Social Finance

What Funders of Social Enterprises Want

June 5, 2013

Don Shaffer - Default

Originally published by Sustainable Industries

by Don Shaffer

Interest in social enterprises is growing—and believe it or not (some entrepreneurs may have their doubts), so is the pool of capital available to them.

The broad field of impact investing—which involves directing capital to enterprises that are doing good, rather than simply screening out companies that have strong negative effects—is projected to grow by a billion dollars this year. Impact investors surveyed for a J.P. Morgan and the Global Impact Investing Network (GIIN) report released in January said they plan to commit $9 billion to impact investing in 2013, up from $8 billion in 2012.

Of course, much of that money will go to larger, more established businesses, not to emerging social enterprises. But RSF Social Finance does finance social enterprises that need growth capital—and our investment funds mirror the broader trend. RSF’s main investment vehicle, the Social Investment Fund (SIF), grew 20 percent in 2012, to $90.5 million.

In addition to a larger pool of capital, several other trends are creating opportunities for social entrepreneurs:

  • There’s a growing focus on developing social entrepreneurs through the use of accelerators and technical assistance groups. Some examples are Village Capital, Ashoka Fellowships, and Hub Ventures.
  • Investors are looking at alternative forms of investing, including royalty payments.
  • There’s increased interest in investing regionally, specifically in the United States.

What are investors looking for?

Many of the investment organizations funding social enterprises specialize in particular niches, or work on a few key focus areas at a time. If you’re seeking capital, your first stop should be a funder that specializes in your area—they’re more likely to understand the business opportunity, and can plug you into a valuable network.  For example, one of RSF’s current focus areas is the creation, support and expansion of decentralized, regional food processing and distribution operations, because they contribute to strong local economies by providing markets for small and midsize farmers, helping with the logistics of aggregating food from multiple suppliers across a region, and serving as market creators by connecting producers with local food buyers.  We’re also seeking to build relationships with impact-making borrowers in our other two focus areas: ecological stewardship, and education and the arts.

What qualifies as a social enterprise?

Every funder has their own criteria, but ability to demonstrate impact and capacity to run a successful business will probably always be top of the list. RSF defines a social enterprise as a for-profit or non-profit venture in which the economic activity is a means toward creating significant social or ecological impact. We vet borrowers for:

  • Social and ecological impact for public benefit: Is the organization’s economic activity a means toward directly solving or alleviating society’s greatest challenges in our focus areas?
  • Advocacy for change: Is the organization an advocate for or does it demonstrate social change in its field? Does the organization hold itself accountable and is leadership committed to the social mission?
  • Capacity to accomplish the mission: Does the organization have the capacity to tackle the problem? Do its activities have the potential for scale?
  • Commitment to financial and operational sustainability: Is management committed to and capable of growing a profitable or self-sustaining independent enterprise? Could RSF’s involvement be catalytic? Does the business meet high standards for workplace and environmental practices?
  • Community building: Is the organization building a community committed to its success?

If you have an enterprise that meets those criteria and needs a finance partner to reach the next level, please get in touch. If you’re not there yet, I encourage you to take advantage of the resources available to social enterprises. There’s never been a better time to be a social entrepreneur.

Don Shaffer is President & CEO of RSF Social Finance, as well as an alumni speaker at the Sustainable Industries Economic Forum.

Safe, Ethical, and Transparent Fashion

May 23, 2013

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.”

Read Scott’s full blog post here

As he says, “No one should have to suffer and die to produce the clothes we wear.”

A Healthy Stream of Capital

April 25, 2013

by Tammy Childers

Originally published in the Spring 2013 RSF Quarterly.

RSF’s purpose is “to transform the way the world works with money,” but what exactly does that mean? In pondering this question, I recalled time spent outdoors exploring a particular creek. I realized there was a metaphor in the story of that creek for a transformed financial system.

Last summer, with my family, I visited Filigreen Farm, a diverse Demeter certified Biodynamic fruit farm in Mendocino County. One morning, my mother-in-law, Joellen, and I set out to tromp through the creek that bisects the farm. This creek, the Anderson Creek, is a major tributary feeding into the Navarro River and to the Pacific Ocean twenty miles away.

In the year that had passed since my last visit, the creek had changed. The water was deeper in some places, but there were also more sandbars. Standing up to our knees in cool, clear and slow moving water we marveled at dark pools of circling fry, audible frogs, and lush vegetation. We lingered in shallow water searching for captivating treasures.

By the time the sun was directly over our heads, we were ready to head back to the cool shade of the house, but with willows, shrubs, and grasses crowding the creek banks and islands, we could see no obvious path to the farm on the other side.

When we finally emerged, we ran into Stephanie Tebbutt, one of Filigreen’s managers. We thanked our host, and Joellen commented on what great fun she had in the creek. This creek, Joellen said, struck her as particularly beautiful; she had not seen a stream as clear as this one since she was a child on her family’s farm in Nebraska.

When Stephanie and her husband Chris, both landscape designers, first came to Anderson Valley in 1982, “the stream looked nothing like its present self: curving, clear, and about twenty feet further back from its former location,” Stephanie said. “It looked like others up and down the Anderson Valley: straight, denuded of vegetation. The landowner at that time had bulldozed the creek each autumn to straighten it, clearing any vegetation brave enough to rear its head along the way. What little survived was grazed down by the cattle.” The practice had eroded the farm land, sending topsoil down to the sea, creating a steep cut bank, and facilitating spring flooding.

Lush landscape and Filigreen Fram

Lush landscape and Filigreen Fram

Together the Tebbutts set out to stabilize the creek bank. Bringing the natural rhythm and energy back to the water would be the key to the riparian restoration. “Water is not meant to flow in a straight line,” Stephanie said. “There are unintentional consequences to forcing water in that way: flooding, bank erosion, and a wider, shallower summer creek bed with higher water temperatures unsuitable for nurturing new life.”

They began by planting willows and cottonwoods along the banks, and over a period of 18 years, experimented with an array of engineering techniques to stabilize what was considered one of the worst erosion problems in the county. Many of those early efforts failed, but eventually, Chris came up with a system to build jetties, or “nick points” to slow the creek in flood. The jetties were planted in fast-growing riparian trees and formed the basis for what would eventually become the flowform structure that enabled meander to return to the creek. Now the water would hit a berm, follow the curve, hit another berm, and follow the curve, depositing silt and topsoil from upstream at the back of the jetties, and scouring out deep pools in front, effectively changing the flow of the water back to that of a healthy creek.

In time, silt and soil built up along the banks and native weeds and woody plants moved in to capitalize on the new territory, thus providing habitat for the life we witnessed. Now this half-mile stretch of Anderson Creek is monitored by county and state agencies for its remarkable come-back.

As Stephanie explained this, I exclaimed “That’s what RSF is trying to do with money! We are trying to change the flow of capital so that it flows to the businesses and organizations that are creating a deep, positive social impact.”

With our current financial system, if we speak of the flow of water as the flow of capital, we could say the flow has been interrupted; it has been bulldozed and channeled straight. As a result, the flow is muddy and opaque and the wealth is removed from its origins and deposited far downstream.  When bad news hits, businesses lacking deep roots in the community are wiped out in a flash flood. As aggradation, or the displacement of sediments caused by repeat floods, alters geography resulting in shallow and dispersed water flow, a financial crisis erodes capital from communities and displaces it to far off investors resulting in less capital for local initiatives.

A healthy financial system can be seen as a healthy stream with its meander restored by the actions of the social finance community. Through direct lending, investing, and giving, RSF can contribute to restoring the natural flow of capital to businesses and organizations that encourage a healthy economy, environment, and people.

With a transformed financial system, we will directly invest in businesses and organizations with deep social impacts that encourage and support their communities. There will be diversity among these businesses and they will add value to their community by investing in people and practices that are good for society and the planet. The flow of capital will be patient and will settle into areas suitable for sparking new opportunities that, in turn, contribute back to the greater flow. More people will have access to and benefit from this flow, increasing the diversity of businesses and organizations. When bad news hits, it will not be a tragedy because our businesses and organizations will have established deep, healthy, community-based roots.

Now I ask you to ponder: What does it mean to you to transform the way the world works with money? How would that world be different than it is today? What needs to happen to make that change? And what can you do to contribute to it?

Tammy Childers is Loan Servicing Manager at RSF Social Finance.

Easter in the Investment Conference Room

March 28, 2013

At this time last year, RSF investor Rosemary Feerick, brought her two sons to our office to open their very own Social Investment Fund accounts. Later, she decided to share the story of her experience that day.

This essay was originally published in the Harvest Time newsletter.

by Rosemary Feerick

When we arrived at RSF Social Finance, Ellie, the receptionist, asked if we wanted a cup of tea.  It was the day after Easter, a day off from school for my sons.  I told the boys that we were going to San  Francisco to invest some of their college savings.

On the way to the city, we stopped at our credit union and withdrew money from a savings account I had set up for my eight year old son Ian. I gave Ian the check to hold in the car. He studied the piece of paper carefully. When we got to RSF Social Finance, he was still holding the check with care.

“I would like a cup of darjeeling, please,” Ian responded to the receptionist’s question.

“Darjeeling. Hmm. Let’s go see if we have some,” she offered, leading us into the kitchen.

Mark Herrera, RSF’s Client Development manager met us there. As Ian and Ellie focused on tea, Mark showed the composter to my 11 year old Roddy and explained what biodynamic sugar is. “These are some of the products made by the companies supported by the fund in which you’ll be investing,” Mark explained.

Next, he led us upstairs to the conference room overlooking the Golden Gate Bridge. We felt very important.

In the conference room, Mark gave the boys samples of organic cookies. Together they read the ingredients, all of which actually sounded like food. Then, Mark told the boys about a company that employs people who are newly released from prison. Next, he described with excitement a sustainable fishery in Alaska that is allowing the Eskimo people to keep their way of life. “These are more of the companies the fund you are investing in supports.” The boys nodded.

Mark then sat down with Roddy and Ian and explained the mechanics of the investment, making sure they understood how it worked and what the rate of financial return would be. Together they did the math to figure out what that translated to in terms of the boys’ investments.

Rose Feerick & Sons

Rose with her sons Ian and Roddy.

When Mark was satisfied that Roddy and Ian understood what they were getting into, he had them each fill out an application and sign it. Their accounts were officially open.

On one level, this exchange felt like no big deal; it seemed like how making an investment should work. But as I watched, another part of me wanted to celebrate. I was aware that what I was witnessing was the result of years of my searching for a different way with money.

Twenty years ago, I received a gift of love that came in the form of a financial portfolio. At the time, I understood little of how investments worked. But as I learned about the mutual funds in my portfolio, I realized that I was invested in companies whose products and ways of doing business offended my conscience. I searched for other models of investing and discovered socially responsible mutual funds.

Initially, I felt good about moving my money into those funds. But as I read through the prospectuses and annual reports, I soon realized that in spite of a variety of social screens I was still invested in companies whose products I would not buy. The socially responsible mutual funds I had in my portfolio felt to me like the lesser of two evils.

A few years later, I was attending a conference on Sabbath Economics when Rob Baird of Progressive Investments (now Portfolio 21) got up to speak about investing. He did not have any fancy visuals, but as he spoke, I felt as if fireworks were going off. Listening to Rob, I saw for the first time a way that investments could do something good in the world.

Up until then, I felt I had to hold on to some of my investments in order to care for my family. But I felt horribly conflicted about doing so because it felt that my money was sitting inside of a global economic system that is causing harm. As Rob spoke about different models of investing, a door to a whole new world opened for me. I started to search for investments that could do good.

I learned about investing in microcredit; in affordable housing mutual funds; in community development banks; fair trade companies; and social investment funds. I worked with Andy Loving, an advisor who shares my faith and began to move some of my money into those kinds of investments. When the financial statements came each month, I noticed how differently I felt opening the ones that came from investments I had chosen. Instead of feeling guilty, I felt excited. It felt like a privilege to participate in the work of fair trade companies and local organic farms.

Shifting to alternative economic models required that I let go of the possibility of a high financial return. Having been raised to believe that receiving a high financial return was “good stewardship,” that was hard at first. Didn’t I have a responsibility to seek high returns for myself and for my children?

But as I learned about the impact many corporations are having on the ecosystem and the human family, I came to believe that that definition of good stewardship was inadequate. Good stewardship, for me, needed to take into account the world that I am passing on to my children as well as the money that will eventually change hands. I wanted any investments that I participated in to be part of creating a world full of life.

On one level, my visit to RSF Social Finance to invest a portion of my children’s college savings on Easter Monday was simply the next step in my process of shifting the investments I manage into such vehicles. But that day in the conference room I felt as if something else was happening too. There was something there that felt holy.

As a mother, I feel a responsibility to form my children in Easter hope. I try to do that by modeling and letting my children know about ways of living that respond to the crises of this historical moment with alternatives that bring life. My children will inherit this world. For me, it is not enough to bring them to church. I feel I also need to show them how to discern where God is moving in the world and teach them how to participate in that.

That is what it felt like was happening that day at RSF. In the conference room, I sensed that my boys and I were participating in a way of investing money that brings life to everyone it touches. In addition, Mark’s taking the time to teach the boys about how their investment would affect others was powerful. It was as if he understood that giving children life-giving possibilities when it comes to money is a radical investment in the future.

As I witnessed the exchange, I felt a sense of awe and gratitude. I felt a Holy Presence with us as we sipped tea, ate cookies, and filled out investment account forms on Easter Monday.

Impact Investing for All

December 4, 2012

Earlier this year, Mark Finser, RSF Board Chair, had a lively conversation with Chris Mann, Guayaki CEO, and Matt Reynolds, Indigenous Designs President. Matt and Chris were energized about the RSF pricing meeting in which they had just participated and were enthused by the community spirit. They started asking several questions including: How can RSF borrowers better acknowledge their relationship with RSF? In what ways can the borrowers cross-promote their brands and support one another? How can the borrowers leverage their communities to raise more awareness about RSF and the Social Investment Fund, which allows individuals to make a return on their investment while providing loan funds to phenomenal social enterprises?

Chris and Matt’s spirited energy is something we always see following the RSF quarterly pricing meetings and community receptions.

There’s no question that RSF’s pricing meetings are unique. The three stakeholder groups in the RSF Social Investment Fund—investors, borrowers and RSF staff—come together to discuss the interest rate for the upcoming calendar quarter. As far as we know, this process is unprecedented in the world of financial services. What bank is out there asking investors what rate they should receive or inquiring of borrowers what a fair loan rate would be? But, it’s not just the discussion of price that makes the pricing meetings so revolutionary. It’s what happens during the meetings while the participants are sharing their needs and motivations. It’s the stories they tell about what led them to become an RSF investor or, as a borrower, what the RSF loan has allowed their social enterprise to accomplish. It’s community building around financial transactions. Through our expanding and engaged community, amplified by the impact of our borrowers, we’re building the next economy—one that considers everyone’s needs and restores trust in financial relationships.

After several discussions and brainstorms following up on Mark, Chris, and Matt’s enthusiastic conversation, we launched a Facebook campaign: Impact Investing for All. Along with Guayaki and Indigenous Designs, we’ve been joined by additional RSF borrowers: gDiapers, Happy Family, Late July, Mary’s Gone Crackers, and Nutiva.

Impact Investing for All highlights the RSF Social Investment Fund (SIF), in which anyone can become an impact investor with a minimum of $1000. All of the money in SIF is loaned to path-breaking social enterprises. If you open an account, you know where your money is working while you receive a financial return! (And, you’ll be invited to participate in the quarterly pricing meetings.) For the duration of the campaign, the borrowers will be promoting each other and highlighting this incredible community of social enterprises.

These participating social enterprises are passionate, inspiring, dedicated, and making a world of difference. We are honored to have them as part of our borrower community and we are all lucky to have such committed, mission-driven businesses in the marketplace.

Wondering if you should participate in the Impact Investing for All campaign by opening an SIF account?

Are you a mom or dad in love with the Happy Family lines which offer delicious and nutritious food for your kids? Or, are you a gMum or gDad, committed to your baby’s comfort and a healthier environment by going with disposable gDiapers?

Perhaps you’re gluten free and can’t get enough of Mary’s Gone Crackers? Or are superfoods your thing and Nutiva products a dietary staple? Do you appreciate delicious organic snacks and reach for Late July when you need a treat?

Maybe you’re a Guayaki yerba mate aficionado (we have a few on staff!)?

Is fair trade fashion a passion and Indigenous Designs a trusted purveyor?

Or are there other borrowers in our community you know and love?

If you’re interested in participating in building the next economy and know that direct, transparent and personal transactions are necessary for a resilient financial system, become an investor at RSF. All of the participating borrowers have offered generous discounts, so we have gift packages for those who open a Social Investment Fund account before Dec 31, 2012. The gift includes a $50 Indigenous Designs gift card, a $25 Happy Family basket, and much more! The gifts are limited – get yours today!

To learn more about the participating borrowers, check out the campaign page: here

To open an account, contact Mark Herrera at or 415.561.6160.


Building the Next Economy

October 8, 2012

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:

Guayakí Pioneers Market-Driven Restoration

Common Market Boosts Urban Access to Fresh Food, Helps Local Farms Thrive

Indigenous Sets Out to Remake the Apparel Industry

B Lab Seeds a Movement Toward a New Kind of Corporation

Strong Vision Helps Pine Hill Waldorf School Persevere and Lead

RecycleForce Keeps Electronic Waste Out of Landfills and Ex-Felons Out of Prison


Strong Vision Helps Pine Hill Waldorf School Persevere and Lead

September 24, 2012

Building the Next Economy

Fire is a defining element for Pine Hill Waldorf School—as both metaphor and history. In a sense that’s true for RSF as well.

The old New Hampshire farmhouse the school had occupied since shortly after its founding in 1972 burned to the ground in 1983. Determined to rebuild, the school formed a fundraising team. Among those they approached was Siegfried Finser, who at that moment was reviving the Rudolf Steiner Foundation (now RSF Social Finance) as a social investment vehicle.

“Our situation ignited the rebirth of RSF,” says Arthur Auer, then a Pine Hill teacher and now director of the Antioch Waldorf Teacher Training program, located during the summer on Pine Hill grounds. “Forces and people coalesced and created a comprehensive school master plan and one of the most striking examples of Waldorf school architecture in the U.S.”


“I saw an education for children where their whole beings were tended to and cared for—bodies, minds, spirits—and people coming together who all wanted that,” recalls Sherry Jennings, who has been a Pine Hill teacher from the beginning. “I was very inspired to tend that flame.”

She notes that Pine Hill was at the forefront of a surge of interest in Waldorf schools, which numbered only about a dozen at the time, most of them started in the 1940s. “Parents were looking for a new kind of school community, where they could be part of it and have connections with other adults who shared similar values.”

A similar “hunger” arising again today gives the school fresh inspiration, she says. “We’re coming full circle, in a way. I see that parents are really longing for deep connections.”


That intense parent connection to the school was an important aspect of an innovative $1.1 million rebuilding package that included $500,000 in pledge loans and loan guarantees through the newly minted RSF and an innovative parent bond program. To spread costs, parents of new students were required to purchase a $1,000 bond that could be redeemed upon graduation; at that point many opted to donate their bond to the school, producing an ongoing asset-building stream.

With Pine Hill as a model, RSF has continued to support Waldorf schools, not only by providing capital but also by helping them to build communities willing to commit financial and other resources to a project’s success.

At Pine Hill, the school community also was integral to designing the new building. The architect interviewed teachers, friends, parents and children, and the children drew pictures of what they thought the building should look like. The result was a building that appears to emerge from the land itself.

“We wanted the building to arise out of a sense of place in the forest, on that granite hilltop,” Auer says, “and we wanted it to be not just environmentally friendly but also to fit into the environment. Its main gesture is a big heart of an auditorium in the center and two classroom wings embracing the children as they stream into the building.”

The auditorium was completed several years later in a second building phase, and unbelievably, a second fire struck as the last coat of finish on the stage was drying. It destroyed the auditorium and damaged both classroom wings. Insurance covered the cost of rebuilding, but “that fire was extremely painful,” says Auer. “That building was built with love by a whole team of parents.”

Now Pine Hill is building again, and again with help from RSF. The Children’s Village, an early childhood education center that fulfills the school’s master plan, is taking shape next to a biodynamic community farm. “We’re really excited about The Children’s Village,” says Jennings. “This is a space where we can protect and honor the needs of the really young child. We’re also doing publicly accessible parent education, which is a way to contribute to the whole community.”

Pine Hill child care center


“Without RSF we would not have been able to develop as full a master plan and model school,” says Auer, adding that the impact is not just local: The Children’s Village speaks to other Waldorf schools about the value of establishing their own early childhood education centers.

“One could become very anxious about taking such a risk in a recession,” Auer says. “But I think The Children’s Village is the right decision, to have the courage to go outward and serve the community. Others might say this is not the time to do it, but we are not doubting. Having gone through two fires has proven that Pine Hill has a strong body of life forces. I always have had confidence that those forces will prevail and bring us through to another new phase.”


Organization name Pine Hill Waldorf School
Impact area Education & the Arts
RSF relationship Loan recipient, RSF investor
HQ Wilton, New Hampshire
Annual budget About $2 million
Employees 20+
Students 180 children, 125 teacher trainees (summer campus)
Communities served Local area and Waldorf education nationally


B Lab Seeds a Movement Toward a New Kind of Corporation

September 14, 2012

Building the Next Economy

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.


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.”


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.”


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.”


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)



Common Market Boosts Urban Access to Fresh Food, Helps Local Farms Thrive

September 6, 2012

Building the Next Economy

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.


“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.”


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.


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.”


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)


Guayakí Pioneers Market-Driven Restoration Business Model

August 27, 2012

Building the Next Economy

“We had this incredible product—yerba mate—that gives you the strength of coffee, the health benefits of green tea and the euphoria of chocolate. We thought if we work with people on forest projects we can make the mate be the driver for reforestation, and inspire other companies to do similar work,” says Guayakí founding partner Chris Mann, describing the genesis of the company’s pioneering “market-driven restoration” business model.

California-based Guayakí sells the stimulating rainforest plant as a loose-leaf tea and in canned and bottled drinks. The company partners with farming communities in South America’s Upper Paraná Atlantic rainforest to produce shade-grown organic yerba mate and to reforest their land with native hardwoods, and it pays a premium to support living wages, healthy working conditions and community development projects.


Co-founder Alex Pryor introduced the four other Guayakí founding partners to yerba mate in the 1990s, when he arrived in the California central coast college town of San Luis Obispo from Buenos Aires toting a traditional gourd cup for the hot brew—favored over coffee by a wide margin in several South American countries.

Yerba mate is mostly cultivated on industrial farms in full sun, but it is native to the canopy of the Upper Paraná Atlantic rainforest, which stretches across Argentina, Paraguay and Brazil. When Guayakí’s founders started their business in 1996, they thought they would help preserve the rainforest—one of the world’s most endangered—by giving local communities a way to make a living from it without cutting down trees. A few years in, faced with a map showing 95 percent deforestation since 1900, they realized that preservation was not enough.

“We needed to develop a model for how they could get paid to plant hardwood and nurture it,” Mann says. “We were really surprised there weren’t many people doing restoration. The timber companies were planting monocrops to cut down again. One of the large conservation groups had a project, and there were a few smaller-scale research things, but we didn’t find any market mechanisms.”


Guayakí’s market-driven restoration model, developed in pursuit of a mission to restore 200,000 acres of the Upper Paraná Atlantic rainforest and create more than 1,000 living-wage jobs by 2020, involves cultivating relationships with indigenous communities that often have had “hellish” experiences with outsiders, Mann says. “It’s little by little, building that trust network and educating the community on what we’re trying to do, and listening and being educated on what’s working for them and what they want to do. It’s a slow process,” he says.

Guayakí made steady progress and by 2008 it was delivering on its mission. Revenue was at about $8 million a year—but the company was losing money. “We’re competing with a lot of brands that are just trying to grow market share as fast as possible, which means paying distributors and giving away tons of product,” says Mann. Guayakí needed more capital to thrive, but the founders wanted to maintain control of their business—and their mission—and banks weren’t lending money to pre-profit companies at the depth of the recession. “We were in the lurch,” Mann says.

RSF Social Finance had just launched its Mezzanine Finance fund to fill precisely this sort of funding gap: growth capital for social impact businesses that don’t want to take on more equity partners and aren’t seeking a quick exit. When RSF stepped up with $500,000, Guayakí was able to roll out its canned beverage line, develop its small-store delivery distribution model and build inventory.

In addition to its financial relationship, Guayakí is engaged with RSF to advance thinking on business structures and practices that respond to community needs and are sustainable in the long term. For example, Mann has participated in RSF meetings that bring together investors and borrowers to discuss and recommend interest rates. The last pricing meeting session was inspiring, he says: “If you create a system that’s not based on every single person having to maximize, there’s room for everyone to do well.”


Guayakí’s moves with the RSF capital infusion paid off, and the company was profitable on $15 million in revenue in 2011. With its strengthened financial position, Guayakí now qualifies for RSF’s Social Enterprise Lending Program and has a $1.9 million line of credit.

The company is about 15 percent of the way toward its 2020 goal, providing about 150 jobs (including 35 U.S. employees) and restoring 30,000 acres of forest. Because of the carbon those new trees capture, purchasing one pound of Guayakí yerba mate tea reduces atmospheric CO2 by 1.26 pounds, according to a third-party life-cycle analysis.

“A core aspect for us is providing a dignified way of life and dignified working conditions” in indigenous communities, says Mann. In the U.S., he adds, “we’re really passionate about the need to create local living economies. There is no business if there is no community.”


Company name Guayaki,
Impact area Food & Agriculture
RSF relationship Mezzanine Finance (2009), Social Enterprise Lending Program (current)
HQ Sebastopol, CA
Revenue about $15 million (2011)
U.S. employees 35
Communities served U. S., Canada, and south-central America


Social Finance

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