First two investments: to expand regional food hubs; provide upfront capital to contractors owned by women and people of color
The Surdna Foundation’s Board of Trustees has approved the creation of an $18 million Program Related Investment (PRI) revolving fund to support its mission of fostering just and sustainable communities in the United States by using its capital to create economic and social value. The foundation also announced an investment from the Fund to support the growth of regional, sustainable, and just food systems.
The PRI Fund allows Surdna to make fuller use of its financial resources by expanding beyond the 5 percent share of net assets, on average, it invests in generating program outcomes. And if the principal from these below market rate investments is paid back, as expected, the foundation could extend its social impact by reinvesting the capital into new PRIs or grants.
The Fund’s creation is the result of a decision by the board of the 97-year old, family foundation with a deep commitment to social justice, to amplify the impact of its work by exploring innovative ways of deploying Surdna’s philanthropic resources including capital, revenue, staff expertise, and leadership.
“Our goal is to extend the impact of Surdna’s grantmaking strategies. We know that, in addition to grants, we can help achieve greater impact, and collaborate in new ways to accelerate our mission by using market forces to drive social change,” said Phillip Henderson, President of the Surdna Foundation. “Providing funds at below-market rates, can be particularly useful when capital is needed to start-up, grow, or sustain a social enterprise, or when results cannot be achieved with grants alone.”
Surdna’s second PRI, announced today, is a loan of $750,000 to RSF Social Finance, a nonprofit financial services organization, to capitalize a loan program to supply lines of credit and equipment loans to help food hubs expand their aggregation, distribution, and processing systems so that they can supply healthy food profitably to new markets, including underserved communities. Learn more about our investment in RSF.
“We have seen a huge need for debt financing for social enterprises working to connect farmers to institutional buyers and Surdna’s investment enables us to increase our funding to organizations that would otherwise be turned away,” says Taryn Goodman, Director of Impact Investing at RSF.
The foundation’s first PRI, completed in February, was a $700,000 low interest loan to BOC Capital Corp, a small business development organization, in partnership with Goldman Sachs 10,000 Small Businesses, to capitalize a $3.5 million loan program to connect businesses owned by people of color and women in New York’s construction industry to the short-term capital they need to complete subcontracts, including those awarded through the City’s post-Sandy Build It Back program.
“Surdna Foundation’s investment in BOC Capital is helping to expand resources to enable a growing number of small, minority-, and woman-owned contractors to access economic opportunities,” said Nancy Carin, Executive Director, Business Outreach Center (BOC) Network. Learn more about Surdna’s investment in BOC.
“Through a partnership between Goldman Sachs’ 10,000 Small Businesses initiative and the Surdna Foundation, we were able to launch an innovative fund to help small business owners in the construction industry access working capital to grow their businesses and create jobs, ” said Dina H. Powell, head of the Goldman Sachs Urban Investment Group and President of the Goldman Sachs Foundation. “We’re pleased to collaborate with Surdna and support their mission to build stronger communities and local economies.”
“We hope the organizations Surdna supports will become more attractive to conventional investors who might otherwise be deterred from investing in them,” said Surdna’s Henderson. He explained that Surdna’s use of PRIs helps to encourage investees to strengthen their business practices—improving cash flow, building financial capacity, creating a track record—that can in turn improve their ability to attract capital from private sector investors seeking market rate returns.
“Surdna is demonstrating how foundations of any size, or any type, like a family foundation, can maximize their impact through the innovative use of capital. I expect these investments will encourage other foundations to look for similar ways to raise the level of investments in their communities,” commented Peter Berliner, managing director of Mission Investors Exchange, a membership organization where philanthropic innovators exchange ideas, tools, and experiences to increase the impact of their capital.
PRIs, which are typically loans or loan guarantees, are designed to generate both a social and a financial return. Like grants, they are made to achieve specific outcomes such as creating condition for good jobs or expanding food hubs that fulfill a foundation’s programmatic goals. Unlike grants, they are expected to be repaid, often with a modest return on investment. Once repaid, the money can be recycled into new charitable purposes, extending the reach and impact of the foundation’s programs.
Surdna intends to use its PRI Fund, in part, to augment grant awards with below market rate loans or guarantees when there is an opportunity to increase programmatic impact and or scale. The foundation may also invest in financial intermediaries like Community Development Financial Institutions which facilitate access to capital and other resources to enterprises in underserved markets.
About the Surdna Foundation
The Surdna Foundation seeks to foster sustainable communities in the United States — communities guided by principles of social justice and distinguished by healthy environments, strong local economies, and thriving cultures. For five generations, the Surdna Foundation has been governed by descendants of John Andrus and has developed a tradition of innovative service for those in need of help or opportunity. Learn more at www.surdna.org
Media Contact:
George Soule | Director of Communications
gsoule@surdna.org
212.557.0010
