By Deb Markley
It is clear
from our work on the ground that creating a more prosperous, vibrant community
is a team sport! It takes many players whose visions converge to create
businesses, jobs and wealth that make our communities more sustainable over
time. Increasingly, those interests converge around impact investing – “investments made into companies, organizations,
and funds with the intention to generate measurable social and environmental
impact alongside a financial return”1. Impact investing has received
much attention over the past years, especially with the Ford Foundation’s announced
plan to commit $1 billion from its endowment to mission-related investments
and the Kresge Foundation’s $350
million commitment to social investments. For the place-focused foundation
partners we work with, local impact investing presents new opportunities but
also some challenges. What exactly is it? How might community foundations get
involved? What does impact investing look like?
To
contribute to this conversation, here’s a story about impact investing with
three central actors – the Jessie Ball duPont
Fund, a philanthropy established to invest in places and organizations important
to the late Mrs. duPont; Virginia Community Capital, a
community development financial institution (CDFI) working to make a difference
in underserved communities in the state; and the Haynie Family Farm in
Reedville, VA, a multi-generational family farm established shortly after the
Civil War by the Rev. Robert Haynie, a freed slave and first African-American
landowner in his Northern Neck (Virginia) county.
The Haynie
Family Farm has grown far beyond the acreage and vision of its founder. Three
generations of the Haynie family now farm thousands of acres of farmland
scattered across several counties. They also operate several small businesses. However,
agriculture is a challenging business. In some ways, the story
of the Haynie Family Farm is not unlike that of other farm families who make a
living in an unpredictable and sometimes harsh industry. But, there’s more to
the Haynie story.
As
African-American farmers in the south, the Haynie family experienced challenges
that white farmers did not. The story of Ricky Haynie, who now farms the land
with his son, and the discrimination he faced trying to access capital and
other support through the USDA was chronicled in 2004 in the Washington
Post. The financial ruin inflicted upon the family by an institution
charged with helping farmers is difficult to accept. But, the family survived.
In 2014, the family knew they needed financial assistance and they needed a
partner who would help them keep the family farm vibrant for the next
generation.
Enter the
other two actors in our story. First, the Jessie Ball duPont Fund who cared
about the Northern Neck of Virginia, the site of Mrs. duPont’s childhood home. After the 2008 recession, the Fund leadership
began to think about how they might deploy investment assets along with grant
dollars to help communities that were suffering economically. As Sherry Magill,
CEO & President, was quoted in a recent Fund
report, “Could we invest a portion of our portfolio in local places and receive
a social as opposed to a market return?” In 2011, trustees agreed to set aside
$10 million from the funds endowment for Program
Related Investments. PRIs are made by foundations to support their
charitable activities – in this case, to expand access and create opportunities
in communities that Mrs. duPont cared about. The key difference between a PRI
and an outright grant is that the foundation expects the investment to be returned
at some point. As foundations move into the local mission-aligned investing space,
they are looking for the right partners who can use investments to further the
foundation’s mission.
That’s where
Virginia Community Capital enters the story. VCC works throughout the state to
provide both capital and advisory services to businesses, housing developments
and other investments that have a positive impact on communities. As a CDFI,
they are particularly focused on bringing their capital and services to people
and places that have struggled to gain access to capital. In VCC, the Jessie
Ball duPont Fund found the right partner. In 2011, VCC received a $1.5 million
PRI from the Fund to support economic development efforts in low- or
moderate-income communities, including the Northern Neck.
In 2014, VCC
made a loan to the Haynie Family Farm, drawing on resources provided through
the PRI, enabling the family to take the next steps toward a more stable and
sustainable future. They found the right financial partner in VCC, who through
a PRI from an enlightened philanthropic
fund, was committed to the Northern Neck area. The impact of the loan is
measured beyond the financial return on investment. It helps to strengthen a
multi-generational family farm and increase the odds that it will be around for
the next generation. It helped to create or retain 35 jobs directly associated
with the farm and its operations. It maintains a vital business in the region. And,
its helps to restore some faith that capital access decisions can be based
solely on merit and not race.
This is a
story about a series of value-added relationships where the right mix of
ingredients (aka partners) resulted in a recipe for successful community
prosperity. VCC helps the Jessie Ball duPont Fund achieve its impact investing
objectives and put endowment dollars to use helping communities. The Fund
provides needed capital that helps VCC strengthen its commitment in the
Northern Neck region. And, ultimately, VCC deploys the Fund’s investment to
help the Haynie family strengthen their farming operation and their place and
impact in the community.
This story
illustrates one path that foundations may choose as they consider a role in local
impact investing – finding a trusted, mission-aligned CDFI partner to help
deploy investment dollars. Did you follow a similar path or blaze another? How
are you engaged in impact investing? I’d like to hear your stories!
1
A Short Guide to Impact Investing, Case Foundation.
Deb Markley is Co-Founder and Managing
Director of the Center for Rural Entrepreneurship and Senior Vice President of
LOCUS Impact Investing. Join the LOCUS mailing list to learn more about local
investing for impact.
Our next blog will feature a
foundation story of local investing for impact.
