Leading
by Lending:
the Calvert Foundation’s Social Enterprise Initiative
 By Heather Peeler
The Calvert Foundation, in Bethesda, MD, is a pioneer in community
investing. For more than 10 years, it has provided access to capital
for hundreds of community-based institutions seeking to end poverty.
The foundation's current portfolio of investments exceeds $90
million, which is spread across a number of sectors, including micro
credit, community development, and affordable housing. Its reach
stretches beyond national borders; 30 percent of its investments are
internationally directed. The loan program has shown that investors
can realize a return while supporting organizations that are making
a difference in our communities.
Thus, it is no surprise that the Calvert Foundation has decided to
provide affordable loans for social enterprises through its newly
established Social Enterprise Initiative. The Initiative supports
social enterprises that have been operating for at least three years
and have $1 million in total assets or operating revenue, positive
net worth, independently audited statements, and an earned
revenue-to-expense ratio of at least 40 percent (Click
here for more information on eligibility).
Social Enterprises Have Special Needs
Borrowers may be either for-profit or nonprofit, but they must be
able to provide data that show the positive social impact of the
enterprise. The loan amount is based on the size of the organization
and its financing needs.
“Within our existing program, we encountered demand for financing
from the social enterprise sector and recognized the need to create
new tools (such as due diligence and monitoring products) that
support investment vehicles for social entrepreneurs and the
enterprises they run,” explains Gita Rao, investment officer at the
foundation. The foundation is able to offer these affordable loans
by working with collaborators such as investors and donors, and it
plans to raise $10 million for its Social Enterprise Initiative over
the next year.
“We recognize that there is a higher cost structure embedded in many
of these business models due to the social mission; thus, they
require subsidized financing,” explains Rao. “With a low interest
rate loan, the enterprises can focus on making their operations more
efficient and scalable.”
Success Begets Success
The Initiative’s success is tied to the borrowers' success. In many
ways, the Social Enterprise Initiative is a pilot for the entire
investment community. If borrowers are able to maintain their
payment schedules, then the sector will establish itself as
creditworthy. The Foundation’s financial return will attract others
to try similar programs and spur the creation of new capital
products. “We expect the fund to be a strong teaching tool regarding
the risk and rewards related to investing in social enterprises,”
says Rao.
To date, the foundation has made three loans totaling about $900,000
and is actively building the pipeline for loan applicants.
Interested enterprises can apply online at
www.calvertfoundation.org/socialenterprise/.
Case Study:
Planet Access Company
The Planet Access Company (PAC) received a $200,000 loan from the
Social Enterprise Initiative for plant and equipment financing.
Located in Chicago, PAC provides warehousing and fulfillment
services to businesses. In addition, it provides paid work
opportunities for more than 110 people with developmental
disabilities annually via the PAC Work Crew Program. Workers in the
program help out by tagging, bagging, labeling, and packing
merchandise, among other tasks. The loan will enable PAC to upgrade
its information technology systems and other warehouse equipment.
PAC is a subsidiary of the Search Development Center, a nonprofit
agency that provides life skills training and support to people with
developmental disabilities in Chicago.
For more information about the Calvert Foundation’s investment in
Planet Access Company, click
here.
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