New fund aims to help Island nonprofits and social enterprises grow
A new Island-focused investment fund has been launched to fill the funding gap for social enterprises and nonprofits who want to expand their reach and implement innovative programs that help the community.
The Thrive Impact Fund, launched by Victoria-based Scale Collaborative, which provides nonprofit organizations with coaching and consulting services, will offer a variety of funding options for social enterprises and nonprofits that had to go beyond traditional financing options. .
Thrive’s ultimate goal is to establish a $ 10 million grant that will fund 10 to 15 projects each year with loans ranging from $ 50,000 to $ 400,000. About $ 1 million has been secured and Thrive is wooing investors.
Kristi Fairholm Mader, Director of Scale and Head of the Thrive Impact Fund, said she is looking for institutional investors, foundations, family organizations and high net worth individuals looking to have a greater impact with their investments. The fund will pay an annual dividend.
Fairholm Mader said the company is designed to help social and nonprofit enterprise groups remove barriers such as collateral requirements that prevent them from accessing capital through traditional lenders.
She said the fund will provide start-up capital that will allow organizations to grow, establish programs and income sources, and eventually start repaying loans and accessing larger deals.
“Social impact organizations don’t have access to equity, which for many businesses gives them space and time to grow and generate income to pay back investors. “
Instead, Thrive may offer a loan that is paid back through a revenue share or through a flexible schedule that only waits for payments a few years after the transaction begins, in which case the payment amounts are higher and more frequent, and are reimbursed. the main unpaid.
Fairholm Mader said it’s the right capital in the right place at the right time, adding that the company has already learned that it will need to be flexible in how it applies its funding models and terms to each client.
The idea for the fund came to Scale Collaborative after years of seeing groups with great ideas that took a long time to fundraise to get started.
Fairholm Mader said that since it is a fund rather than a financial institution, it has flexibility in how it lends money. “This allows us to co-invest with more traditional funders and to take part of the risk. The risk is actually very low, she said. “The capital barrier is a perception of risk rather than real risk. “
Fairholm Mader said the track record of nonprofits that repay loans is excellent.
“They are very risk averse, very stable and thoughtful when taking funding,” she said, adding that because they work in the community, their work relies on their reputation and relationships.
To be eligible for this type of funding, social or nonprofit businesses must demonstrate that they are creating positive social, environmental or cultural benefits on Vancouver Island, although Thrive also considers the positive economic impact. and job creation.
Thrive is a permanent fund, intended to last for the long term, and when the funds are repaid, they are redistributed to other organizations in the form of new loans.
“We reinvest these dollars continuously, so a dollar can be invested three times in the first quarter,” she said.
© Colonist of the time of copyright