Local economies

Seed Fund Grantee Highlight: Rosebud Economic Development Corporation

March 19, 2015

by Ellie Lanphier

REDCO logoIn South Dakota, on the 1,900 square miles of the Rosebud Reservation, the Rosebud Economic Development Corporation (REDCO) is working to address high rates of poverty and unemployment and pervasive food insecurity. To support their campaign to increase access to fresh, local foods, REDCO received a RSF Seed Fund grant in 2014 towards the establishment of a community garden and farmers’ market.

REDCO is a non-profit, tribally chartered entity of the Sicangu Lakota Oyate (Rosebud Sioux Tribe). Through many different programs and initiatives, the organization promotes economic development and self-sufficiency to improve the lives of the tribe’s 32,000 members. The tribe currently faces staggering challenges. The county on which it sits is the second poorest in the United States, the life expectancy for men is 47, compared to the national average of 77 years. The tribe faces epidemic levels of alcoholism, suicide, and diabetes that are more than double the national rate. REDCO is committed to generating revenue for the Rosebud Sioux Tribe and promoting economic growth through business management and development, economic policy development, and community development.

In 2012, the Rosebud Sioux Tribe put REDCO in control of 600 acres of tribal land adjacent to the tribal-owned Turtle Creek Crossing Supermarket. Over the next 10-15 years it will become the Keya Wakpala Green Development (KWGD), a holistic, resilient, and planned development incorporating community gardens, walking trails, native plant habitat, spaces for cultural and spiritual activities, energy efficient housing, renewable energy, and business incubation. KWGD was recognized as a “Commitment to Action” by the Clinton Global Initiative in 2013. In late 2013, community members, spiritual leaders, and other tribal leaders were asked to prioritize features and services to be included at KWGD. In written surveys, the top four priorities in a long list of options were food or agriculture related: a community garden, grocery store/food co-op, farmers market, and greenhouse.

The Keya Wakpala Farmers’ Market will be a weekly seasonal market, featuring produce grown by the new Keya Wakpala community garden and other reservation gardens. The market will be located in a convenient location, next to the existing supermarket, and as a part of the KWGD. From the time the market opens, they will accept SNAP food stamps and provide opportunities to sample food and educational materials on the relationship between diet and health to encourage adopting a healthy eating lifestyle.

REDCO’s Food Sovereignty Coordinator will oversee the community garden program, and later the farmers’ market. Beyond providing access to fresh, local food, the hope is that it will also create a safe gathering space to come together regularly. Market vendors will receive hands-on entrepreneurship training as well as generate income. REDCO also hopes to encourage and inspire the development of agriculture and food-related industries on the reservation, such as dried buffalo, specialty dried corn and popcorn, and preserves, including the use of wild foods like chokecherries and plums.

REDCO was in touch with RSF since receiving the Seed Fund grant, and described challenges to securing other funding for the garden and market project. The RSF Local Initiatives Fund was able to provide an additional $10,000 grant to support fencing and irrigation costs to get the community garden development underway.

Ellie Lanphier is Program Associate, Philanthropic Services at RSF Social Finance

Seed Fund Grantee Highlight: Mutual Aid Networks – Dane County TimeBank

February 24, 2015

by Kelley Buhles

What would it look like if everyone were doing the work they loved, what they felt called to do?

This is the driving question behind the research and development of Mutual Aid Networks (MANs), a project of Dane County TimeBank which was supported in 2014 by the RSF Seed Fund with a grant of $2,500.

Developed over the last four years, Mutual Aid Networks are a new form of cooperative that utilize many collaborative economic tools, such as timebanking, price-based mutual credit, shared resources, lending pools, and cooperative savings, to create a model that supports people and communities to live and work in a way that allows them to thrive.

This model was created as a solution to some of the most challenging issues we face in the modern economic system. How do we leverage the gifts and talents of ALL people in our communities? Not just those whose skills are valued by our current economic system. How do we make a living while also finding time to pay attention to health, to make time for art and music, and to care for our community? How do we engage communities to work together in mutual support for each other?

Dane County TimeBank's Annual Meeting

Dane County TimeBank’s Annual Meeting

Stephanie Rearick, founder of the Dane County TimeBank and leader in the formation of MANs, has experienced the challenges of our current economic system in a very personal way. As an artist, activist, and small business entrepreneur, she often found it a struggle to do the work she loved, while making ends meet, and trying to create an equitable society. It was this experience that led her to create the Dane County TimeBank and MAN as a way to create cooperative ownership models that would support more equitable, self-sustaining communities and better livelihood for the people in them.

The Mutual Aid Network model creates an infrastructure that empowers people to come together for a common purpose and generate, share, and steward the resources needed to realize their common goal. It leverages current collaborative economic tools, and puts them together into a comprehensive system that allows people meet their own needs, as well as support the needs of others, and their community, through a shared ownership vehicle.

With support from the Seed Fund, among other donors, this project has been able to accomplish much already. The first local version of a MAN, the Allied Community Coop, was created in October in Madison, WI with a focus on building neighborhood wellness and sustainability.

They have also already incorporated a meta-cooperative in Wisconsin called the MainMAN that will support local MAN pilots, such as the Allied Community Coop, with resources and technical assistance. The plan is to launch six more pilot sites across the US that will be experimenting with the MAN model. They have a strong focus on sharing their learning experiences from each of the regional pilot sites so that rapid replication may occur. Stay updated on their progress by following their blog at http://blog.timeftw.org/

RSF is very excited to be among the supporters of this group working to build the next economy!

Kelley Buhles is Director of Philanthropic Services at RSF Social Finance

Strength in Collaboration – A Resource Guide

January 23, 2015

After the stock market crash of 2008 the world was met with a new reality when thinking about economics. One group of Waldorf Schools in the Mid-states region took up the conversation about what this new economic reality would mean for local communities and the non-profit organizations that serve them.

How could communities, non-profits, and small businesses work together to build resilient local economies?

Through these conversations, and the inspiration provided by the Economics of Peace Conference held in 2009, the group decided to develop a guide designed to support conversations and provide resources for building regenerative communities.

The guide titled, “Building Regenerative Communities: Strength in Collaboration” is now available on RSF’s publications page. Below is a note from the authors:

regenerative communities guide imageOur intention in creating the guide is to facilitate conversations which promote deeper understanding, trust and community within and between organizations. We feel that such interaction may lead people to discover ways to collaborate that foster associative endeavors, perhaps discovering ways to share resources to support each other’s work.

The Guide provides a starting point for calling a circle and highlights a variety of tools from which to choose for setting up conversations. It contains several case studies which provide the content to initiate conversation. There are additional web, print and video resources to inspire and urge participants into deep discussion around themes of regenerative communities, associative economics and cultural renewal.

It is given freely and may be shared broadly. It may be posted on websites to encourage its availability.

~ Mary Christenson and Marianne Fieber, June 2014

The First Immersion: BALLE-RSF Community Foundation Circle

January 9, 2015

by Catherine Covington

Consider the following: What questions keep you up at night? What do you dream is possible in the world? What part do you want to play, and what special gifts do you bring?

These questions were just a few of the prompts for the 8-minute personal storytelling presentations given by each participant in the BALLE-RSF Community Foundation Circle (CFC), an 18-month leadership intensive which launched in early December with its first in-person gathering in Petaluma, CA. The invitational CFC is a natural extension of RSF’s commitment to building the field of social finance and BALLE’s mandate to connect leaders, spread solutions and attract investment for local economies. The CFC grew out of RSF’s initial gathering of community foundation leaders hosted in Phoenix in January 2014. The big take-away from that gathering was a desire to pursue impact investing, even though many of the community foundation leaders lack the knowledge and support to do so. The CFC was created to address this need and is currently comprised of 11 leaders from 9 different community foundations (full list available here) across North America. With over $2 billion in collective assets, the members of the group are working to align their investments with their missions to serve their communities. Leading the group are facilitators Christine Ageton, BALLE’s Chief Program Officer, and Sandy Wiggins, Senior Advisor to RSF Social Finance.

2014-12-10 03.01.29 (2)

Participants of the BALLE-RSF Community Foundation Circle (CFC)

As a community of practice, these pioneering CFC leaders are focused on advancing place-based, mission-aligned investing by their foundations. The immersive program will support the participants to: strengthen their personal effectiveness in overcoming barriers to place-based impact investment; share with and support one another as they learn to bring their personal stories and passion to the forefront; learn from domain experts; and, intentionally create new knowledge and practices. In addition, members of the CFC are devoted to advancing the field and to making their resources and knowledge available to others doing related work.

The content of the CFC gatherings (4 total over the course of 18 months) is designed around four key challenges that community foundation leaders have named as obstacles to shifting their assets toward local investment: culture, strategy, capacity and investment opportunities. This first gathering was dedicated to participant introductions, framing the need for local investment, solidifying the CFC vision and purpose statement, and discussions around cultural challenges faced at the board, staff and community levels.

There is no doubt that culture, defined by RSF’s CEO Don Shaffer as, “connectivity between stakeholders that drives you toward your mission,” is hard to shift, particularly in organizations with decades of history. Marjorie Kelly, author of Democracy Collaborative’s recent report focused on community foundations as hubs of community wealth building, framed the need for change. “When we ask ourselves, where do we find ourselves right now – what time is it? – we begin by recognizing that the multiple and growing problems we face are systemic. It’s not the people who are the problem, it is the system. We need to build a new economy, create pilot projects for the future. And this means blending theory and practice. We need our theories, but we always need to test them in practice.”

Peter Berliner, Managing Director of Mission Investors Exchange, challenged the participants to ask their organizations these questions related to culture: What is your identity? How do you define success? What is the role of your organization in the community? After further discussion, one participant shared a moving revelation, “Mission got lost in the string of promises we made along the way to our donors. We’ve put ourselves in this situation. . . We’ve tied ourselves to a mirror image of a mutual fund.”

A full three days were spent learning about each other’s personal stories and organizational profiles, discussing challenges, sharing case studies and helping each other set goals related to tackling cultural barriers to change. It was a powerful and rich experience as captured in these closing reflections:

“I’m privileged to be a part of this team which is focused on care, assistance and accountability. Never doubt that a small group of citizens can change the world.”

“You can’t do this work without feeling the passion. I appreciate the safe space and the framework for sharing that will serve not just our communities but the world. I feel like we are on the brink of something very big.”

“Let’s demystify, illuminate this work and its potential, weave together our networks and make place-based investing the norm for community foundations everywhere. We have to find a new business attractor and I believe this work is it.”

The next gathering of the CFC will take place in Asheville, NC in mid-April 2015 with a focus on strategy. I have the privilege of representing RSF along with Sandy Wiggins and am very excited about the road ahead. Stay tuned to our blog for more updates!

Catherine Covington is Manager of Client Development at RSF Social Finance.

Community Foundations Deploying All Resources to Build Community Wealth

November 24, 2014

The following preface was written by RSF President & CEO Don Shaffer for the Democracy Collaborative’s recent report, A New Anchor Mission for a New Century: Community Foundations Deploying All Resources to Build Community Wealth. The report highlights “The Innovative 30″ community foundations and their cutting edge work focused on deploying resources, in many cases not just grants, in support of rebuilding community wealth. RSF is particularly excited about this report as it ties in well with the ongoing work we are doing with pioneering community foundation leaders who are determined to align their individual foundations’ investments with their deep commitment to place.

community foundations

Preface

Many thanks to The Democracy Collaborative for this insightful paper. As so many of us push for innovation, it’s important we pause today to celebrate–as this paper does–the wide range of benefits that community foundations already generate.

Of many great quotes in the paper, one by Janet Topolsky from Aspen Institute Community Strategies Group brilliantly sums up the challenge: “A community foundation can do anything… But it has to decide what it wants to do.”

On the one hand, community foundations are nonprofit public charities with flexibility in their legal structures to create direct loan funds, loan guarantee pools, collaborations with community development financial institutions, and many other new approaches to working with different kinds of capital to meet the needs of local social enterprises. On the other hand, community foundations face many barriers in trying something new.

Yet, as this report shows, exciting innovation is already underway by community foundations, in both economic development and impact investing. Both are ways of moving toward the vital new anchor mission of deploying all resources to build community wealth.

The anchor institution work that The Democracy Collaborative has pioneered is a no-brainer for community foundations to embrace. Yes, it is resource-intensive and requires skillful partnering. But what is the alternative? It is a challenge community foundations will be wise to embrace.

Regarding impact investing, a massive cultural shift is still needed. There are very few foundation leaders who can say, as Clara Miller from the Heron Foundation does, “Our fundamental question for deployment of all capital will be, ‘what is the highest and best use of this asset for furthering our mission?'”

Short-term paper gains in a portfolio of public companies are just that–paper gains. They do not represent real wealth. The aspirational investment goal for community foundations is deploying 100 percent of assets for impact in their local communities. As this paper reports, Kelly Ryan and her board at Incourage Community Foundation in central Wisconsin are the first among community foundations to make this commitment. It will be exciting to watch as they move toward realizing this ambitious goal. At RSF Social Finance, our vision is of 100 community foundations reaching the 100 percent goal in the next decade.

I send my best to all of you taking on these worthy challenges.

Sincerely,

Don Shaffer

President & CEO, RSF Social Finance

Click here to read the full report.

RSF Local Initiatives Fund

November 21, 2014

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

Catherine Covington 1by Catherine Covington

Earlier this year, I was encouraged to take on the challenge of conducting RSF’s first-ever feasibility study. The study took place in the spring and focused on laying the groundwork necessary to expand and deepen the potential of the RSF Local Initiatives Fund (LIF). More than 10 staff members pitched in to help plan for and conduct 35 external interviews during which we solicited feedback about the LIF and sought advice on the prospect of a capital raise. Now that the study has concluded and we are in the midst of fundraising, I am excited to share an update on the fund with the entire RSF community.

In 2012, in collaboration with a generous donor, RSF launched the Local Initiatives Fund pilot program to meet the growing need we have seen for an alternative approach to financing regional food systems. Throughout our history, RSF has had to turn away many impactful organizations that could not yet benefit from a loan, but instead, could use grants or equity-like capital to spur their growth. We have learned that without more flexible capital available, particularly in the early stages of their enterprises, it is extremely difficult for entrepreneurs to build food systems that generate positive social, environmental, and economic change.

LIF is a first-of-its-kind philanthropic fund that employs an integrated capital approach—one that focuses on the coordinated use of investments, loans, and grants to provide much-needed, flexible capital for entrepreneurs who are building regional food systems and resilient local economies. In the first two years of the pilot, we have been able to deploy $2 million to 40 early-stage sustainable food and agriculture enterprises with a focus on technical assistance grants, loan guarantees and place-based Shared Gifting circles; those funds have leveraged $8.3 million in additional financing to date.

Many of our feasibility study participants confirmed that there is an urgent need for the next stage of our integrated capital approach which includes a mix of tools such as loans backed by guarantees, direct equity investments, and philanthropic risk capital for smaller scale financing, all to support regional food systems infrastructure. For example, Viva Farms, a farm incubator program in Washington State, received an equipment loan from RSF backed by a guarantee from a foundation partner which was further supported by a capacity building grant from the LIF! There was also consensus that our deep and extensive lending experience combined with philanthropic capital would help us accomplish a range and degree of financing for this burgeoning field – funding that we simply cannot do through our current lending and grantmaking programs. Our experience and perspective make us uniquely suited to work in this innovative and much-needed way.

In our view, the opportunity is great, and, not moving capital in this innovative way—while the need for food access and the opportunity to meet that need grows—will have long-term adverse social consequences. We invite philanthropic funders who share an interest in transforming food systems to join us in this challenge of embracing an integrated financing approach that will push boundaries, revise how philanthropy can truly support regenerative economic work, and have a lasting impact on people, communities, and food systems. Since June, we have added 8 new donors to the fund (totaling over $600,000 in gifts) and are eager to add more as we take the LIF beyond the pilot phase. Will you join us?

Please contact Catherine at catherine.covington@rsfsocialfinance.org or 415-561-6151 for more information!

Catherine Covington is Manager of Client Development at RSF Social Finance

RSF in the Wall Street Journal

August 20, 2014

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Dear Friends,

The RSF Social Investment Fund was recommended in the Wall Street Journal for the first time last Saturday, August 16, in an article titled “The Payoffs of Investing Locally.”

We’re thrilled to get such prominent coverage, and I have one brief clarification:

In the article, the journalist wrote, “returns are often lower than other fixed-income investments.” I want to address this statement.

Working directly with our investors over the past seven years, I have observed two primary reasons why they choose the RSF Social Investment Fund:

  1. They want to support inspiring social entrepreneurs.
  2. They want a low-volatility, liquid investment that has minimal downside risk.

Regarding #1, we have a track record of finding great social enterprises to support, often before a commercial bank will step in.

Regarding #2, we have a 100% repayment rate (principal + interest) to our investors since RSF was founded in 1984.

The investment is structured as a 90-day note, similar to a bank certificate-of-deposit (CD). Because of the liquidity and the low-risk profile, investors should consider the RSF Social Investment Fund as a part of their cash/savings asset allocation, not their fixed-income allocation. This is the critical point.

The Wall Street Journal writer correctly observes that the average return on our 90-day note over the past year has been 0.53%. This is two times the average financial return of bank CD’s with similar duration, according to Bankrate.com.

And with a big-bank CD, you have no idea where your money is being invested. It may be going to support small-business loans in your community, or it may be going to support clear-cutting of rainforests in Malaysia through the bank’s proprietary trading operations.

Nowhere else but with RSF can you find a bank CD-like investment (in terms of high-liquidity and low-risk) in a diversified direct-loan portfolio of over 90 phenomenal social enterprises, with an institution that has been a pioneer and a leader in social finance for over 30 years, with a minimum investment of $1,000. You know exactly which social enterprises receive loans from us (see a list of all our borrowers here). And the financial returns are actually superior to any comparable-term savings account or CD at a bank!

Thank you for your attention and interest. Again, we certainly appreciate the great story in the Wall Street Journal.

All the best,

Don Shaffer

President & CEO

Seed Fund Grantee Highlight: Sustainable Economies Law Center

February 25, 2014

by Alex Haber

Building the next economy will take work in many sectors. RSF focuses on work with investors, donors, and entrepreneurs to build the direct, transparent relationships necessary to make economic renewal a reality. But as all these groups move their money and conduct their business with deep values, ossified legal structures will have to adapt and become more flexible to meet the needs of new economic relationships.

Sustainable Economies Law Center 1RSF Seed Fund grantee, Sustainable Economies Law Center (SELC), works precisely at this intersection. SELC provides essential legal tools – education, research, advice, and advocacy – to support a transition to local, resilient economies. It focuses in many areas, including cooperatives, community-owned enterprises, co-housing, urban agriculture, barter, and local currencies.

Last year, SELC received a grant from the Seed Fund to support a new project that helps farmers interested in sustaining and growing their businesses through community-based or crowd-sourced financing methods. These methods allow local, small-scale investors to become financial stakeholders in an enterprise, and allow enterprises to seek capital from friends, family, and community members instead of high net-worth individuals or banks. With RSF’s funding, SELC was able to run an outreach campaign and application process for this new service to assess interest among farmers, and the response was very strong.

South Central Farmers 1One of the most promising candidates was the South Central Farmers’ Cooperative (SCF), a worker-owned farm in California’s Central Valley. The coop grew around South Central Farm, a former fourteen-acre urban farm in South Central Los Angeles. After ten years of cultivating the land and building the community around it, the farmers were evicted in 2004 when the plot was slated for development. This eviction led to significant protests and civil disobedience, as well as an Academy Award nominated documentary, The Garden.

Since then, the South Central Farmers have been cultivating land in the Central Valley, and are currently looking to expand and help start other worker-owned farms. In order to do this, and to avoid the threat of eviction, SCF is looking to form a non-profit organization that could purchase land it could lease to worker-owned agricultural cooperatives, and to finance these land purchases through a public offering, so small investors, potentially from all over the state, could invest in these farms.

South Central Farmers 3

SELC and SCF hope to continue working together on this project as it evolves, and SELC is looking for funding to continue the work and develop a how-to guide for other farms interested in community-based and crowd-sourced funding.

Click here to learn more about how you can get involved with the Seed Fund to support great organizations like Sustainable Economies Law Center.

Alex Haber is Program Manager of Philanthropic Services

Community Foundations: What It Takes to Become Dynamic Hubs of Local Capital

February 24, 2014

by Don Shaffer

Community foundations—with their deep local ties, significant assets, and community benefit missions—are ideally positioned to play a leading role in solving our communities’ most profound and difficult challenges. Yet many are stuck in a pattern of disbursing only a small percentage of their assets in grants and investing the rest in traditional portfolios that don’t advance (and may even undermine) their mission.

What is preventing these anchor institutions from realizing their potential? What exactly is that potential, and how can community foundations shift to an impact investment strategy that really makes a difference to community success and resilience?

RSF is taking a hard look at these questions. We recently brought together senior executives from 24 of the most innovative community foundations in the U.S. and Canada, along with RSF advisors and other impact investment experts, for “A Field-building Collaborative: Changing the Game through Local Impact Investing,” a conference looking at barriers to place-based investing and how to overcome them, lessons learned, and drivers of change.

The imperative of impact investing

We were pleased that the Jan. 29–31 event, co-hosted with the Arizona Community Foundation in Phoenix, attracted so many community foundation leaders from across the country, representing rural as well as urban communities and holding assets totaling more than $5.5 billion. But we weren’t surprised: a powerful combination of generational change and aspiration is motivating community foundations to explore local impact investment strategies. Foundation leaders are searching for ways to stay relevant to the next generation of donors, who tend to take a hands-on approach and often are entrepreneurs who made their money by thinking big and taking risks. These leaders also aspire to make their institutions drivers of local economic health. They see the opportunity to become dynamic hubs of community capital, deploying a full range of low-interest loans, loan guarantees, convertible notes, and other forms of investment funding to social enterprises.

Kelly Ryan is on her way to doing that in central Wisconsin as CEO of the Incourage Community Foundation. She told the story of how her community lost 40 percent of its jobs overnight when their major employer moved overseas. The foundation rallied, changing its focus to creating jobs and supporting local businesses, essentially saying, “We’re going to be the institution that brings everyone out of the ashes.”

All community foundations have that opportunity right now. The questions we started exploring with “Changing the Game” are, is it possible to make that happen before reaching the tipping point of a massive crisis? And if so, how?

Identifying roadblocks

The motivations and opportunities to invest for local impact are powerful—but so are the countervailing forces. Foundation leaders who take steps toward changing their institution’s investment practices confront a thicket of challenges. Two sets of issues stood out in the presentations and discussions.

Culture. The cultural assumptions of boards, investment committees, investment advisors and even staffs can present significant roadblocks. RSF advisor John Fullerton captured the problem: the people serving on investment committees often have spent their careers living and breathing current models of portfolio theory and investment management. They’re focused on fiduciary responsibility, and in their minds that means making sure the money makes more money—not ensuring that investment has a positive impact on the community. It’s hard to convince a board member who spent their career on Wall Street that financial return is not the number one goal.

Capacity constraints. Most community foundations don’t have the staff expertise to evaluate and manage direct investment in local enterprises, or to develop a cohesive local investment strategy. Even hiring appropriate consultants can be a challenge. Impact investing is relatively new, so the pool of experts is not yet deep. Another challenge is tension between programming and investment—the program staff may feel that impact investments are invading their turf. In addition, the lack of history with direct investment means the opportunities may not be obvious to foundation staff.

Creating space for impact investing to grow

Discussions at the event revealed a big gap between the desire many have to pursue impact investing (“Why wouldn’t we want to do this?” was a commonly expressed sentiment) and the knowledge they need to actually do it. RSF advisors and foundation leaders who’ve started down the path shared suggestions for moving forward.

Work with the board to change investment culture. Private foundations are often created with one large gift that’s expected to last; they are risk-averse and focused on returns because they want to ensure perpetuity. Community foundations, however, are public institutions whose growth and success rest on the number of donors they can continue to attract over time; they should be free to focus on demonstrating their relevance to the community and attracting the next generation of donors. There’s no structural reason for them to be risk-averse and returns-focused—the fact that many are is often a result of board culture.

Brian Byrnes of Santa Fe Community Foundation encountered tremendous board resistance to a shift in investment strategy; to counter that he took the board through an analysis that revealed their level of investment in areas contrary to their mission. Byrnes said the exercise was a powerful force in opening minds. Kelly Ryan reconstituted her board at Incourage so that they could implement a community investment strategy as a central feature of their mission.

Redirect investment expenses. One of the most eye-opening moments for many participants was RSF advisor Leslie Christian’s “do the math” challenge. “How many of you are experiencing a roadblock in that your boards think impact investing is too expensive?” she asked. Hands shot up all over the room. She then did the math: a $100 million foundation paying a typical 0.8 percent fee to its investment advisor is spending $800,000 a year to maintain its portfolio. What if the foundation fired the investment manager and instead put all that money into a Vanguard index fund, which historically has long-term returns as good as or better than investment managers? With a typical mutual fund fee of 0.08 percent, they’d free up $720,000 they could use to hire impact investment experts.

Restructure your organization. Dana Pancrazi of the FB Heron Foundation put forward a structural solution to internal turf battles and mission conflicts: the foundation dissolved its grantmaking and investment teams, replacing them with an operations team that provides administration and support, and a capital deployment team that handles grants and investments—and treats both as 100 percent mission driven.

Pioneers wanted

A few foundations have already made great progress on local impact investing, but it hasn’t been easy—and it won’t be for the next wave of pioneers, either. In addition to inspiring stories, we also heard “it’s not all rainbows and unicorns.” At RSF, we know how hard this is, having spent the last 30 years building up the expertise and insight to invest for impact effectively. There will be failed investments and difficult expectation setting. But as entrepreneurs know, failures teach the lessons that lead to ultimate success. Why not give the non-profit sector the same opportunity to use investments to try out innovative solutions to our communities’ most pressing problems?

We’re hoping to spark this change by inviting the most committed community foundation leaders to join a community of practice that will go deeper into what it takes in terms of personal leadership to shift to impact investing. The group will provide peer support and share everything from in-progress case studies to best practices to credit memos.

We believe the opportunity for change is profound. If a relative handful of community foundations reinvented themselves right now, they could truly change the game for communities across the country.

Don Shaffer is President & CEO at RSF Social Finance

Community foundations conference attendees.

Community foundations conference attendees.

2013 BALLE Conference Recap

July 23, 2013

BALLE_Logo_RGB

by Catherine Covington

 

It’s a beautiful morning here outside my sun-porch office at RSF and my spirits are high. I am reminded of the level my spirits reached during BALLE’s 11th annual conference in Buffalo, NY, last month. I came back so inspired by my fellow attendees, the projects they are working on, and the action they are taking in their communities.  RSF has been a long-time sponsor of BALLE’s annual conference. BALLE’s work, which is focused on creating real prosperity by connecting leaders, spreading solutions and driving investment toward local economies, is very much in line with our mission and the kind of collaboration we seek to support.

A theme that was continually referenced throughout the conference was a focus on shifting from an “egosystem to an ecosystem”, from a system focused on “me” to a system focused on “we”.  This theme resonated with me and the image of what such a community would look like continued to develop in my mind as the conference progressed.  Janine Benyus, Founder of Biomimicry 3.8 Institute, gave an incredible presentation on not what we can extract from organisms and their ecosystems, but on what we can learn from them.  She highlighted sustainable solutions that can be found by emulating nature’s time-tested patterns and strategies and left the audience awestruck with her visual images and analogies.  A similar presentation by Janine, given at a TED conference, can be found here.

What would our economy look like if everyone knew their neighbor, lived with less and wasted almost nothing, and could invest money in their local community?  Well, one aspect of community health that is important to all of us, the production of and access to healthy food, could be addressed in part if local investment models such as the Farmer Reserve Fund were replicated in other communities.  Tim Crosby of Slow Money Northwest shared the nuts of bolts of how the fund was established during a panel we both participated on called “Rethinking Investment for the New Economy”.   The Fund was made possible by a partnership between Slow Money Northwest, RSF grantee and borrower Viva Farms and North Coast Credit Union (NCCU), which serves Skagit and Whatcom counties in Washington.  Much more detail can be found on Slow Money Northwest’s website, but in short, the Fund is able to provide a pool of capital to help new farm businesses, which often don’t have a credit history, have their best shot at being successful.  The innovative structure of the Fund builds on NCCU’s internal system of risk management and rigorous due diligence, reduces the risk of the loans by utilizing Viva Farm’s expertise to provide technical assistance to the borrowers, and enhances the existing loan loss reserve balance by leveraging small foundation grants and gifts from individuals.

I highly encourage you to check out some of the video clips from the conference. In particular, there is an inspiring presentation by Nikki Henderson, Executive Director of People’s Grocery, a long-time RSF grantee (the clip begins 1 hour, 56 minutes into the BALLE Friday Morning Session video).  She never ceases to amaze me with her ability to engage with the audience so naturally while delivering a powerful message in a most memorable manner!  Her message focuses on moving from breakdowns to breakthroughs, the difference between intention and impact, and responsibility without shame.  My favorite part is the how she finishes out her talk with an emphasis on how she sees us being able to bring all of work together to “congeal” through celebration, culture, and rhythm (she likes to dance!).

Click here to view more conference videos

Catherine Covington is Senior Associate, Philanthropic Services at RSF Social Finance.

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