Lending

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

The Next 25 Social Enterprise Stars: How to Spot One

February 17, 2015

RSF_SocentStarsLOGO-300dpi (2)We’re happy to report that our campaign to add 25 social enterprise stars to our loan portfolio over the next year is generating referrals. It’s also inspired some of our friends to ask, “How would I know a social enterprise star when I see one?”

Excellent question. When we say “social enterprise” we mean a for-profit or non-profit venture that generates revenue not as an end, but as a means toward creating significant social or ecological benefits. Just giving profits to good causes doesn’t qualify; the mission must be embedded in the organization. A “star,” by our campaign definition, is an enterprise that’s been in operation for at least three years and has annual revenue of over $1 million (signs that its leaders have shown the ability to stick with it and grow), advocates for or demonstrates social change in its field, and has the potential to achieve significant positive impact through its own operations and as a model. We also have specific loan criteria; see the Social Enterprise Stars campaign page for details.

One of our newest borrowers provides a great example: Hudson Valley Harvest. This for-profit food hub based in Kingston, New York, provides efficient distribution services that connect small and midsize farms in upstate New York with wholesale food buyers in New York City and surrounding areas. This kind of distribution link is essential to economic success for farmers and to access to fresh food for urban communities. Hudson Valley Harvest, founded in 2011 by a farmer and three friends who met at farmers markets, also buys and processes surplus products for sale under its own label, with the farm source identified. The new line of credit from RSF will help support the company’s rapid sales growth and related inventory expansion.

Know any enterprises that fit the star profile? 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. Many thanks to those who were active last month, including 3BL Media, Just Means, SOCAP, Social Earth, Invest with Values, Robert Simons, Green Reads, Karen Ammann, Business for a Fair Minimum Wage, and Finance Weekly.

Here are a few post ideas:

@RSFSocFinance has loans to spare for #socents. See if you could be one of the next 25 #SocentStars: bit.ly/1tH0ytE

Are you a #socent looking to expand your impact? @RSFSocFinance has loans up to $5M: bit.ly/1tH0ytE #SocentStars

@RSFSocFinance is seeking the next 25 #SocentStars. Send candidates here: bit.ly/1tH0ytE #socent

RSF Makes a Loan to Imagine Supported Living Services

February 10, 2015

Logo from FBRSF is pleased to announce a loan to Imagine Supported Living Services, a non-profit organization providing services to adults within Santa Cruz County living with developmental disabilities. RSF financing allowed Imagine to acquire two buildings which will house their administrative headquarters and a community center.

Imagine was founded in 2002 with a mission to empower people with developmental disabilities through service and advocacy. Imagine works cooperatively with individuals and other service agencies to increase access and reduce the barriers which prevent people with disabilities from full inclusion in our society.

IMG_1856

Imagine Client

Imagine offers services which acknowledge an individual’s strengths and abilities, and supports that individual in planning a life that they find personally rewarding. At Imagine, each person designs and directs their own services to accomplish the goals they set for themselves.

“Imagine focuses on the abilities of their clients, not their disabilities,” says Ted Levinson, Senior Director of Lending at RSF. “Similar to our long-history of work with Camphill Communities, it’s this approach that makes Imagine a true leader in the supported living services industry.”

Imagine finds and secures housing while providing on-going and long-term direct staff support for personal care and tasks, money management, facilitation of social and recreational activities, and medical management. Each month, Imagine provides 11,000 service hours to clients throughout Santa Cruz County.

In addition to direct services, Imagine is also engaged in community-building, advocacy, and collaboration. Their Resource Library offers free check out of communication devices, training materials, therapeutic devices, and other specialized resources to anyone living in Santa Cruz County. Imagine organizes an annual community event which celebrates the diversity and abilities of its community members and is attended by over 300 people. Imagine has mentored several other agencies and has led a collaborative initiative which brings together all the providers in the region in order to increase the quality of services and have the opportunity to share resources and best practices.

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Imagine Clients

RSF financing enabled Imagine to acquire real estate which will house its administrative offices and a community center. The new location provides more space and is more accessible to clients, some of whom visit the offices by public transportation.

“As an agency that seeks to serve individuals with developmental disabilities throughout their lives, we have community integration as a core value and sustainability as an imperative,” says Doug Pascover, Executive Director of Imagine. “The loan we received from RSF helps us plan our finances toward the same far horizon to which we plan our services. It helps us to be the kind of neighbors in our community that we ask our neighbors to be for the people we serve. Working with a lender as mission-driven as we are makes our new financing relationship a real partnership according to our values.”

About Imagine Supported Living Services

Founded in 2002, Imagine is a non-profit organization providing supported living services to adults with developmental disabilities in Santa Cruz County. Imagine’s mission is to empower people with developmental disabilities through service and advocacy. Imagine works cooperatively with individuals and other service agencies to increase access and reduce the barriers which exclude people with disabilities from full inclusion in our society. http://imaginesls.org/

Announcing the 2014-2015 RSF Social Impact Fellows

December 19, 2014

RSF Social Finance is pleased to announce the 2014-2015 RSF Social Impact Fellows. This cohort marks RSF’s fifth year of the fellowship program, and the first year professionals have been invited to participate in addition to graduate students.

The Social Impact Fellowship is designed to support the development of the next generation of inspiring leaders in the social finance field. RSF also seeks to bring a fresh perspective to the organization’s business development activities.

Fellows will work closely with RSF’s Lending Team to identify prospective borrowers, conduct due diligence, and structure commercial loans that will become part of RSF’s $85 million Social Enterprise Lending portfolio. The Fellowship is an extension of RSF’s mission to build the field of social finance. Working with graduate students and professionals across disciplines and geographic areas not only allows RSF to build a network of advocates for the industry, it also spreads the work of social finance into places where the concept of values-aligned investing is still very nascent.

Twenty-seven fellows have completed the program since it began in 2010. Nearly half are now successfully working in the social finance field at organizations like Village Capital, Impact Assets, and OPIC.

“I know first-hand, this is an incredibly valuable experience,” said Kate Danaher, Senior Lending Associate at RSF. Danaher was a part of the first cohort of Fellows and now runs the program. “These fellows have the opportunity to identify and engage with pioneering entrepreneurs who are at the forefront of solving pressing social and environmental problems.”

2014-2015 Social Impact Fellows 
                                                                                                                                             

Lisa Fisher is the Founder and President of an independent consulting firm focused on cultivating vision, authenticity, and sustainability in individuals, organizations, and communities with an emphasis on social responsibility and social impact. For 17 years, Fisher has served nationally and internationally as a coach, a facilitator, and an educational, organizational, and development consultant for both for-profit and non-profit organizations. She is a graduate of Wellesley College and holds a Master of Arts in Teaching degree and a Master of Arts in Leadership and Organizational Development. She is currently completing a Master of Arts in Psychology and a PhD in Organizational Systems with a focus on catalytic philanthropy and social enterprise. Fisher is a certified yoga instructor, a former Junior Olympic alpine ski racer, and, most importantly, a mother. She loves to play in the glorious outdoors as often as possible.

 

Nakul Kadaba is currently a Project Associate at the Small-Scale Sustainable Infrastructure Development Fund and helps manage their projects and other initiatives in South and Southeast Asia. He has experience in innovative finance, enterprise development, and poverty alleviation for several organizations. He holds a Masters in Public Administration from George Mason University and a Bachelor’s degree from The College of William and Mary. He is based in Cambridge, Massachusetts and is excited to add to the social finance conversation.

 

Sam.Kressler_Head Shot CroppedSam Kressler is the Executive Chef of Bom Dia Market, a neighborhood gourmet market in Noe Valley. Before joining Bom Dia, Sam ran Stir Consulting, a consulting agency that focused on menu and product development for hospitality and food businesses. Sam holds a culinary degree from the French Culinary Institute and a Masters in Food Systems from NYU. He is a founder of Slow Money NYC as well as a monthly happy hour that brings together Bay Area professionals across the sustainable food and agriculture industry.

 

Dave Hanold is a loan officer at NYBDC, a mission-based lender in New York State. Dave leads a team of community development lenders specializing in SBA loans of $25,000 and upward to businesses that are not eligible for traditional bank financing, with a recent focus on food and beverage producers. After graduating from Macalester College in 2009, he spent a year in the Americorps NCCC program, performing community service projects across the Midwest. When he’s not evaluating balance sheets, Dave’s probably at the climbing gym or playing soccer!

 

Stu Fram currently works at the High Meadows Fund, an environmental foundation in Vermont, where he supports the administration of the Fund’s mission spending budget. Prior to joining High Meadows, Stu received a BA in Human Ecology from Middlebury College, where he co-founded an organization that works to improve the amount of local and sustainable options available in the dining halls. While studying abroad in Madagascar, Stu received a grant to study local and institutional perceptions of integrated conservation and development projects in one of the country’s national parks. He resides in Burlington, VT.

RSF Makes a Loan to the Pine Forest School

December 15, 2014

PFS Logo.RSF is pleased to announce a new loan to the Pine Forest School (PFS). RSF financing will help fund the acquisition and renovation of a new campus property that will increase the community’s access to education inspired by Waldorf principles.

Celebrating their 20th anniversary this school year, Pine Forest School is a publicly funded, Pre-8 grade school in Flagstaff, Arizona using a curriculum and methodology inspired by Waldorf Education. PFS was founded in 1995 as a K-4 public school, and was originally funded by the Arizona State Department of Education. Through collaborative efforts by interested Flagstaff families and enthusiastic, trained Waldorf educators and other teachers, education inspired by Rudolf Steiner’s ideas has become a reality in Northern Arizona. Over the following five years the school grew to be a complete K-8 program.

Michael Heffernan, PFS Executive Director, standing in front of the school's new property. Photo courtesy of the Arizona Daily Sun.

Michael Heffernan, PFS Executive Director, stands in front of the school’s new property. Photo courtesy of the Arizona Daily Sun.

The school currently operates on a 1.5 acre campus located in a light industrial park area of north Flagstaff. For the past several years the school has been focused on developing resources and community support for a move to a site offering an environment more suited to a school inspired by Waldorf principles, as well as the capacity to embrace a larger community. With the help of RSF financing the school was able to acquire a 3.5 acre property in Sunnyside, one of Flagstaff’s oldest neighborhoods. The school has plans for over $1.4 million in renovations, and hopes to open the new campus for the 2015-2016 school year.

“Pine Forest School and RSF Social Finance have known each other for many years,” says RSF Senior Lending Associate, Reed Mayfield. “I first visited the school in the spring of 2011 when they were seeking to build out new facilities – it was not the right time for a move. But now as the school and community have grown, we are proud to co-create a path to the new space. Talk about long-term relationships!”

The curriculum inspired by Waldorf Education that Pine Forest School follows uses a child development model that nurtures and embraces learning for the head, heart, and hands of each student. With nearly 250 students currently enrolled, PFS offers main lesson blocks intertwined with Southwestern culture, tradition, and history. Special classes and extra-curricular activities include German, Spanish, eurythmy, woodwork, handwork, art, archery, chess, basketball, and volleyball. The school is led by a passionate group of teachers and administrators, and seeks to facilitate strong family and community involvement through events, volunteer opportunities, and communication.

Pine Forest School is currently the only public charter school in Flagstaff inspired by Waldorf principles. PFS believes all children should have access to education inspired by Waldorf principles, regardless of their financial resources, and hope that the move to a new location will provide greater access to underserved children. The new site is more centrally located in Flagstaff, and is surrounded by several different neighborhoods and communities of people from varying ethnic, cultural, and socioeconomic backgrounds.

“I am very excited that PFS has been blessed with the opportunity to expand our enrollment and bring this form of education to more children and families, and move to a location which is in the heart of Flagstaff, surrounded by neighborhoods, other schools, public libraries, city parks and national forest,” says PFS Executive Director Michael Heffernan. “We will be able to build our program with the larger facilities and more acreage, and the possibilities for community collaboration are many.  RSF is the perfect organization to partner with as their mission for social finance is aligned with our mission for excellence in education.”

Video courtesy of Pine Forest School:

About Pine Forest School

Founded in 1995, Pine Forest School (PFS) is the only public charter school in Flagstaff, Arizona using a curriculum and methodology inspired by Waldorf Education. PFS provides an education of the whole child, with a curriculum that is a truly comprehensive balance of academic, practical, and artistic activities. The school is dedicated to helping individuals achieve their full intellectual, emotional, and physical potential, in a sustainable and beautiful environment that reinforces integrity, understanding, respect, and trust.  www.pineforestschool.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

 

RSF Makes a Loan to the East Bay Waldorf School

December 2, 2014

10685579_10152799061635734_4161669210641885723_nRSF is pleased to announce a new loan to the East Bay Waldorf School (EBWS). RSF financing helped the school complete renovations to existing classrooms and facilities and lease additional classroom space.

The East Bay Waldorf School was founded in 1980 when a group of parents and friends opened a kindergarten in the Julia Morgan Center in Berkeley. Each subsequent year another grade was added toward the full complement of eight grades. The school moved to Emeryville in 1984, where it remained for 12 years. When the school district reclaimed the Emeryville site in 1996, EBWS purchased its current home – an 11-acre hillside campus in El Sobrante, California.

Born from the insights of Rudolf Steiner, the Waldorf model of education unfolds an enriching and rigorous synthesis of academic, artistic, and practical pursuits for intellectual, moral, and physical development. The mission of the East Bay Waldorf School is to ignite the spark of individuality in each child, developing a lifelong commitment to learning, creativity, and excellence. The school’s curriculum integrates the sciences, humanities, mathematics, music, movement and the arts to offer a diverse and profound learning experience.

IMG_7128RSF’s relationship with the East Bay Waldorf School dates back nearly two decades, when RSF provided the mortgage loan for the purchase of the El Sobrante property. Two additional loans were made, in the fall of 1996 and in 1999, and were used for construction costs, classroom renovations, and the purchase of computers and science lab equipment. The new loan has allowed EBWS to complete renovations and lease three new portables.

“The new classrooms needed to be in place and the upgrades had to be completed in time for the start of the new school year,” says Ted Levinson, RSF Senior Director of Lending. “The East Bay Waldorf School community was extremely helpful and cooperative in completing the process. It was exciting to be of assistance in the completion of the improvements to the school!”

ourbackdoorAn extraordinary feature of the East Bay Waldorf School is their remarkable hillside campus, adjacent to thousands of acres of regional parkland accessible by foot. The campus and adjacent wild lands function as an extension of the school’s classrooms, providing fantastic opportunities for students to spend time learning and playing in nature.

“This location provides us with rich opportunities to venture regularly into the natural world,” says Kelly Chappie, Interim Administrator at EBWS. “We are committed to offering Waldorf education to a broad constituency while cultivating a school resonant with the impulses of the first Waldorf school: a development of thinking, feeling, and willing in children, which offers them an education in service of realizing and making their own unique contributions to the future.”

javelin

About East Bay Waldorf School

Founded in 1980, the East Bay Waldorf School is situated on a remarkable 11-acre hillside campus adjacent to thousands of acres of regional parkland in El Sobrante, California. The school offers an infant through 8th grade program and is committed to offering Waldorf education to a broad constituency. The East Bay Waldorf School ignites the spark of individuality in each child, developing a lifelong commitment to learning, creativity, and excellence. http://www.eastbaywaldorf.org/

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.

A Celebration of Giving – Part II

September 11, 2014

Click here to see Part I of this series

KelleyBuhles_Books_Large (2)by Kelley Buhles

As RSF Social Finance celebrates its 30th anniversary, we feel deep gratitude for all the supportive relationships that have nurtured, inspired, and challenged RSF to expand and deepen how it goes about transforming the way the world works with money and that are bringing associative economic principles into daily practice.

Over the next few months we will be posting a series of stories about some key catalytic gifts and givers who saw potential within RSF, seeded future possibilities, and in turn, have become part of our destiny.

A Prophetic Gift

Voices of the prophets have been heard in most cultures throughout human history. They are traditionally seen as harbingers if not agents of change. In 2002, RSF received a prophetic gift from an anonymous donor that would eventually transform the way we work with lending.

Prior to this gift, RSF was making loans solely to non-profit organizations. At that time, the field of social finance was nascent and there were few models for how to work with money in alignment with social and environmental values. Through dialogue with RSF’s community of clients and partners, the idea emerged to expand our work to begin lending to mission-aligned for-profit businesses.

However, RSF’s ability to lend relies on the investments we receive from the RSF community. Because most of our individual investors don’t have the risk tolerance necessary to experiment with lending to an emerging field of borrowers, RSF was not able to experiment with this idea without a source of capital beyond the Social Investment Fund.

Fortunately, one of RSF’s donors was inspired by the idea and decided to make a gift of $2.5M to guarantee loans to mission-aligned for-profit businesses, thereby allowing RSF to gain experience lending in this new way. This initiative was called the Fair Economies Program.

The Fair Economies Program provided financing to businesses in emerging industries that were environmentally restorative while providing fair working wages, humane working conditions, and supporting self-determination in economic development. An additional goal was to support these social enterprises in underserved regions.

The program was developed both to provide early-stage socially responsible enterprises access to low-cost capital, and to demonstrate that enterprises created for social and environmental benefit could be sustainable and provide value to the communities they served.

Through this program RSF was able to contribute to the growth of many successful businesses such as Organic Bouquet, Indigenous Designs, and Root Capital.

RSF_30th_purpleAnother gift RSF received was experience—both the experience of lending to organizations in fields that we previously hadn’t worked in, and of using new and different types of financing. The Fair Economies Program provided bridge loans, term loans, convertible loans, purchase order financing loans, and working capital loans, most of which had not previously been provided by RSF. We also gained experience working in sustainable agriculture, independent media, and fair trade, whereas our previous experience was mostly working with Waldorf Schools and other organizations inspired by the work of Rudolf Steiner.

Additionally, through our dealing with projects in need of early stage financing, RSF provided necessary technical assistance and client attention while supporting some of the companies through challenging situations. While not all of the projects funded by the Fair Economies Program were successful, the lessons RSF learned from it were documented, reflected upon, shared, and eventually fed back into our operations, thereby making RSF a more knowledgeable and experienced lending partner to mission-aligned, for-profit businesses .

The donor and the gift that facilitated the creation of the Fair Economies Program inspired and ultimately provided the experience necessary to create our for-profit lending program as it is today – standing at 50% of our social enterprise lending portfolio. For this we are very grateful.

Click here to see Part III of this series

Kelley Buhles is Director of Philanthropic Services at RSF Social Finance

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