Loan Program Informational Meeting that describes the process for moving forward with the introduction of available capital for entrepreneurs that would augment traditional financing streams.

1. May 28, 2014
Loan Fund
Informational Meeting

2. Agenda
I. Introductions
II. Community Foundation Overview
III. Impact Investing and Legality
IV. Planning Roadmap and Implementation
V. Case Studies
VI. Discussion
Loan Fund
Informational Meeting

3. Foundation Finances
$9.8
Million
$7 Million
$300,000
Investment Pool
Endowment
Grantmaking
The mission of the Community Foundation of South Lake is to provide
leadership to enhance the quality of life in South Lake County by
identifying community needs and seeking philanthropic support as
permanent funding to meet those needs.

4. Community Foundation Business Model
Old Model New Model
Traditional
Investments
Investment
Income
Community
Impact
Grantmaking
Traditional
Investments
Impact
Investments
Community
Impact
Investment
Income
Grantmaking

5. “The way we deploy capital and the assumptions and approaches we
use to do so can in themselves make a difference. We plan to invest
100 percent of our endowment—as well as other forms of capital—for
mission. Beyond money, we are obligated to deploy all of the resources
at our disposal—capital, revenue, ideas, talents, influence, and natural
allies—toward the broad, multi-sector approach, which will be
necessary for the pursuit of goals that are, admittedly, much bigger
than those we have pursued in the past.”
- FB Heron Foundation
Impact Investing

6. “by providing innovators and entrepreneurs from both the for-profit
and not for profit sector greater access to capital, they will develop and
create facilities, products, and services that will meet the needs of
people and communities not adequately served by the existing
marketplace. Neither new nor novel, impact investing is a tried and true
set of practical tools that can complement your established programs
and strategies. Impact investments are being used by foundations of all
types and sizes, national and regional, local and urban.”
- Community Foundation Field Guide to Impact Investing
Impact Investing

7. A geographically specific stream of capital intended
to augment traditional financing available from
banks, venture capitalists, and equity investors.
Loan Fund

8. Legality of Impact Investing
IRS Guidelines state, Program Related Investments are those in
which:
1. Primary purpose is to accomplish one or more of the
Foundation’s exempt purposes
2. Production of income or appreciation of property is not a
significant purpose
*Aspen Institute, Supporting Economic Growth and Entrepreneurship

9. Legality of Impact Investing*
Loans must have some form of social purpose:
• Any non-profit entity
• Creating jobs in economically distressed areas
• Creating/retaining/improving jobs for low-income workers
• Low-income business owners
• Diversifying the local economy to promote economic
stability
• Critical community issues (e.g. healthcare, food, energy)
*Aspen Institute, Supporting Economic Growth and Entrepreneurship

10. Legality of Impact Investing*
Rates and terms must reflect charitable intent:
• Below market rates for the risk incurred
• Must fill a financing gap
Reasonable expectation of repayment
• Due diligence
• Collateral (below bank standards)
Appropriate servicing and collecting
*Aspen Institute, Supporting Economic Growth and Entrepreneurship

11. Planning Roadmap*
• Identify Champions
• Determine goals,
success measures
• Foster program and
finance team
• Engage Committee
and financial
advisors
• Assess interests
• Investment
Policy
• Determine deal
size & structure
• Determine credit
culture: risk
tolerance,
pricing,
performance
benchmarks,
intermediary vs.
direct investment
• Internal
education
• Deal sourcing
• Financial due
diligence
• Deal approvals
• Legal structure,
documentation
• Portfolio
monitoring,
reporting
• Financial
performance
• Social impact
innovation
• Leverage
collaboration
• Evaluation,
learning,
reporting
• Communication
Initial Strategic
Planning
Operating
Systems Design
Program
Management
Impact Investing
Policy Decision
*Developed by Lisa Richter of GPS Capital Partners

12. Phased Implementation Plan
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Monitoring
Develop budget
and
implementation
plan with timeline
and structure
Develop lending
criteria, policies,
tracking software,
loan products, and
legal documentation
Develop initial
business plan to
include marketing,
funding, legal
framework, and
loan request flow
chart
Prepare and
underwrite
first loan
Develop
application form,
evaluation tools,
invoicing system,
and present
findings and
recommendations

13. Organization Structure Investments Funder Established
Marin Community
Foundation
501c3,
Managed In House
Non-profit Loans
Investment Pool,
DAFs
1994
Social Enterprise Fund
Separate Limited
Partnership
Social Enterprises
Private and Public
Investors
2010
Innovation Fund
America
501c3,
Managed In House
High Tech Startups Private Donations 2011
Arizona Community
Foundation
501c3,
Outsourced
Non-profit Loans Bank CRA Loans 2013
Case Studies

14. Investor Asset Class Amount Investee Org Type
Grand Rapids
Community Found
Loan $462,000 Dwelling Place, Inc 501c3
Community
Foundation of
Jackson County
Loan $500,000
Jackson County
Learning Center
501c3
Seattle Foundation Note $1,000,000
Enterprise
Community Partners
Intermediary/CDFI
Rhode Island
Community
Foundation
Equity Converts to
Debt
$2,000,000
Neighborhood
Health Plan of RI
For Profit
Greater Cincinnati
Foundation
Equity $500,000 CincyTech USA
Public/Private
Investor
Case Studies

15. How is success defined?
Who is eligible for a loan?
How can the business community be supportive of
this idea?
What risks has the business community identified?
What are potential challenges to overcome?
What are potential funding sources?
Questions