RSF borrower Indigenous has been pioneering fair trade fashion for years, and the recent tragedy in Bangladesh shows how much their work is needed. Indigenous is now offering to share its transparency and labor practices with the rest of the fashion industry, and urging consumers to demand ethical fashion.
Here’s a taste of what Scott Leonard, Indigenous CEO and co-founder, has to say about the current situation and what’s possible:
“Many fashion industry executives claim full transparency is too hard to accomplish, too elusive, too big to get their arms around. At Indigenous we believe they are not trying hard enough, and they are not using the right tools. This Fall every INDIGENOUS garment will include a QR code on its hang tag. This code launches our ‘Fair Trace Tool’ application. The Fair Trace Tool shares the story of the artisans who make our clothing, information about our supply chain and social impact survey data.”
At RSF, we see education and life-long learning as central to the renewal of culture. The Esalen Institute and Hollyhock Learning Centre offer unique opportunities to cultivate deep change in self an society. Here, Dana Bass Solomon, Hollyhock CEO and RSF investor, and Tricia McEntee, Esalen CEO (an RSF borrower) discuss how individual change can flourish to create better enterprises, movements, and a healthier world. This article was originally published in the Winter 2013 RSF Quarterly. Catch the podcast for more of our Clients in Conversation.Interview with Marta Abel, Communications Associate
Marta: How did each of you come to be involved with your organizations?
Tricia: I came from the business world. I’m a CPA and had held Chief Financial Officer positions in both for-profit and in non-profit organizations through my career. I came to Esalen in February of 2006 for a weekend workshop with Brother David Steindl-Rast called “The Noble Cause of Business.” At that time I had been following quite a contemplative spiritual path in my personal life. I just fell in love with Esalen—it just felt like home. It spoke to me on a personal spiritual level, and with the beautiful physical environment here in Big Sur, I was just swept away.
photo courtesy Doug Ellis for Esalen
Dana: My story involves a bit of magic and a bit of practicality. I first heard about Hollyhock over 20 years ago when I lived in a little mountain town in Colorado. I met two of the founders who had just acquired the land which was to become Hollyhock. It sounded like an extraordinary place. Fast forward several years. I was the general manager of a hot springs property in California when I heard from a colleague that she was coming to Hollyhock to participate in “Spirit and Business,” a precursor conference to Social Venture Institute. I made arrangements to join her.
Tricia: It’s interesting that we both came to these places for similar workshops—to explore the idea of spirituality and business, and how much impact it could have on our world if we really had noble businesses.
Dana: Yes it is. Hollyhock was founded on the idea of positive change for a better world. One of our founders was involved in the founding of Greenpeace. We have always been focused on providing lifelong learning programs and inspiring people to create just and healthy organizations, communities, and cultures. Hollyhock’s leadership programs and conferences often include personal and professional skill development. We think about personal development as a key factor in building successful individuals, enterprises, organizations, and campaigns. The individual is where the growth begins. Learning how to be more skillful human beings, then taking that out into the world helps support successful enterprises and organizations. I think that that is what we’re all doing through various methodologies, both at Hollyhock and Esalen.
Tricia: Yes it is. Our terminology for it is “From Me to We.” I think there’s a sense of urgency to take our personal growth out into the world to make positive change. We don’t have a lot of time to waste so we’re trying to put a lot more emphasis on that.
Marta: How has the work at Hollyhock and Esalen, contributed to your own personal development?
Dana: It’s re-enlivened my hope for the future. It’s about hope for me and being part of advancing human kind. Over this last decade and a half, our demographic has shifted from mostly middle-aged women. We’ve grown the conferences as a gateway to include more young people. The growth is generative. Emerging young leaders who care about the future are gathering and creating initiatives that are stunning. I feel most fortunate to be engaged with, and sharing lives with these inspiring people. I have real hope that there’s a future for a better world.
photo courtesy of Hollyhock
Tricia: We have about 20,000 people a year that come to Esalen. In talking to these people I often hear, “You know, coming to Esalen has changed my life.” There was an article recently in the San Francisco Chronicle about Esalen’s 50th anniversary that said the ideas that came from Esalen during those early years have just changed everything about our culture—how we think, how we pray, how we eat, how we work. A lot of times people are in a hard moment, they’re in a transition in life. I think Esalen offers that respite, a renewal time. It has a very personal impact. People are discovering great things about themselves that were already there, but after the experience here it just shines out to the rest of the world. We see people become better parents. They’re better spouses. They’re better teachers. They find their purpose, their calling in life. I can see that over and over again. Anytime I get personally down or in a negative space, I just sit down and talk to the people that are there. And I say “Well, what workshop are you taking? How’s it going?” And I just hear how much of an impact we’re having on people’s lives. That’s all it takes.
Marta: What’s on the next horizon for your organizations?
Dana: The next edge for Hollyhock is to scale up our ability to reach more people so that we can have more impact. Our Vancouver programs are accessible, affordable and high impact. These last few years we’ve developed partnerships with universities, the Dalai Lama Center for Peace, Power of Hope, and other progressive institutions, seeing what we can do together to broaden our reach and to share skills and stories.
Tricia: There are two major themes that are leading the way forward at Esalen. First we will embrace our role in social transformation with greater intentionality–going from “Me to We.” We plan to do this by building on our distinguished track record of being a catalyst for collective and social change through private gatherings of thought leaders, spiritual teachers and progressive scholars. We plan to increase the topics and number of gatherings and expand the impact of these private gatherings by disseminating the content on our new web site.
Second, we are seeking to diversify the people we serve, reach a broader audience and new generations of leaders. An example of this is the Esalen Integral Leadership Program that is currently underway and that seeks to bring future leaders to Esalen by partnering with universities who will offer college credit for taking our courses. Another priority for us is forging partnerships with social change organizations for public workshops and conferences that serve both our diversity and social impact goals.
photo courtesy of Doug Ellis
We are also committed to the stewardship of our Big Sur property, to transform our aging structures into a model green educational village that will enhance the visitor and staff experience.
Dana: We launched a website this year called Hollyhock Life. It has several different focus areas, the main ones being Community, Food and Garden, and Big Ideas. Volunteers, interns, our presenters and guests are populating the site with new ideas and content. People can actually interact on Hollyhock Life. They can post articles, or write reflections about their experiences and interests. It’s a really fabulous, interactive site that changes almost every day. That’s the cutting edge of where we are going.
Marta: We’re working with similar questions at RSF about how to scale when so much of the appeal of our work is about the personal transformative elements. How do you really do that in a way that’s meaningful for people?
Dana: That is what we’re all working towards—all three of our organizations. How do we remain relevant? But, not just relevant. How do we remain relevant, and interesting, and facilitate engagement within and outside of our communities? Is it through a deeply personal and collaborative experience?
Centers like Hollyhock and Esalen don’t consider ourselves as competition. The more that we can offer to each other, the more we’ll be able to accomplish. We have, for many years, really been supportive of each other—through our program and operations departments. Collaboration is key to our collective future.
Tricia: I totally agree. Our mission is the same. The next question is how can we get this impact out in the world more effectively by partnering? It is absolutely something I would want to do so we’ll definitely need to connect to further the conversation.
It’s heartening to see RSF borrowers supporting one another. The San Francisco Chronicle recently published this article about Oakland School for the Arts and Revolution Foods working together to offer healthier school lunches. In addition, Revolution Foods has nabbed a major contract with the San Francisco Unified School District. Congrats to Rev Foods and bon appétit to students!
By Jill Tucker
Ajna Singh, 12, nibbled on the cheese enchilada with a side of rice served in the Oakland School for the Arts cafeteria, using fingers instead of a fork.
In between bites and balancing the meal’s recyclable tray in one hand, she said she liked the school food, which included rice, packaged grapes, milk, dinner rolls and a self-serve tray of broccoli.
“It’s especially better than my mom’s cooking,” Ajna said. “I’m appreciative.”
photo courtesy Revolution Foods
Not all of the sixth-grader’s classmates at the Oakland charter school were as enamored with the offerings, provided by Oakland’s Revolution Foods, with one seventh-grader describing the meals as “like, nasty.”
The indiscriminate tastes of preteens notwithstanding, the Oakland students are getting what many parents and school officials across the country consider the top-shelf version of school lunches.
Revolution Foods never serves reheated tater tots, greasy pizza or mystery meat. The meals are prepared by chefs using local ingredients, no high-fructose corn syrup, and nothing is ever fried or frozen. They are in the hands of students 24 hours after coming out of the oven.
Starting Monday, those fresh meals will be in San Francisco schools.
While Revolution Foods has been around since 2006, few large school districts have signed up, despite parental pleas for higher quality cafeteria food, because of the higher cost.
But over the last few years, Revolution has been among the fastest-growing urban companies, with production centers in California, Colorado, Texas and the East Coast, serving more than 200,000 meals every day to children in private, public and nonprofit school programs.
Cost savings came with the growth, allowing Revolution Foods to compete for bigger contracts, going up against national school lunch providers offering frozen meals shipped to school sites all over the country.
The company, created by two moms as part of a business school project, nabbed its biggest client yet in December, when it beat out bigger companies to get a $9 million contract with San Francisco Unified.
“We’re really excited,” said co-founder Kristin Groos Richmond. “I feel like it’s such an honor for us.”
Adding workers
In less than a month, Revolution has had to prepare for serving 33,000 meals to 114 schools in San Francisco and has added 40 workers to the Oakland site, bringing the company’s total to 965 employees nationwide.
In addition, the company often uses local suppliers, including meat from Diestel Turkey Ranch in Sonora and rice from family-owned Massa Organics in the Chico area.
To meet the increasing demand, Revolution Foods has shifts going 24 hours a day, prepping, cooking, refrigerating and packaging the meals.
“There are so many school organizations out there who want good food for kids,” Richmond said.
Richmond started the company with UC Berkeley classmate Kirsten Tobey, creating the equivalent of a high-tech Silicon Valley startup in the food industry.
At the time, small, parent-driven movements were kicking soda and junk food out of schools, and Berkeley chef Alice Waters was making sure that children knew what kale looked like through school garden programs.
Richmond was pregnant at the time, and she was advised to wait to kick off such an ambitious endeavor.
She refused to listen.
“I remember thinking at the time, no way,” she said. “This is the right time for this movement in the country.”
The company has had some growing pains in recent years, including tangles with labor unions in New Orleans.
The new contract in San Francisco will require working closely with union cafeteria workers who will reheat and serve the food. School board members reiterated their support for the union workers before unanimously approving the Revolution Foods contract.
Cost increase
Despite the concerns raised by labor organizations, district officials and parents celebrated the new contract, which will cost $1.95 per lunch, up from $1.79 charged by the previous provider, Preferred Meal Systems. The 18-month contract caps the costs at $9 million annually.
Students not eligible for free or reduced-price meals will be charged $3 for lunch and $1.50 for breakfast.
District officials hope that more students will buy the meals, helping to offset the higher costs.
At Oakland School for the Arts, which serves about 50 Revolution Foods lunches each day, several students are willing to pay the $4.50 the school charges.
Sure, some of the veggies – squash, beans and carrots – are sometimes a hard sell, said Kai Johnson, who monitors the cafeteria during lunch.
“It’s just like at home, when you’re sitting at the table saying ‘eat your vegetables,’ ” she said. But with Revolution Foods, “it’s not an option. They’re going to eat healthy no matter what.”
This article was originally published by Jill Tucker at sfgate.com and is republished with permission of the author.
Let’s recognize the historic opportunity we have to change the current culture of money!
We know, for example, that big banks like Barclays pushed the adoption of Libor over another benchmark—a comparatively simple cost-of-funds index that many observers now say was better for borrowers and much less volatile. The switch was made for one reason: to increase short-term profits for the banks. The foundation of trust in Wall Street has been completely undermined as a result of this and other recent scandals.
Based on our core principles, RSF is taking small steps to create a fundamental transformation in the way the world works with money. A great example is RSF Prime. We developed RSF Prime to create community among the participants in our flagship loan fund, the RSF Social Investment Fund.
For many years, we based our investors’ return rate on the 13-week U.S. Treasury Bill. Each quarter we recalibrated the rate based on this well-publicized benchmark. In 2006, we shifted to Libor because it represented the most commonly accepted barometer for short-term interest rates worldwide.
But as the first wave of the financial crisis unfolded in 2008, we became increasingly uncomfortable with this approach. We realized that pricing to meet the needs of our stakeholders could most productively be determined by the community of stakeholders itself. So we began hosting face-to-face meetings at our offices in San Francisco with representatives of the three stakeholder groups of our RSF Social Investment Fund: investors, borrowers and RSF staff. In October 2009, we adopted a customized interest rate collaboratively recommended by these stakeholders each quarter. We dubbed this new base rate for borrowers “RSF Prime”.
We believe this is the first time that a lending institution has facilitated meetings between investors and borrowers to determine loan pricing. With RSF staff at the table facilitating the conversations, all three stakeholders are visible to each other and engage in a direct and transparent exchange to understand intentions, motivations, and needs. We feel that other financial institutions such as community banks and credit unions have similar stakeholder groups that could be engaged in this way.
The loan-pricing meeting is one step towards modeling a more resilient financial system. At its heart is building community, which RSF also holds in how it works with borrowers by bringing them together to share wisdom and resources, and in its innovative grantmaking through Shared Gifting. A web of trusting relationships and a spirit of collaboration are foundational to a resilient economy. We have observed that by bringing all the stakeholders together, there is more engagement, fulfillment, and accountability.
Just as an organic or biodynamic farm relies on far fewer external inputs than a conventional farm, we are eliminating our reliance on Wall Street rate-setting, going “off-the-grid” as much as possible, so that we can be more resilient based on the strength of our investor-borrower community.
We invite you to share other ideas with us—either suggestions for what we can do at RSF, or ways you think other institutions can change to make our financial system more transparent and trustworthy. You can ask your bank about how they set their interest rates, for example.
Ultimately, we have to “be the change”, as Gandhi said. In our view, energy spent modeling a new way of working with money will have much more positive, transformative, and long-term effects than trying to change the existing system from within through regulation.
Let us know what you think!
Don Shaffer is President & CEO at RSF Social Finance.
Nelida Martinez was born in a subsistence farming community in Oaxaca, Mexico. She migrated to the U.S. at the age of 16 where she worked as a laborer on commercial farms in California and Washington State for the next 20 years, while also growing and raising a family. A few years ago, Nelida’s life changed drastically when one of her sons was diagnosed with leukemia.
During the expensive treatment process, Nelida began selling homemade food products to neighbors and local stores to subsidize the costs. When her son achieved remission, Nelida decided not to return to conventional farm work. Instead she began growing organic produce around her small home—in pots, window-sills, her doorstep—anywhere she could find space. Soon she was able to expand to a ½ acre plot when her farm-worker housing complex opened a community garden. But Nelida had bigger plans in mind. She wanted to grow enough food to support her family and perhaps sell surplus for profit. The question was, where could she gain access to more land?
Serendipitously, and at the same time, a small non-profit called Viva Farms was being launched to address the obstacles new farmers faced. Viva Farms, an RSF borrower, is training the next generation of farmers through a farmer incubation program. Many of the trainees, like Nelida, are Latino immigrants and farm workers. The program incubates beginning farmers by providing access to small, low-rent land parcels, training in sustainable farming practices, shared infrastructure, and marketing support to sell crops through wholesale and retail channels. Viva Farms is one part of the solution to the many challenges in agricultural systems.
Nelida Martinez, graduate of Viva Farms’ first incubation program, is now owner of Pura Nelida, an organic food and farming business.
Our nation’s food system is vulnerable due to farm practices and policies that do not promote the hallmarks of what a sustainable system should look like. Our current system is based on large corporations producing single crops and in the process creating irreversible environmental damage. Two consequences of this situation, which to date have not received much attention, are the lack of succession plans among farm owners, and the transition of former agricultural land into development. One of the largest contributing factors to this problem is the aging farmer population. Data shows that the average U.S. farmer is aged 57. As these farmers move into retirement, an estimated 70% of farm land will change hands in the next 20 years. And with the steady decline of family farming, the children of these farmers are more often than not, leaving farms and rural areas for careers outside of agriculture.
This economic dynamic is threatening the survival of small and medium-sized farms, further tipping the balance toward big agriculture and a lack of diversity in our food system. Viva Farms, which sits in the Skagit Valley (rated among the top 2% in the world for agricultural use) is fighting this imbalance by providing a farm incubator program for the next generation of farmers.
“We need to look for people from different backgrounds to get into agriculture,” says Ethan Schaffer, Viva Farms Director of Business & Organizational Development. “What we’re seeing is a new face to farming: young, educated, urban residents with little agricultural experience and the farm worker community – highly skilled, Latino immigrants with no access to land and capital.”
This is where Viva Farms steps in. The Viva Farms Incubator Program, launched in 2009, provides new farmers affordable access to education, training and technical assistance; capital and credit; and, land and markets.
In partnership with Washington State University Extension, students in the incubator program participate in the bilingual “Agricultural Entrepreneurship and Farm Business Planning” course. Upon completing the course, students are eligible to sublease a 1-3 acre plot to begin their own operations. In addition to land, Viva Farms supplies all operational infrastructure – greenhouse, irrigation, equipment, storage, etc. Typically, start-up costs for beginning farmers can range from $30,000-$500,000. With infrastructural support, Viva Farms lowers that figure to less than $5,000.
“We’re taking a lot of stuff off the farmer’s plate,” says Schaffer. “We want our farmers to focus on growing their food and getting it to market. “
And the market is where Viva Farms is seeing some of their biggest impacts. Santiago Lazano started the Viva Farms Incubation program with 2-acres of leased land. When he first began selling his strawberries to canneries and brokers he was making anywhere from $2-4 per half flat. With marketing support from Viva Farms, Santiago began selling to retail outlets, restaurants, and through the program farm stand. Today, Santiago makes $8-10 per half flat and has expanded his operations to 5 acres at Viva Farms and 4 acres elsewhere.
Likewise, Nelida Martinez has flourished since entering the incubation program. As one of the programs first participants, Nelida started with one acre of leased land. She now farms 5 acres and operates an organic farm and food business, Pura Nelida. She sells her produce through the Viva Farms CSA, and farm stand, and operates her own stand at a local farmer’s market where she sells authentic Oaxacan tacos made with her own produce. It is her hope to one day purchase 10 acres with a house and working farm to support her family and growing business.
The farm incubator is not an end point for farmers. It is a starting point to transition them to farm ownership or to secure long-term tenure. Viva Farms also provides successful program participants with microloans to supply operating capital once they move beyond the incubation program.
The need for this type of program is clearly evident. In 2012, Viva Farms reached capacity on their 33-acres of available land. Program leadership hopes to find more land and expand to a second facility in 2013. Additionally, they are working to establish their own 7,000 square foot food hub where graduates and other small farmers can aggregate, process, store, and distribute produce and food products. Prior to RSF’s loan, Viva Farms’ financing options were limited to grants and in-kind donations. The organization’s growth depends on access to steady and larger sources of capital but is currently at a stage where banks and other traditional sources of capital are limited. Viva Farms is also committed to working with a financial partner who understands and aligns with its mission and values.
RSF’s loan helped Viva Farms purchase critical farm equipment and build infrastructure that provides training to farmers. As Viva Farms continues to grow, it will need working capital and additional equipment financing. We see this initial loan as catalytic for getting Viva Farms to its next phase of growth.
This article was originally published in the Fall 2012 RSF Quarterly. Catch the podcast for more of this Inside Story.
You’ve probably heard of the “new economy,” which often refers to social media, sharing-based businesses, and sometimes socially responsible businesses. RSF Social Finance is working to build the next economy: one that’s rooted in community, considers everyone’s needs, and restores trust in financial relationships through transactions that are direct, transparent and personal.
Through our innovative investing, lending, and giving programs, RSF provides critical access to capital for path-breaking social enterprises working in Food & Agriculture, Education & the Arts, and Ecological Stewardship. We collaborate with like-minded organizations to create a financial infrastructure that will support the next economy. And we’ve democratized impact investing with our Social Investment Fund (SIF), which allows anyone with a $1,000 minimum investment to participate in building the next economy.
This is incredibly ambitious. We’re asking you to help spread the word as we promote our “building the next economy” stories on our website, Facebook, Twitter (#nexteconomy) and elsewhere. We’re focusing on these points:
RSF provides critical access to capital for path-breaking social enterprises.
RSF collaborates with like-minded organizations to create a financial infrastructure for the next economy.
RSF has democratized impact investing with the Social Investment Fund, which allows anyone with a $1,000 minimum investment to participate in building the next economy. More information on opening an account: here
Read our latest borrower stories on the Reimagine Money Blog:
Jay Coen Gilbert and Bart Houlahan are a business success story. They were part of a team that created the basketball footwear and apparel maker AND 1, built it into a $250 million company, and sold it profitably. One of the lessons they learned: the definition of success needs to change.
“It became clear to me that business, if harnessed appropriately, could create tremendous positive change. But the current legal environment in the U.S. doesn’t support that work,” says Houlahan. “There needed to be a way for a company to scale, raise capital, have a liquidity event, and remain true to a social and environmental mission.”
The solution: Houlahan and Gilbert, with investor Andrew Kassoy, created B Lab, a nonprofit that’s building a community of Certified B Corporations, which meet rigorous governance, social, and environmental performance standards. At the same time, B Lab is driving the state-by-state movement to pass benefit corporation legislation that allows such businesses to protect their mission as they grow.
INSPIRATION
Houlahan and Gilbert ran AND 1 as the kind of business they wanted to work for, treating employees and suppliers like family and minimizing the company’s environmental impact. But as the company grew, staying true to those values became more challenging. As a result, the commitment to employees, the environment, and community lagged. “Not because investors weren’t supportive; it was just that we were acutely aware of our fiduciary duty to maximize shareholder value,” Houlahan says.
Gilbert, Houlahan, and Kassoy believed that others could succeed where AND 1 hadn’t—with the right cultural and legal support. B Lab, founded in 2006, provides that support by promoting the B Corporation certification as a way to differentiate good companies from companies that simply have good marketing, spreading the use of its Global Impact Investing Ratings System (GIIRS) among institutional investors, and establishing the benefit corporation—a legal form that bakes high standards of purpose, accountability, and transparency into a corporate charter—as an option in all 50 states.
“We are not a change agent—our change agent is the entrepreneur,” Houlahan says. “We exist so they can scale, they can affect change, and they can solve society’s greatest challenges.”
INNOVATION
Houlahan is quick to note that B Lab stands on the shoulders of giants. The B Impact Rating Assessment, used to certify B Corporations and as a basis for GIIRS, was built on the work of the Global Reporting Initiative (GRI) and the thinking of a host of sustainable business pioneers; ideas about new corporate forms have been developing for decades.
B Lab’s great step forward was to build the infrastructure for a movement that could make those ideas reality. Prior to the B Corporation, Houlahan says, “all the certifications were focused on a particular product or practice; the B Corporation certification was the first to focus on the whole business.”
And by certifying B Corps, B Lab created a community that could advocate for the legal changes needed. Policy makers work for constituencies, not ideas, Houlahan points out, and B Corps form the constituency for benefit corporation legislation. “Without the businesses that would use legislation for a new corporate form, earlier initiatives didn’t get much traction,” he says.
B Corp certification also represents a shift in thinking for corporate social responsibility, from focusing on doing no harm to focusing on doing good. “Our assessment only provides points for positive impact. We don’t measure whether you’re doing no harm,” says Houlahan. “We assess whether you are improving society and the environment.”
RSF Social Finance played a central role in all these developments and continues to be a core supporter. “RSF has been a pioneer in B Lab’s work from day one,” says Houlahan. In addition to providing a $250,000 loan from the RSF PRI Fund and ongoing fundraising support, “they were on our first board and on our first standards advisory council. They were the first to use the impact rating system to evaluate loan prospects, their RSF Capital Management unit is a Certified B Corporation, they are a pioneer fund for GIIRS, and they are a pioneer investor for GIIRS. They’ve participated in every level of our development.”
IMPACT
B Lab has certified close to 600 B Corporations, provided GIIRS ratings for nearly 300 companies, and signed on 60 GIIRS pioneer investment funds. Eleven states, including California and New York, have enacted benefit corporation legislation. B Lab is working with a group in Chile to pilot expansion throughout South America. And the B Corp brand is gaining power.
“For more than five years, companies joined this community out of an act of leadership,” lending their own brands’ power to build the B Corp brand, Houlahan says. Now the B Corp community is at a tipping point, where the B Corp brand will enhance the value of companies that earn it.
“Our mission from day one has been to harness the power of entrepreneurs to solve social and environmental problems,” Houlahan says. “We want to redefine success in business so that people are competing to be not only the best in the world, but the best for the world.”
VITALS
Company name B Lab Impact area Supporting social enterprise RSF relationship PRI Fund, field-building partner HQ Berwyn, PA Budget $4.5 million in 2012 Employees 29 Community served Mission-based businesses in the U.S. and abroad (pilot program)
When Tatiana Garcia-Granados and her husband, Haile Johnston, moved to North Philadelphia’s Strawberry Mansion neighborhood in 2002, they found themselves in a fresh-food desert.
“Most of our neighbors were getting their food from corner stores. You walk into these stores and there’ll be all these different flavors of potato chips and Twinkies, but no fruits or vegetables,” says Garcia-Granados. The couple started working to bring a farmers market to the neighborhood and discovered a much bigger problem. “It wasn’t just neighborhoods like ours that didn’t have a link to the farmers right around us; it was also hospitals, universities and schools.”
Working with other local farm and food advocates, they created Common Market in 2008 to forge a distribution link between threatened farms and fresh food-deprived urban communities. Today, with a crucial assist from the RSF PRI Fund, Common Market supplies about 200 customers—institutional kitchens, retailers, restaurants and buying clubs—with produce, dairy and meat from about 100 sustainably run regional farms.
INSPIRATION
“Fifty years ago there were deep connections between the farmland right around Philadelphia and city residents,” notes Garcia-Granados. “With the rise of global commodity agriculture, that has changed—we’re more likely to find peaches from California than peaches from New Jersey.”
“When we started planning this, the distribution void was not on people’s radar,” she says. “We got blank looks when we talked about what we were working on. People didn’t realize this was a problem.”
What drove them forward was making the connection between health problems in the city and the loss of farmland. “We were seeing the health disparities that exist in our neighborhood and realizing what a huge role food plays in people’s lives and their ability to pursue opportunity. And every time we went to Lancaster County we would see more farmland being turned into housing developments.”
INNOVATION
Common Market’s key insight—the big step forward in solving the farm-to-city problem—was the value of cultivating institutional customers.
“With the amount of food an institution like a hospital is purchasing, we could have an immediate impact on the farms,” says Garcia-Granados. “We also targeted institutions that serve a cross-section of the population. That allows us to reach people who didn’t already have access to fresh food through farmers’ markets and high-end retail.”
Common Market had ready suppliers and buyers; the big challenge was cash flow—institutions are used to paying in 60-100 days. “But supporting farmers requires paying them quickly, as close to 15 days as possible,” says Garcia-Granados. “As we grew we realized we were facing a huge cash flow gap. That’s where RSF came in.”
The founders made the rounds of commercial banks and state and municipal development lenders, “but no one understood our business model or the sustainable agriculture piece and why what we were doing was meaningful,” says Garcia-Granados. “Common Market is a nonprofit social enterprise—it runs like a business but will invest any profits in expanding access to markets for farmers and to fresh food for urban communities. “The people at RSF were the only ones who understood.”
In 2010 RSF provided a $150,000 credit line (it’s now $350,000) through the RSF PRI Fund, which supports non-profit and for-profit social enterprises addressing key issues in food production, food access, value-added processing, distribution, retail and waste management.
“We had the customers and the infrastructure, but it was that access capital that allowed us to increase our sales and have an impact,” says Garcia-Granados.
IMPACT
Common Market nearly doubled its sales from 2010 to 2011 and its customers include more than 50 public and charter schools in Philadelphia and New Jersey. That’s a key audience given the enterprise’s big goal: changing what people eat and how they get their food.
Achieving that goal will require many more Common Markets, and the enterprise increasingly serves as a model. “Every other week we get a call from an enterprise or development agency,” says Garcia-Granados. “We share our business plan and feasibility study widely and invite people to come see our operation.”
The benefits accrue widely, she says. “For our farmers it’s giving them the ability to differentiate their product and take it out of the global commodity chain. For entrepreneurs, it’s allowing them to serve and sell local produce. For people who wouldn’t otherwise have access to local produce, it’s changing the food they are eating.”
VITALS
Company name Common Market Philadelphia Impact area Food & Agriculture RSF relationship PRI Fund HQ Philadelphia Revenue $1.6 million in 2012 (projected) Employees 12 Community served Delaware Valley (New Jersey, Pennsylvania and Delaware)
RSF has elected to lower the interest rate by 25 basis points (0.25%) for the third quarter of 2012. RSF Prime will now be 4.75% and investors will earn an interest rate of 0.75%.
RSF’s most recent pricing meeting was held in Sebastopol, CA earlier this month. This was the twelfth such meeting we’ve had since RSF made the decision to change how our quarterly interest rate is determined. Prior to October 2009, we used the London Interbank Offered Rate (LIBOR) as a benchmark to determine our rate of return. Since then we’ve been using this customized rate established by our Social Investment Fund (SIF) stakeholders — RSF staff, SIF investors, and borrowers in our Social Enterprise Lending program. The SIF investor rate is then added to a 4% spread (for RSF’s operations) and the resulting rate, named RSF Prime, is the base rate for borrowers.
This pricing mechanism is more deeply aligned with our values to make financial transactions as direct, transparent, and personal as possible. Further, we’ve been able to offer a significantly higher interest rate to investors than if we had continued using LIBOR. Important to note: with this change in pricing, investors will continue to earn a rate several times that of a conventional bank CD.
Following the meeting we reflected on an important conversation that took place: would lowering RSF Prime make us more competitive in attracting high impact social enterprises in need of financing? Ultimately the answer was yes.
With that said, we are aware that the average RSF investor, for this next period, will experience a lower return (a decrease of $125 annually for the average $50,000 SIF Investment Note). For borrowers the impact is greater, as their average loan size is over $900,000, and their annual costs will be lowered by $2,000 to $2,500 annually.
We believe that lowering RSF Prime to 4.75% will help us retain and attract worthy projects to support through our Social Enterprise Lending program. To learn more about the projects we fund, visit the RSF Impact Map.
Thank you for your attention to this matter. In a spirit of transparency, we are happy to talk with you about our decision directly.
Current investors can contact Mark Herrera, Senior Manager, Client Development at mark.herrera@rsfsocialfinance.org or 415.561.6160.
Equal Access International (EA) is an innovative non-profit organization using media and community-building to overcome some of the most critical challenges affecting millions of underserved people in the developing world including women’s & girls’ empowerment, youth life skills & livelihoods, human rights, health, civic participation, peace building & governance. Working in Afghanistan, Nepal, Cambodia, Chad, Niger, India, Laos, Pakistan and Yemen, EA combines the power and broad reach of innovative media with direct community mobilization to provide people with life changing information and education inspiring them to overcome obstacles and improve their lives.
Founded in 2000 by Ronni Goldfarb, the organization has grown significantly as a trusted voice and community resource for millions of people. Today, with a broadcast reach to 90 million, EA produces annually over 1700 hours of award winning programming such as serial dramas, magazine features, youthchat shows, street theater, online platforms and “voices from the field” segments in 19 languages. Every day, youth, women and whole communities take new actions inspired by EA’s media programs; they participate in trainings, theater events, youth club discussions and community roundtables. By sharing success stories and ongoing burdens through radio call-ins, SMS texting and interpersonal dialogue, local solutions emerge – unleashing the power of positive change.
With a lean staff of 10 at SF HQ, EA has 120 worldwide staff , with 90% being trained in-country nationals and community reporters. Equal Access has received considerable acknowledgment for their positive impact such as the Tech Award in Education for Technology Benefiting Humanity, the prestigious UK One World Media Special Award. They were also cited by Secretary of State Hillary Clinton for their Women’s Rights as Human Rights inAfghanistan project, and were chosen by the UN Trust Fund to present “Voices” ( see below) during the week of panels during the launch of UN Women.
Here is a glimpse at two of their major programs:
VOICES: Reducing HIV/AIDS and Violence Against Women – Featuring the award winning radio show, Samajhdari(Mutual Understanding), and“The MostUnderstanding Husband Campaign,” VOICES addresses the intersection of violence against women (VAW) and HIV/AIDS and explores daunting dilemmas faced by Nepali women and girls. With one million listeners and 300 listening groups and legal literacy trainings, Samajhdari’s candid on-air dialogues teach Nepal women to think critically, speak unhesitatingly, and organize collectively to protect their rights. Breaking the silence, VOICES has shifted the social landscape by increasing national awareness on VAW, provides new definitions of masculinity, and encourages mutual understanding between men and women.
To be lasting, behavior change on sensitive issues must emerge from within the culture. CEO Goldfarb emphasizes EA’s practice of deep listening, culturally appropriate approaches, and interactive feedback loops at every stage of program implementation. “While providing vital information, our real success lies in empowering beneficiaries with the education and skills to interpret and apply new information, while inspiring their imagination and belief in their inherent power to improve and transform their lives. ”
Chatting with My Best Friend
“You have provided a base for the poor, helpless and hurt people like me. I will study and do something good for everyone with my self confidence. I will stand on my own two feet.” -A young girl listener to Chatting with My Best Friend, Nepal
In the developing world, weak government, poor education and lack of livelihoods leave youth (who comprise over 50% of the population) tremendously vulnerable. To empower young people, EA pioneered a media and youth engagement model, which they implement in five countries. For example, in Nepal, through a nationally broadcast youth-led radio series, leadership trainings, discussion groups and more Chatting with My Best Friend instill vital life skills as foundational support for healthy development, informed choices and positive engagement. EA elevates young voices on air, builds self-esteem, provides livelihood training, and empowers young people as creative change agents. Chatting with My Best Friend has a regular audience of 6.5 million young people and receives SMS feedback as high as 5,000 messages per month, while 1200 self-formed youth groups meet to discuss the program and take actions. Surveys by AC Neilson and the Nepal Health Demographic survey demonstrated that regular listeners are more likely to complete schooling, are more informed about HIV, and practice less risky behaviors.
To experience all EA youth programs in other countries, check out this link.
RSF is honored to have Equal Access as a borrower since 2008. RSF’s credit line assists EA to bridge timing gaps between contract and grant payment receivables from diverse organizations such as UN Women, US Institute for Peace, Open Society Institute, USAID, and others enabling continuous implementation of programs such as the VOICES and Chatting to reach rural, underserved populations. Please visit equalaccess.org for more information.
Reed Mayfield is the Lending Associate at RSF Social Finance.
You’ve probably heard of the “new economy,” which often refers to social media, sharing-based businesses, and sometimes socially responsible businesses. RSF Social Finance is working to build the next economy: one that’s rooted in community, considers everyone’s needs, and restores trust in financial relationships through transactions that are direct, transparent and personal.
