September 30, 2016; Forbes
Social enterprises—for-profit businesses with a social purpose—can face a tough road in securing startup funding through regular bank loans, especially when building a business model that requires a relatively low profit margin. Think about eco-friendly food production, for example. The higher cost of sustainable farming, green transportation, and innovative supply chain structures can cut into the margin enjoyed by conventional producers, and make the sustainable farm less competitive in the eyes of major banks.
Forbes reported Friday on a nonprofit loan-maker aiming to help sustainable farms and other social enterprises through loans, grants and investments. RSF Social Finance runs an integrated capital funding program, using various forms of assistance: loans, grants, loan guarantees, investments and advisory support to social enterprises. These blended funds allow enterprises to develop production processes and get off the ground before seeking traditional financing.
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RSF’s first blended fund, the Local Food Capital Collaborative, served as a pilot for the organization’s integrated capital blended funds program, moving approximately $2 million into the sustainable food industry in its first two years. The fund has, thus far, supported over 40 early-stage social enterprises, according to Forbes. Another example of RSF’s work is the Women’s Capital Collaborative, which provides funding to female entrepreneurs.
A more recent funding initiative, the Soil Health Capital Collaborative, intends to provide $1 million to sustainable farming ventures. Grass Roots Farmers’ Cooperative, a 13-farm co-op supporting sustainable farming, will be the first recipient of the Soil Health funds. Grass Roots was launched through a web of financial support: the collaborative also received venture funding through RSF’s Local Food Capital Collaborative along with startup loans through Heifer International.—Lauren Karch