Earlier this week, OFN announced that five CDFIs were selected as the first awardees of the NEXT Fund for Innovation. This pilot program builds on the impact and innovation that was demonstrated over the course of 10 years through the Wells Fargo NEXT Awards for Opportunity Finance.
With this decade of experience as a foundation, the NEXT Fund for Innovation was designed to provide patient, flexible capital with no restrictions on where the CDFIs could find inspiration for innovation. As a result, this first series of awards, totaling $5MM, showcase how CDFIs work to create models and strategies that truly fit the needs of their communities.
Here’s a snapshot of each of the award-winning strategies:
Building Hope, based in Washington, D.C., was awarded $1MM as a subordinated unsecured loan. Building Hope has been a leader in charter school financing for more than a decade, growing its capacity over the past decade to meet a broader set of needs for charter schools. With this new loan, Building Hope intends to expand its real estate development practice to fund pre-development, personnel, and other expenses related to expansion into Texas and Tennessee through its real estate development practice, Building Hope Real Estate Development (BHRED). Through BHRED, Building Hope can offer an affordable solution with a proven track record so charter schools can expand into new markets.
CEI of Brunswick, Maine, will use its $1MM equity investment award for its new solar energy venture, Bright Community Capital. This new subsidiary will provide long-term debt and equity capital to mid-sized commercial solar projects, filling a financing cap in the solar energy marketplace. In a recent interview regarding this new subsidiary, Bright Community Capital CEO Niels Zellers said: "These mid-sized projects can be a challenge because each is so different, with unique variables, but by controlling multiple sources of capital, Bright Community Capital can finance more efficiently at this scale."
Metropolitan Economic Development Association (MEDA), of Minneapolis, MN will use their $1MM award to provide a new, patient equity-like capital product to support early-stage minority-owned businesses in Minneapolis that have potential for high growth. In a statement announcing their award Gary Cunningham, president and CEO of MEDA, said “nationally, less than 10% of patient and equity capital is invested in minority-owned businesses. MEDA is proud to partner with OFN and Wells Fargo to provide this funding which is necessary to fund innovation, potential and growth in minority businesses. By investing in these businesses, MEDA will be helping them reach scale, increase revenues and become sustainable employers.”
ROC USA Capital of Concord, NH plans to use the $1MM 10-year subordinated debt investment to continue its transformational work converting manufacturing housing community from investor-ownership to resident—ownership by supporting a new product in the manufactured housing space to address park-owned home and park-financed home portfolios. ROC USA Capital will use the financing in approximately nine resident owned community transactions throughout the U.S. ROC USA Capital expects to be able to revolve the 10-year financing investment approximately 3 times.
Reinvestment Fund, based in Philadelphia, PA, developed a strategy to use its $500,000 award to fund and raise capital to invest in Pay for Success transactions. PFS transactions are structured in a way that precludes working capital. This fund would target investments in housing, education, social services, and health care throughout the U.S., with a focus on smaller transactions so these promising policy innovations have a chance to create the impact.
This program was developed with support from Wells Fargo and Prudential Financial. Learn more about the NEXT Fund for Innovation here.