The RSF Social Finance fellowship is missioned with growing the field of social finance, one cohort of thought leaders at a time. During their time at RSF, fellows work closely with the lending team to identify prospective borrowers, conduct due diligence, and structure loans. In this blog post, former fellow Stu Fram (2014-’15), now a lending associate at RSF, talks to interviewer Enrique Perez about his experience in the program. Stu also provides insights into his changing views of money and what it means to be an investor.

Enrique: What made you consider becoming an RSF Fellow? What about this experience called you?

Stu: When I applied, I was in a place of transition. I was one year in to a two-year position at a foundation called the High Meadows Fund, which makes grants to environmental non-profits throughout the state of Vermont. I remember having a conversation with a grantee who was originally from the Bay Area. I asked her about organizations doing cutting-edge work there, and she mentioned RSF. I think that primed me.

I was on the RSF email list at the time, so when the announcement about the fellowship passed through my inbox, I was inclined to give it a second look. RSF struck me as a dynamic organization doing interesting work in both the for- and non-profit sector. It seemed like a great learning opportunity, especially since I was grappling at that time with my understanding of what role capital should play in addressing social and environmental issues.

What’s one memory that comes to you when you think about your time as a fellow?

Feeling overwhelmed! I felt a bit like a fish out of water. Many of the fellows that go through the program have financial backgrounds. I did not. Lending and credit risk were new languages for me. Having come from the grant-making world, most of my thinking up to that point required focusing on social and environmental return; I hadn’t had to consider the question of repayment.

It’s easy to idealize the work being done by values-aligned companies. Prior to starting the fellowship, I hadn’t given much thought to what actually enabled social enterprises to accomplish their important work or where lenders like RSF fit in to the equation. How do you factor things like customer concentration risk, ability to service debt, collateralization—all in the context of mission? These concepts were pretty foreign to me.

Something a little more tangible that stands out from my time as a fellow was the mentorship of my supervisor, Mike Gabriel. He was incredibly patient, and taught me much of what I now know about financial analysis.

Tell us a little bit about what you do now.

I now work full-time as part of RSF’s Social Enterprise Lending team, focusing primarily on enterprises that advance ecological stewardship. I work with companies and organizations in need of financing, and do a first pass to determine whether they’re a good fit from both from a mission and financial perspective. I also cultivate and steward relationships we have with existing borrowers.

Has your understanding of money changed since joining RSF?

Prior to the RSF fellowship, it never occurred to me to think critically about how we’re using money as a society. I thought of it primarily as currency, a component of transactions. Something you earn and spend. Working at a foundation helped me realize philanthropic capital, deployed strategically, can have a lot of influence and serve as a powerful tool for engendering social progress. The fellowship also helped me appreciate the role debt can play as well.

At RSF, there’s an element of intentionality that goes into financial transactions beyond anything I had previously thought possible. It’s been profound and humbling to consider money in that new light, and to work with people thinking creatively about how to leverage money for good.

How did you view investors before being a fellow?

Generally, investors were people who tried to maximize financial return.

How do you view them now?

Now I view many of them as people who seek to align their money with their values. Investors in the Social Investment Fund (SIF), for example, are not in it to make a killer return. The primary reason many invest in SIF is for the social and environmental return.

Those factors are inherently more difficult to measure, at least from a quantitative standpoint. But I think it says a lot that more people are willing to forego a market rate of return to support a movement elevating these other factors. It’s a privileged thing to be able to do, for sure, but I think in the coming decades we’ll realize our economic system has been largely built under the false pretense that it’s okay to exploit the planet and its people as long as we’re maximizing shareholder value. That’s why the work our investors and borrowers are doing is so important, and that’s powerful to me.

Are you an SIF investor?

I am, and it feels good to have some skin in the game.

Stu Fram

Where do you see the field of social finance headed?

I think it’s only just picking up speed. As impact investing gains cachet in the conventional finance world, my sense is more and more people are going to begin demanding options that allow them to feel good about where their money is and what it’s doing.

Here at RSF, we’re trying to do our part by creating more flexible forms of capital and by engaging partners like foundations with new ways of investing and giving. There’s a lot that needs to happen, and RSF is only one player in a vast ecosystem. But the field is growing, and it’s fun to be along for the ride.

Article by Enrique Perez. Enrique Perez is the former Marketing Manager at RSF Social Finance.