Invest for Impact? Lend to Local Nonprofits

Most place-rooted foundations use only their grantmaking to help local nonprofit programs and organizations do their critical work in the community. Not the Marin Community Foundation (MCF). Recognizing that short-term grants may not be the best tool to help bring about change on a long-term issue, MCF is now also providing loans and using its investment portfolio to strengthen nonprofit capacity.

Marin County, just north of the Golden Gate Bridge, is well-known for its beauty and affluence, but less known for its higher-than-average poverty rate (19%) and wide income disparity. A few years back, MCF noted that area nonprofits were struggling to sustain their efforts to address the challenges related to family poverty, the environment and other priorities. In analyzing the situation, MCF realized that local non-profits had trouble accessing traditional commercial debt – often because commercial banks’ considered the nonprofit sector too risky. At the same time, MCF had a growing list of donors with donor advised funds who cared about producing “triple bottom line” results with their giving. These donors also had a longer-term perspective; they knew that getting enduring equity, economy and environment results takes time. So the Foundation engaged these donors and other partners to create a loan fund – now at $20 million – to meet the financing needs of critical nonprofits in the region. In just 10 years, MCF can tally 800 affordable homes, hundreds of acres preserved, and new domestic violence and arts programs as results of its nonprofit lending.

Not only has MCF lending helped these organizations build capacity, restructure when needed, and acquire or rehabilitate sites (with a 0% default rate), but the Nonprofit Loan Fund is now one of the six impact investment pools that MCF’s donors may choose when they give to MCF. Offering this option puts significant donor resources beyond grantmaking right back in the community. Marc Rand, MCF’s Program Director for Loans and Affordable Housing, shared the genesis, design and lessons from MCF’s lending and investment pool approach – now being researched and replicated in other places – in an in-depth session during our recent Advancing Economic Success: Community Foundations Building Family, Community, and Regional Prosperity workshop.

Watch Marin Community Foundation’s Presentation | Download the Slides | Access the Presentation Handouts

Voices from the Field

Paul Major, President of the Telluride Foundation, talked about the Telluride Venture Accelerator in an article by Elizabeth Kraus, Boulder, CO entrepreneur and angel investor:

“Funding for-profits is a way for us to enhance our economic impact in Telluride and retain high-quality human capital to benefit our entire community.” 

Learn more about the Telluride Venture Accelerator.

Partnership Activities

The Aspen Institute Community Strategies Group and the Center for Rural Entrepreneurship are committed to providing more opportunities for peer exchange and learning around community development philanthropy (CDP). Step one? Sharing the stories from our recent Advancing Economic Success workshop with a wider audience. Each month, this newsletter will feature one strong CDP story and alert you to other resources. And, we’ll keep you posted on our own partnership activities – where we are, what we’re planning and how we hope to help you advance your CDP practice. If you want to see how we are defining CDP, click here.