Collaborative approach unlocks $12M project transforming youth lives 

Collaborative approach unlocks $12M project transforming youth lives 

by | Dec 26, 2018 | News

Mission Driven Finance, Civic San Diego, and Alliance Healthcare Foundation provide critical funding for nonprofit Access Youth Academy’s new athletic and academic facility in Southeast San Diego

(SAN DIEGO)—January 15, 2019—Mission Driven Finance recently announced a coordinated investment with Civic San Diego and Alliance Healthcare Foundation to support the growth of Access Youth Academy. Access, a local nonprofit organization, engages with youth through scholarship and sportsmanship to transform their lives.

Transforming Youth Lives

Seeking to grow and serve more students, Access is transforming a vacant lot in Southeast San Diego into a vibrant, inspiring athletic and academic facility.

Access Youth Academy has a unique approach to youth development through the sport of squash. Access starts working with students in 7th grade and continues mentorship through college and two years beyond. This long-term investment of care transforms students’ lives and supports healthy choices. Not only does Access promote active lifestyles, confidence, and leadership, but it also opens doors to elite education institutions.

Many colleges, especially on the East Coast, have underused athletic scholarships for squash. By developing squash skills and academic achievement in first-generation college students, Access Youth Academy helps them qualify for scholarships at leading universities. Since 2002, Access students have earned $6,300,000 in scholarships. A full 100% of Access alumni have graduated from high school and gotten accepted to college.

“Alliance Healthcare Foundation recognized the transformative power of Access Youth Academy in 2013 when they became our Innovation Initiative (i2) award winner. We understand the link of poverty and social determinants of health and the long-term positive network effect for the participants—and their siblings, parents, family, friends, neighborhood—of achieving a debt-free Ivy League college education through squash scholarships and the generational impact on future health and well-being in low-income neighborhoods. This was a deep investment in young members of our community in recognition of the ripple effects the Access transformational program provides,” said Elizabeth Dreicer, Alliance Healthcare Foundation’s interim executive director. “We are pleased to now also assist Access in relocating to their new home through our Program Related Investment (Impact Investment) program in partnership with Mission Driven Finance and Civic.”

Rendering of new squash courts at Access Youth Academy's planned facility

Collaborative finance

This collaborative $800,0000 pre-development bridge loan unlocks a $12M project to build the new facility—to be largely financed with New Markets Tax Credits. Without this bridge financing, Access would have been unable to complete the required pre-development work in order to secure construction financing.

“We find new markets tax credit investments exciting because they bring outside capital into our low-income communities. However, significant upfront costs in these complex transactions make it challenging for smaller organizations to tap into these transformative programs,” stated Mission Driven Finance CEO David Lynn. “Taking a flexible approach to finance allows us to close gaps like this for Access Youth Academy and get more kids going to great colleges.”

Louie Nguyen, chief investment officer of Mission Driven Finance, Michael Lengyel, assistant vice president of Civic San Diego, and Erin McNamara, interim chief investment and financial officer of Alliance Healthcare Foundation coordinated the bridge investment. Mission Driven Finance and Alliance Healthcare Foundation each committed $400,000. Civic provided a prior loan to Access and hopes to allocate a future award of New Markets Tax Credits. This collaborative approach to funding leverages the strengths of each party to support Access Youth Academy’s mission.

With this new facility, Access can reach more kids easily. Located one block north of the Market Creek plaza and just downhill from Horton Elementary School, the new building will have more connectivity to the community and public transit. For Access Youth Academy, having a dedicated building allows them to serve more first-generation college students and to earn income from the space during off-hours.

Mission Driven Finance’s private debt fund Advance supports nonprofits, social enterprises, and small businesses with project financing to advance economic opportunity in San Diego. Projects funded through Advance are too big for microfinance, yet too small for conventional bank financing. With this transaction, Mission Driven Finance has committed $1.8M to community-driven organizations across San Diego County.

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About Mission Driven Finance

Mission Driven Finance is an impact investment firm and Certified B Corporation empowering community through new models of investing in social change. Launched in 2016, all of our funds and structured products are designed to close financial gaps that in turn will close opportunity gaps. Learn more about our community-connected capital approach and discover how easy it is to invest in your community.

About Alliance Healthcare Foundation

We work to advance health and wellness for the most vulnerable in San Diego and Imperial counties. We accomplish this work through collaborative funding, convening, and advocacy. We currently operate a portfolio of five programs: i2 is our innovation initiative, also referred to as “venture philanthropy”—based on the thesis that innovation capital (often high risk, high reward) is needed to transform the current paradigm (high cost and poor outcomes) and improve quality, increase capacity and reduce costs; Mission Support—based on the belief that trusting those closest to our constituents and providing core operating support for great organizations will best advance our mission; Responsive Funding—based on the belief that it is important to be responsive to time-sensitive community needs and opportunities; InvestUp—based on the belief that it is important to actively and strategically be looking for ways to meaningfully advance our mission and it is worth spending some or all of our corpus—beyond the earnings off of our endowment—if we can substantively, sustainably and positively change the dynamics; and Program-Related Investments, also referred to as “impact investments,” based on the thesis that we can activate our investment portfolio to achieve more positive impact. For more information, visit alliancehf.org

Notes from L.A. Opportunity Zones forum

Notes from L.A. Opportunity Zones forum

by | Dec 4, 2018 | News

Note: For a primer on Opportunity Zones, see our earlier post that outlined the spirit of the legislation, California’s strategy to designate eligible census tracts, and what issues we all should be sensitive to moving forward.

Last week I had the opportunity to be one of the speakers at the Los Angeles Opportunity Zones Forum: Community-Centric Investments organized by the Federal Reserve Bank of San Francisco, along with HUD, USC, and the California Community Foundation.

The headlining speakers included:
  • John Kobara, California Community Foundation
  • Rachel Reilly, Enterprise Community Partners
  • Greg Nelson, Parker Foundation
  • Gary Painter, USC Price Center

My notable takeaways:

Community context matters
  • Los Angeles is the most underfunded county in the US when accounting for philanthropic, state, and federal support per capita. As much as we in San Diego often look to LA as having so much funding and large foundations, they’re actually a bit jealous of what we have going on in San Diego – the grass always seems greener!
  • The room was majority-minority which was nice to see. Most were players focused on inclusive economic development and community benefit as opposed to a room full of purely financially-motivated investors like some Opportunity Zone sessions.
  • In this room of community institutions, the tenor of the conversation moved from high optimism to high concern. There were many questions from nonprofits and community development organizations about how their voice would be heard or how their project would make it on the list.
Room for improvement in regulations
  • There is a push to have more transparency built into the regulations, and perhaps tighter guidelines to ensure impact and minimize displacement. However, that may be a losing battle.  The timeline is still expected to have regulations solidifed in 2019Q1. Per Greg, this may feel slow to those of us outside the beltway, but it’s blisteringly fast for Treasury.  There is currently no outcome requirement built into these regulations at all.
How do we move forward?
  • Some cities and regions are coming together to develop full prospectuses or marketing materials about the opportunities in their geography, with varying (often low) degrees of community input. In conversations at SOCAP, we noted that San Diego has exceptionally diverse neighborhoods in our Opportunity Zones. As such, we will need materials that are accessible in different formats and languages.
  • Despite many concerns, we must acknowledge that Opportunity Zones are getting investors to look at areas that would never otherwise make it on their radar. However, that means there is significant need to generate high quality deal flow in a short timeframe. Tight timelines rarely match with community stakeholder engagement or local government processes though. Gary summarized it well: there are many reasons capital has not been flowing to these communities in the past, and OZ’s have not removed those barriers.
  • Many folks creating Opportunity Zone funds have never worked in these communities before. This is a concern both for hearing community voice and also their capacity to bring deals forward. This is a sign of a mismatch of capital and opportunity, not a fit.  Additionally, investors coming into these deals often have no experience with these types of investments and it may take significant effort to get them comfortable with the risk profile of a small business in a low-income census tract.
  • Enterprise follows our definition of market: the market will determine the appropriate rate necessary to move capital.  With Opportunity Zones, the benefit is on the investor side and not built into the deal like other tax credits. The actual end rate to investors is completely unknown, and deals will be set as a pre-tax rate.  In my opinion, this just means residents and businesses currently in Opportunity Zones will be priced out even more, as the capital gains tax benefits will have more value to the wealthy.
  • Philanthropy and government have large roles to ensure community voice will be heard. This is a very significant but short-term effort that may determine the path of communities and inclusive development for decades to come.

The OZ Forum reinforced my skepticism and caution, but underlined that movement forward is required. At Mission Driven Finance, we have an obligation to continue to lend our voice and experience developing community-connected capital.