Rhode Island Foundation makes a $500,000 loan to Capital Good Fund
Funds will enable the nonprofit lender to help more Rhode Islanders with affordable loans for COVID-19 relief, transportation, housing
The Rhode Island Foundation has made a $500,000 loan to Capital Good Fund. The Providence nonprofit will use the funding to make below-market, short-term loans to consumers who do not qualify for conventional financing for expenses related to the COVID-19 crisis and other key needs, such as buying or repairing a car and security deposits.
“Making loans and direct investments from our endowment enables this impact investing to align our financial investments with our mission. Investing directly from our endowment gives us the flexibility to support the work of our nonprofit partners in a way that supplements our grant programs,” said Neil D. Steinberg, the Foundation’s president and CEO. “We are proud to provide Rhode Island-based nonprofits like Capital Good Fund with resources to serve their mission.”
Launched in 2017, the initiative aims to invest up to five percent of the Foundation’s endowment, beyond traditional grant-making efforts, in Rhode Island-based nonprofits, for-profits and governmental agencies to support projects that generate measurable social impact as well as a financial return. Investments range between $200,000 and $2,000,000. Terms generally will be no longer than 10 years.
The five-year loan from the Foundation will enable Capital Good Fund to help an additional 250 borrowers. Capital Good Fund is a nonprofit, U.S. Treasury-certified Community Development Financial Institution that provides equitable loans to borrowers with low incomes.
“This investment will enable us to achieve our strategic goals, including increasing the number of Rhode Island families impacted by our products.”- Andy Posner, Capital Good Fund founder and CEO
He continues, “The death of George Floyd in Minneapolis and the COVID-19 pandemic have exposed long-standing racial disparities in the financial system. We appreciate the Foundation’s support of our work aimed at closing the gap by ensuring that low-income Rhode Islanders have options other than predatory lenders that can cripple their finances.”
Capital Good Fund will use the funding from the Impact Investing program to offer personal loans ranging from $300 to $25,000 with an average interest rate of 14 percent, which is a fraction of what some so-called pay-day lenders would charge; in fact, the maximum allowed interest rate on a payday loan in Rhode Island is 261 percent APR.
“Our clients are people who can’t access mainstream loan products for a variety of reasons, ranging from being low-income, having poor credit or simply not trusting the financial system,” said Posner.
As borrowers pay off their loans, Capital Good Fund will use the proceeds to repay the Foundation with interest. About 95 percent of its borrowers repay their loans, according to the nonprofit, which also offers a nationally recognized Financial and Health Coaching program to help clients establish a financial plan that enables them to achieve their life goals.
With the loan to Capital Good Fund, the Foundation’s Impact Investing initiative has made 11 loans and investments totaling $9.8 million. The recipients include Urban Greens, which received a $300,000 equity investment to build an 8,000- square-foot, community-owned grocery store on the southside of Providence; and Horizon Healthcare Partners, which was awarded a $300,000 bridge loan to launch a behavioral health center.
Our other impact investments
Following are snapshots of additional impact investments, by date they were made:
The Public’s Radio received a loan of $1 million to cover donor pledges during its capital campaign. The loan allowed the station to purchase and relocate its FM signal to help expand its audience and programming. In the first year, the station reported a 7% increase in listenership over 2018.
One Neighborhood Builders (ONE|NB) received a $806,000 loan to support the Protecting Providence Property program, a pilot effort to provide affordable homes to middle income households. ONE|NB purchased and rehabilitated four properties (six housing units in total) and leased to six families earning $45,000 - $75,000 per year. Financial counseling is provided by ONE|NB for the tenants to eventually purchase the homes they are renting. Read our story on this investment.
Urban Greens received a $300,000 equity investment to build an 8,000 square foot, community-owned co-op grocery store at 93 Cranston Street in Providence. The store successfully opened in June 2019 and has experienced steady sales among neighborhood residents and others in the Providence metro area. Urban Greens continues to prioritize providing affordable organic options, partnering with local food producers, and serving local residents with cooking demonstrations and other educational events. Read our story on the Urban Greens Co-op Market.
Horizon Healthcare Partners was awarded a $300,000 bridge loan to cover setup costs for the State’s Behavioral Health Link program (BH Link). BH Link seeks to more effectively serve Rhode Islanders with behavioral health and substance use emergencies by diverting patients from emergency departments to a community-based setting. BH Link has provided help to thousands of Rhode Islanders and is a particularly critical service during the COVID-19 pandemic.
Community Care Alliance (CCA) received a $225,000 loan to cover Health Reimbursement Arrangement expenses. CCA provides a wide array of social services to residents of northern Rhode Island. Programs include, but are not limited to, housing (including rapid rehousing in crisis and recovery housing), basic needs assistance, family support and reunification, and community-based alternatives to divert individuals from hospital emergency departments.
Farm Fresh Rhode Island received a loan of $1.9 million to support the construction of the 60,000 square foot Rhode Island Food Hub in the Valley neighborhood of Providence. The Food Hub will provide a venue for locally grown, harvested, and caught food. Half of the space will house Farm Fresh RI’s programs and operations, including a year-round farmers market, and the remaining space will be leased to food and farm-related small businesses. Construction will be completed in Fall 2020 with the winter market opening soon thereafter.
Horizon Pharmacy received a $313,510 loan to purchase the Synergy Medications Systems Robot to process a high volume of packaged prescriptions more efficiently. Horizon Pharmacy was founded by and affiliated with Horizon Healthcare Partners. The pharmacy provides services to long-term care clients, including group homes for people with developmental disabilities, assisted living facilities, and long-term care providers. The increased efficiency, provided by the robot, is enabling Horizon Pharmacy to serve an additional 120-150 clients per year.
The UCAP School received a $1.5 million loan to refinance its mortgage on its Providence buildings. UCAP enrolls middle school students from Central Falls, Cranston, and Providence to help them stay on track for graduation. In total, 140 seventh and eighth grade students are served annually.
NeighborWorks Blackstone River Valley received a $975,000 revolving loan to create the Northern Rhode Island Community Development Fund. The Fund will provide affordable predevelopment and acquisition loans for multi-family, single family, mixed-used, community facilities, and neighborhood economic development initiatives serving low income families in northern Rhode Island.
Providence Revolving Fund received a $2 million loan towards a $10 million Opportunity Investment Fund to provide low-interest loans and financing to private homeowners and developers. For homeowners, the loans will be up to $50K for external renovations for any property built prior to 1940. For developers, the loans will be up to $1 million and will provide gap financing for the comprehensive rehabilitation of buildings or new construction. All commercial projects will also have an affordable housing component.