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Financing Community Organisations Ben Gales, August 2013
INNOVATIVE PARTNERSHIPS
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FINANCING COMMUNITY ORGANISATIONS
• Background on SEFA
• How we can help you achieve your social mission
• Lending responsibly - the 5 C’s of Financing Community Organisations
• Case study - Myrtle Park
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SEFA BACKGROUND
• SEFA is a social enterprise that lends to other social enterprises with a focus on community, indigenous and environment
• We seek to be an important contributor to the long-term development of the social enterprise market in Australia
• SEFA is one of the Australian Government’s Social Enterprise Development and Investment Funds (SEDIF)
• Investors: • NSW ALC, Triodos, Community Sector Bank, foundation, individuals
• Seeking financial and social returns.
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PORTFOLIO
• SEFA has made loans to community projects in regional Australia:
– Crisis accommodation in Cairns;
– Low income retirement housing in NW Tasmania; and
– A community school in Kuranda in Queensland.
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HOW SEFA HELPS YOU ACHIEVE YOUR MISSION
Social Impact
Time
Constrained growth
Unconstrained growth
• We provide loans to community organisations to enable them to better achieve their social mission
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The 5 C’s of Financing Community Organisations
Community Organisation
Responsible lending - an “appropriate” risk
for the community organisation and SEFA
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Character
Community Organisation
Character
• You – the people who run the community organisation
• How well is your organisation run?
• Do you have the right financial reporting and governance in place?
• Do you have local community support?
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Capacity
Community Organisation
Capacity
• How strong is your business model?
• Will the cashflow you generate enable you to (comfortably) repay the debt?
• Is your income diversified?
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Conditions
Community Organisation
Conditions
• What is the state of the market you are operating in and how well are you positioned?
• Is there high demand / need for your product / service?
• What is the social impact that our loan will help you achieve?
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Capital
Community Organisation
Capital
• What is the “capital” in your community organisation? How resilient is your organisation?
• This can be financial – cash – but we also look at the strength of non-cash / community assets.
• Having sufficient capital means that you can weather any unexpected setbacks.
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Collateral
Community Organisation
Collateral
• SEFA lends responsibly to ensure your and our sustainability
• Security is an important factor in risk assessment
• Having a loan backed by security reduces the lenders risk
• This reduces the interest charged to you
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Case Study – Myrtle Park
• Myrtle Park Retirement Centre is based at Yolla in NW Tasmania. A community organisation that provides low income retirement accommodation.
• SEFA is funding four new two-bedroom units. Prefabricated housing units that have a high environmental rating.
• Each unit costs about $120k ($40k of foundations) and rents are about 1/3rd aged pension.
• Bank loans were not available. Security is existing units and land. Organisation has been in existence for 22 years.
• A remote community that is keen to provide low income housing for retired people from district.
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Case Study – Myrtle Park
Myrtle Park
Character: Significant
local community support –
volunteer members – with
the build managed by
Tasbuilt Homes – Strong
and resilient team
Capacity: Rental
income and minimal
expenses due to
community volunteers –
strong cashflow to
service debt
Conditions: Myrtle Park provide affordable
retirement accommodation in Yolla, a
disadvantaged area in North-west Tasmania –
high demand
Capital: limited cash
reserves but minimal
expenses and strong
community support –
highly resilient
Collateral: land and
buildings owned by
Myrtle Park – Good
security
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CASE STUDY
Myrtle Park / SEFA = WIN/WIN Result
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CONTACT US
• Social Enterprise Finance Australia
– Ben Gales - 02 8199 3362 / 0449 258 971
• Website - www.sefa.com.au