When evaluating a financial arrangement with a social enterprise, funders should simultaneously consider how their non-financial resources may also serve the needs and objectives of the borrowing organization.
We really fell in love with RSF because of their passion for social enterprise and their willingness to partner with us on this journey, rather than just being ‘the bank
Traditional funders are inward-looking when assessing how to support a social enterprise (i.e., “Can we do it?” rather than “How can we help?”), and often underutilize non-financial resources.
RSF Social Finance, based in San Francisco, uses an “integrated capital” approach to coordinate the use of different forms of financial capital and non-financial resources to support enterprises working to solve complex social and environmental problems. By taking a holistic approach to its relationships with social enterprises, RSF Social Finance can help organizations not only obtain funding but also advisory support, loan guarantees, or grants depending on its needs and stage of development.
Belay Venture Partners is an organization based in Aurora, Colorado that creates businesses to employ and job train individuals rebuilding lives from addiction, prison, and homelessness. In 2016, the 20-year-old nonprofit was in need of a larger physical space. When Belay approached its bank, however, about acquiring property, the bank required a traditional 30% down payment. Affording that much upfront cash was not feasible for the organization. Belay then connected with RSF Social Finance. The social finance lender offered a creative financial arrangement: RSF would provide Belay with a $2 million loan if it could capitalize the remaining $900,000. To aid Belay in reaching this goal, RSF made network introductions and took on the task of drafting loan agreements for each new deal partner. Successfully, Belay raised $250,000 through donations and found five Denver-based organizations willing to provide secondary loans.
How it applies to your city:
Supporters of social enterprises and funders, in particular, should consider how to blend the many different forms of capital at their disposal—be it human, social, or financial. Lead funding commitments, network contacts, and technical expertise can all play key roles in creating innovative funding structures that strengthen partnerships, reduce financial risk, and meet the needs and objectives of an organization carrying out socially beneficial activity in the community.