RSF Local Initiatives Fund
This article was originally published in the Fall 2014 RSF Quarterly.
by Catherine Covington
Earlier this year, I was encouraged to take on the challenge of conducting RSF’s first-ever feasibility study. The study took place in the spring and focused on laying the groundwork necessary to expand and deepen the potential of the RSF Local Initiatives Fund (LIF). More than 10 staff members pitched in to help plan for and conduct 35 external interviews during which we solicited feedback about the LIF and sought advice on the prospect of a capital raise. Now that the study has concluded and we are in the midst of fundraising, I am excited to share an update on the fund with the entire RSF community.
In 2012, in collaboration with a generous donor, RSF launched the Local Initiatives Fund pilot program to meet the growing need we have seen for an alternative approach to financing regional food systems. Throughout our history, RSF has had to turn away many impactful organizations that could not yet benefit from a loan, but instead, could use grants or equity-like capital to spur their growth. We have learned that without more flexible capital available, particularly in the early stages of their enterprises, it is extremely difficult for entrepreneurs to build food systems that generate positive social, environmental, and economic change.
LIF is a first-of-its-kind philanthropic fund that employs an integrated capital approach—one that focuses on the coordinated use of investments, loans, and grants to provide much-needed, flexible capital for entrepreneurs who are building regional food systems and resilient local economies. In the first two years of the pilot, we have been able to deploy $2 million to 40 early-stage sustainable food and agriculture enterprises with a focus on technical assistance grants, loan guarantees and place-based Shared Gifting circles; those funds have leveraged $8.3 million in additional financing to date.
Many of our feasibility study participants confirmed that there is an urgent need for the next stage of our integrated capital approach which includes a mix of tools such as loans backed by guarantees, direct equity investments, and philanthropic risk capital for smaller scale financing, all to support regional food systems infrastructure. For example, Viva Farms, a farm incubator program in Washington State, received an equipment loan from RSF backed by a guarantee from a foundation partner which was further supported by a capacity building grant from the LIF! There was also consensus that our deep and extensive lending experience combined with philanthropic capital would help us accomplish a range and degree of financing for this burgeoning field – funding that we simply cannot do through our current lending and grantmaking programs. Our experience and perspective make us uniquely suited to work in this innovative and much-needed way.
In our view, the opportunity is great, and, not moving capital in this innovative way—while the need for food access and the opportunity to meet that need grows—will have long-term adverse social consequences. We invite philanthropic funders who share an interest in transforming food systems to join us in this challenge of embracing an integrated financing approach that will push boundaries, revise how philanthropy can truly support regenerative economic work, and have a lasting impact on people, communities, and food systems. Since June, we have added 8 new donors to the fund (totaling over $600,000 in gifts) and are eager to add more as we take the LIF beyond the pilot phase. Will you join us?
Please contact Catherine at firstname.lastname@example.org or 415-561-6151 for more information!
Catherine Covington is Manager of Client Development at RSF Social Finance