamic farmer looks at his or her farm and soil in a holistic way, or as a Waldorf schoolteacher looks at his or her students and school in a holistic way, we’re trying to look at money in a more holistic way.
CCM: How do you assess the impact that you can expect from an organization when you are deciding whether or not to invest? What are your criteria for your investments?
DS: We lend money to both for-profits and nonprofits. Our portfolio consists of a $100 million loan fund, which is our primary vehicle for putting money out in the world. Half of the social enterprises we lend to are for-profits and half are non-profits. The primary thing we’re looking for across the board is, do these organizations have a social or environmental purpose as their primary reason for being, such that they would not be in business but for the environmental or social issues that they’re helping to address?
We use the B Impact Assessment Survey as one way to determine and benchmark an organization and its practices. But in addition to that, we have a much more qualitative, relationship-oriented methodology that we’ve developed over 30 years that looks at the intention of the management group and the business. That’s the very first thing that we look at. A business that we’re looking at may be phenomenally profitable and any bank would want to lend to it, but we don’t even look at it until after we’ve looked at the social or environmental piece. And it can’t be something simple like using organic ingredients. What we’re looking for is a holistic commitment to harnessing business as a force for good. We’re looking at whether the business is an advocate for change, for example, and not just that it’s doing something that happens to coincide with a positive trend in the marketplace.