Earlier in November, FJC’s CEO Sam Marks was a guest on Get Connected with Nina Del Rio, New York City’s 106.7 Lite FM’s weekly talk show featuring NYC’s influencers, experts, and vibrant non-profits.

Del Rio interviewed Marks about his background and the world of Donor Advised Funds, as well as the creative ways that FJC puts philanthropic resources to work. 

He spoke about FJC’s Agency Loan Fund, an impact investment vehicle that allows donors to invest some or all of their accounts in a pool of loans to nonprofits, so that funds are actively supporting nonprofits even before they are disbursed as grants. He cited capital grants and contract receivables as payments FJC’s loans typically bridge. “We do a lot financial intermediation, during these timing gaps for nonprofits,” said Marks.

He also spoke about innovative transactions with nonprofits like The Fortune Society and the Tenement Museum. 

From the interview:

People typically think, my philanthropy is to make grants to help an organization hit their goals to operate in the black for the year. But you could also use philanthropic dollars to help organizations be more entrepreneurial and take on more exciting projects that will help them grow and expand their services.

The nonprofits we work with understand the challenges that their businesses face, whether it’s cash flow issues because of late payments or a dearth of capital to take on new, exciting projects.  The nonprofits really know where their gaps are.  The challenge for us is finding donors with the imagination to put their philanthropic dollars to work to fill those gaps. If we could get more of our donors to think about, while the dollars are with us, how they could be invested for the benefit of nonprofits, we could really help nonprofits worry less about where their next dollars are coming from. We could go to the heart of what makes these nonprofit businesses challenging.

You can listen to the whole interview at this link.

For its Fourth of July broadcast, BronxNet’s OPEN program featured Fortune Society Deputy CEO Stanley Richards in dialogue with FJC CEO Sam Marks on our recently-announced revolving loan fund.

“I would encourage donors who are thinking about impacting nonprofit organizations to look at this model,” Mr. Richards said.  “It’s an innovative model that allows the recycling of an investment to bring about transformative opportunities for people.”

See the interview here.

The Fortune Society is a leading provider of services and housing for people coming out of incarceration.  FJC recently worked with Fortune to arrange a revolving fund, which will help Fortune scale its work developing supportive housing, providing a dedicated source of capital that can be used to initiate these time-intensive, critical projects.  The revolving fund was capitalized with funds from a handful of Donor Advised Fund (DAF) accounts, matched by Fortune’s own resources.

“Where FJC comes in is helping Fortune Society with a particular bottleneck they face in the housing development process,” explains Marks. “Fortune staff are experts in assembling all the complex financing to build supportive housing.  It’s in those early stages – predevelopment – where they might need a few hundred thousand dollars” to access the tens of millions of public and private financing needed to build these projects.

In the interview, Richards notes that Fortune is attempting to have a lasting, generational change.  He cited his own experience as a formerly incarcerated individual, who received the resources and support to turn his life around, start a family, and break the cycle of incarceration.  “That’s what Fortune does every single day when we serve the men and women who walk through our doors. We provide supportive housing, education, and employment.  It’s about generational change.”

Richards also noted the importance of partnership in accomplishing Fortune’s mission, and that by working together, Fortune, FJC and its donors can be more impactful than by working alone. 

“This is a model that nonprofits in the housing sector should take a look at,” Mr. Richards said.  “And it’s also a model for someone who has resources asking, How do I leverage my resources to make a difference?  This is an opportunity for people to lean in, in a way that is aligned with your values and the impact you want to have.”

PRESS RELEASE – Organization teams up with FJC to create a Donor Advised Fund to support new supportive housing developments in New York City

Finding housing options to support the successful reentry of formerly incarcerated people back into society is no easy task. Homelessness remains a significant challenge for those coming out of prison and jail – especially here in New York City.

That’s why The Fortune Society, a nonprofit organization that empowers homeless, formerly incarcerated individuals and their families to build better futures through supportive and affordable housing, is working together with FJC – A Foundation of Philanthropic Funds (FJC) – to create a fund that will enable The Fortune Society to initiate these complex housing development projects.

The initiative bridges people across a vast array of inequality – some of the most vulnerable New Yorkers and New Yorkers whose wealth allows them to set aside funds specifically for philanthropic purposes – in Donor Advised Fund accounts.

Nonprofit organizations face a significant gap in available financing relative to for-profit companies. While they want to be entrepreneurial, they can’t raise equity in the same way as private companies. The Fortune Society, which wants to develop more supportive housing options for its target population, often faces challenges moving quickly to initiate these kinds of projects. To have a competitive chance, the organization must pull cash from its operating budget to cover pre-development expenses. At the same time, wealthy individuals have significant resources invested in stocks and bonds, hedge funds, and philanthropic assets.  

“This opportunity creates a solution to meet an urgent social need,” said JoAnne Page, CEO of The Fortune Society. “We currently do not have a source of ready money that can be put down up front for housing development. This collaboration would be a lasting solution to this problem.”

FJC, a sponsor of Donor Advised Funds, is providing a structure where multiple individuals who support The Fortune Society’s mission can pool their philanthropic dollars together to help the organization cover the pre-development costs to initiate these capital-intensive housing projects.

“The Fortune Society and FJC are collaborating to demonstrate how these individuals can provide the kind of catalytic “equity-like” capital that nonprofits can use to move major real estate development projects forward,” said Sam Marks, CEO of FJC. “This effort will harness large capital commitments from public and private sources to help the organization fulfill its mission.” The revolving nature of the fund is intended to give The Fortune Society the resources it needs throughout the life of the fund to act aggressively in pursuit of mission-critical real estate development opportunities and finance up-front costs. The goal is to recycle these philanthropic dollars multiple times for multiple initiatives, and to leverage the money along with other resources to create a long-term impact.

The DAF sector has grown rapidly in recent years, but also come under criticism for aggregating philanthropic capital without quickly deploying it. This initiative showcases the flexibility of DAFs and the creative ways they can be used to advance an organization’s mission.

“FJC has creatively enabled individual DAF account holders to be meaningful partners in mobilizing resources to create desperately needed affordable housing,” said Gary Hattem, the former Head of Global Social Finance at Deutsche Bank. He joins Theodore Huber and A to Z Impact as some of the first donors of this initiative.

At the end of a five-year term, all the funds will remain charitable by the conversion to flexible DAF accounts, which can be deployed as grants to nonprofits as the donors see fit or remain with The Fortune Society for use as the organization deems necessary for its critical work.

“This kind of revolving fund will allow The Fortune Society to finance up-front costs related to mission-driven affordable housing projects, giving the organization a chance to act quickly and nimbly when opportunities arise,” said Page. The Fortune Society is currently in the pre-development stage as a first venture of this fund through the proposed Just Home initiative, a project to house New Yorkers with complex medical needs after they leave jail on the campus of NYC Health + Hospitals/Jacobi in the Bronx. Donors are excited about the prospect of seeing the fruition of the work live on for generations to come.

For more information on this initiative, please visit our FAQ page.

About The Fortune Society

Founded in 1967, The Fortune Society has advocated on criminal justice issues for over five decades and is nationally recognized for developing model programs that help people with criminal justice histories to be assets to their communities. The Fortune Society offers a holistic and integrated “one-stop-shopping” model of service provision. Among the services offered are discharge planning, licensed outpatient substance abuse and mental health treatment, alternatives to incarceration, HIV/AIDS services, career development and job retention, education, family services, drop-in services, and supportive housing as well as lifetime access to aftercare.  For more information, visit www.fortunesociety.org.

About FJC

FJC is a boutique public charity that offers a diverse menu of philanthropic services to a range of stakeholders. With over $380 million under management, its over 1,000 accounts include Donor Advised Funds (DAFs), fiscal sponsorships, collective giving accounts, revolving funds, and many other philanthropic vehicles. FJC acts as an intermediary between the financial services sector and the nonprofit sector, enabling nonprofit organizations and their supporters to focus on their missions, rather than be burdened with the details of operations and compliance.

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Reflecting on best practices by FJC and its imaginative donors, FJC Chief Executive Officer Sam Marks wrote “Donor Advised Funds and Impact Investing: A Practitioner’s View”, which was accepted for publication by The Foundation Review in their December, 2022 issue focusing on impact investing.  The journal is the first peer-reviewed journal of philanthropy, written by and for foundation staff and boards. 

The article provides a brief overview of FJC’s origin story and the establishment of its Agency Loan Fund as a bespoke impact investing vehicle, which allows participating donors to invest in a pool of loans to nonprofit borrowers that help them bridge cash flow and achieve their missions.

Marks also highlights some of the innovative transactions FJC has executed with its donors, including a 0% interest revolving line of credit for Brighter Tomorrows, the refinancing of the Tenement Museum’s mortgage, accounts that allow foundations to participate in crowd-sourced small business loans, and the recently closed revolving fund for the Fortune Society.    

“In the end,” Marks writes, “the potential for DAF sponsors to accelerate impact investments may also come from their ability to aggregate not just dollars but inspiration.”

Read the full article here.

Safe, Affordable Housing with Services is Focus of FJC’s First-Ever Multi-Donor Revolving Fund

What are the goals of FJC’s Revolving Fund for The Fortune Society?

FJC, a boutique sponsor of Donor Advised Funds, has arranged a fund that will empower The Fortune Society, a nonprofit serving vulnerable New Yorkers coming out of incarceration, to scale its housing development work. People re-entering society from prison are overrepresented in the homeless population, and supportive housing (affordable housing with services) has proven to be an effective strategy to keep vulnerable New Yorkers stable and out of crisis systems (like homeless shelters, hospitals, and jails). The initiative will help The Fortune Society double its housing portfolio over the next five years.

Specifically, the fund will:

• Support people coming out of prison with stable, permanent supportive housing and services;
• Provide The Fortune Society with the capital necessary to invests in its future and organizational growth by doubling its real estate portfolio over the next five years; and
• Allow FJC to demonstrate how Donor Advised Fund (DAF) accounts can be put to work for maximum impact, thereby helping them be more creative with their resources and support a greater number of people in need.

How are funds in the Fortune Society Revolving Fund different from other Donor Advised Fund accounts at FJC?

The Revolving Fund has been funded with philanthropic capital with a specific intention to help The Fortune Society act entrepreneurially to expand and scale its mission.  The goal is to use the same dollars multiple times to initiate multiple projects, preserving the capital for donors to recycle again for philanthropic purposes.

A typical Donor Advised Fund (DAF) account at FJC provides recommender privileges to donors regarding how the philanthropic dollars in their accounts are invested for growth or deployed as grants. With the Revolving Fund, donors have agreed to “lock up” their funds for five years, to allow The Fortune Society to use them to advance their mission to expand their portfolio of permanent supportive housing for people coming out of incarceration.  This agreement is documented in a simple Memorandum of Understanding between the donors and FJC. 

The participating donors have agreed to allow The Fortune Society to draw on these funds as needed, as loans at 1% interest, instead of the typical ways funds in DAF accounts are used (i.e. granting funds out, or investing them for tax-free growth to make grants at a future date). At the end of the five-year term, The Fortune Society will repay the loans, and funds will return to the donors’ individual DAF accounts.  These loans are documented in a loan agreement between FJC as lender and The Fortune Society as borrower.

Who is The Fortune Society?

Founded in 1967, The Fortune Society has advocated on criminal justice issues for over five decades and is nationally recognized for developing model programs that help people with criminal justice histories to be assets to their communities. The Fortune Society offers a holistic and integrated “one-stop-shopping” model of service provision. Among the services offered are discharge planning, licensed outpatient substance abuse and mental health treatment, alternatives to incarceration, HIV/AIDS services, career development and job retention, education, family services, drop-in services, and supportive housing as well as lifetime access to aftercare. 

Developing, owning and operating housing is core to Fortune Society’s work.  Low-threshold access to supportive emergency, transitional, and permanent housing is provided at their congregate facilities, The Fortune Academy (“the Castle”) and Castle Gardens, along with their Scatter-Site Housing program.

What is supportive housing?    

Supportive housing is affordable housing with onsite services that help formerly homeless, disabled tenants live in dignity in the community. Supportive housing came into being in response to the homelessness crisis in New York City in the 1970s and is the most humane and cost-effective solution to ending homelessness for vulnerable people: individuals and families dealing with mental illness, trauma/abuse, addiction, and chronic illness including HIV/AIDS.

Supportive housing is permanent and affordable: All tenants hold leases and pay about a third of their income in rent. The residences are owned and operated by nonprofit organizations and are accountable to their city, state, and federal funders. Because supportive housing either replaces a blighted building or lot, it jump-starts neighborhood renewal. Because it provides 24-7 front desk coverage and other      security features, supportive housing frequently contributes to increased community safety. As a result, studies have shown that supportive housing increases property values. For more about the cost effectiveness and impact of supportive housing, see these great resources at The Supportive Housing Network.

Depending on the site and service contracts, supportive housing is made available to vulnerable populations who are disproportionately represented in the homeless shelter system: such as people who face substance abuse, HIV/AIDS, serious persistent mental illness, veterans, and—in the case of The Fortune Society—people re-entering society after incarceration.

Why does The Fortune Society need resources from a Revolving Fund?

Nonprofits face particular business challenges when launching entrepreneurial activity. The ownership and governance structures of nonprofit organizations don’t allow them to raise equity.  As a result, when nonprofits need to fund the earliest and most risky pre-development stage of a real estate venture, they must fund pre-development expenses from rainy day funds, if they exist, or else pull cash from their operating budget.

To scale its work in developing supportive housing, the Revolving Fund will provide The Fortune Society a dedicated source of capital that can be used to initiate these time-intensive, critical projects.

The total development costs of a typical supportive housing development may run into the tens of millions of dollars, depending on size, which is financed through a combination of private financing and federal, state, and city subsidies.  To secure these resources, The Fortune Society incurs significant soft costs during the pre-development phase, which can run in the tens or hundreds of thousands of dollars. These costs include deposits to secure sites for acquisition, feasibility studies, environmental reviews and architectural design work.

How will The Fortune Society repay loans and replenish the Revolving Fund?

Fortune Society will replenish the revolving fund when their affordable housing projects secure construction or permanent financing, or bridge loans from more traditional financing partners.

The federal Low Income Housing Tax Credit (LIHTC) is the principal subsidy for affordable housing development, and the New York City region receives an allocation of LIHTC through its housing finance agencies NYS Housing & Community Renewal (HCR) and the NYC Department of Housing Preservation & Development (HPD).  These resources are supplemented by tax-exempt bond financing, grants from other public and private sources, and traditional bank financing. In addition to these capital sources, nonprofits must secure service contracts from other city and state agencies.

The Fortune Society has a long track record of securing these sources, as well as the necessary public approvals from community boards and other elected officials.

Is there a risk that loans won’t be repaid? 

No investment is risk-free.  FJC mitigates this risk by working with The Fortune Society to fund activities that have a high likelihood of repayment, on real estate projects that have already secured significant public approvals and/or soft commitments of public resources.  The primary motivation of this fund is philanthropic (and at 1% interest, the loans are being made available at below-market interest rates).  Nevertheless, this project will be deemed successful if the loans are repaid and the donors have the opportunity to recycle them for other philanthropic purposes. 

The loans made from The Revolving Fund are general recourse obligations to The Fortune Society, meaning that if the real estate projects in the early planning stages don’t go forward (the primary source of repayment), The Fortune Society is still “on the hook” to repay them (the secondary source of repayment).  The Fortune Society is in a strong financial position, and has never failed to repay any debt obligation on time.

Working on behalf of its donors, FJC will make all efforts to recover the full loan principal in the event that things do not go as planned.  In the remote possibility that a loan recovery becomes impossible, FJC will convert to a grant any portion of the loan deemed to be uncollectible.  

We have worked closely with donors to understand the risks involved in this Revolving Fund.  Our expectation is that every dollar dedicated to this effort will be used multiple times to initiate multiple projects and then returned to donors’ DAF accounts so they can be redeployed as grants. 

What happens at the end of the 5-year term?

At the end of a 5-year term, funds will be returned to the initial donors’ DAF accounts.  The account holders will then have the flexibility to recommend their funds be granted to the nonprofits of their choice.

Where does the initiative stand now?

Four DAF account holders at FJC have joined this effort, including Gary Hattem, Theodore Huber, A to Z Impact, and an anonymous donor. As of this writing (5/15/23), The Fortune Society has drawn $400,000 to cover pre-development expenses on two projects:

• Just Home Project is an innovative housing initiative that will provide permanent, supportive housing with services for medically complex homeless New Yorkers returning after incarceration. Residents of this project suffer from medically complex issues that require constant medical attention. The project is a partnership with the NYC Health + Hospitals Corporation and will be built on City-owned land at the Jacobi Medical Center (Bronx, NY).
• Illegal Hotel Conversion. Redevelopment of “illegal hotel” to supportive and affordable Single Room Occupancy (SRO housing at 258 West 97th Street in the Upper West Side. The completed project will have 59 supportive housing units and 25 affordable units. The project was the subject of a New York Times article “From ‘Illegal’ Hotel to Housing for the Homeless on Upper West Side” (3/28/22).

Funds will be used to cover architectural services, environmental reviews, consultant fees, and staff management costs.  It is anticipated that over the next year, these projects will close on pre-development or construction financing that will enable The Fortune Society to repay the loans and draw on the fund again for other projects in their supportive housing pipeline.

The nonprofit Bronx Defenders encountered an unwelcome surprise with their longtime commercial bank this spring: the bank would not be renewing its line of credit in the coming fiscal year.  The bank’s credit officers had grown alarmed about persistently delayed payments on New York City government contracts and declared that it was pulling back on making loans that financed these contract payments.

Like any business, nonprofits like The Bronx Defenders depend on access to financing to even out cash flow, ensuring that lumpy cash payments from contract receivables don’t delay services for clients, jeopardize paychecks to staff, or threaten operational necessities like (literally) keeping the lights on.  Lines of credit and other bridge financing mechanisms have become even more critical for nonprofits in recent years as payments on city social service contracts have become even more chronically delayed. 

The issue was highlighted in a recent report sponsored by NYC Mayor Eric Adams and NYC Comptroller Brad Lander, A Better Contract for New York: A Joint Task Force to Get Nonprofits Paid On Time.  The Task Force wrote, “For years, the City’s onerous and slow procurement process has created considerable registration delays that hinder nonprofits’ ability to get paid on time and meet their obligations. In Fiscal Year 2022, over three-quarters of the City’s contracts with nonprofit organizations were registered after the start date.”  The Task Force has recommended a series of reforms to the contracting process, which have been embraced by both the Mayor and Comptroller, and which may take some time to implement.

While remaining hopeful that the City will make necessary reforms in the long run, the finance team at The Bronx Defenders began immediately shopping around for a new banking relationship that is more comfortable with the notion that the City, while chronically late, will ultimately stand behind its commitments.

In the meantime, FJC has provided a $4 million bridge loan, which will give The Bronx Defenders some breathing rooms as it secures a banking relationship with a new financial institution.  The loan bridges proceeds from contracts with the NYC Mayor’s Office of Criminal Justice and the NYC Office of Human Resources Administration.

“The loan from FJC could not have come at a better time.  We had run out of options and were facing the possibility of having to close our doors and turn away New Yorkers in dire need of our services,” says Justine Olderman, Executive Director of The Bronx Defenders.

The Bronx Defenders is a public defender nonprofit that also seeks to transform the legal system to make it more equitable for low-income people. They have pioneered a ground-breaking, nationally recognized team-based model of representation called holistic defense that connects clients to an interdisciplinary team of lawyers, social workers, and advocates. Each year, they defend over 20,000 low-income New Yorkers in criminal, civil, family, and immigration cases, and reach hundreds more through their community intake and outreach programs. They take what they learn from this holistic approach and launch innovative initiatives designed to bring about real and lasting change for the communities they serve.

Says Olderman, “Thanks to the loan from FJC, BxD will be able to continue its mission of defending low-income people facing incarceration, deportation, family separation, and eviction; advocating for laws and policies that advance fairness and equity; and training public defenders from one end of the country to the next on our holistic model. “

An FJC donor has provided a 0%-interest philanthropic loan to help kick-start a $10 million initiative to help newly arrived Afghans rebuild their lives in the United States.  The loan program is a component of Support for Afghan Financial Empowerment (SAFE), an initiative launched by the International Rescue Committee (IRC) and their Center for Economic Opportunity (CEO) to empower Afghan families as they begin their journey to financial stability and economic security in their new homes across the U.S.

More than 70,000 Afghans have arrived through Operations Allies Welcome, a federal effort to support vulnerable Afghans, including those who worked alongside us in Afghanistan for the past two decades, as they safely resettle in the United States.  These families have had to endure a challenging, emergency resettlement experience in the midst of a pandemic and an economy still reeling from COVID-19 impacts.

“Unlike newcomers with refugee status, Afghans are humanitarian parolees, meaning they have official permission to enter and remain temporarily in the United States,” explains Kasra Movahedi, the Executive Director of IRC’s Center for Economic Opportunity. “This status poses unique challenges for building credit, making it harder for them to apply for rental housing, finance a car, and in some cases may limit access to certain jobs.” 

SAFE fills this gap by providing small, 0%-interest credit-building auto, education, immigration and personal loans, coupled with financial education and counselling.  IRC has trained a team of financial coaches, native to Afghanistan, to offer these services to any Afghan who arrived through Operations Allies Welcome.

The 0%-interest immigration loans will help reunify families separated by the chaotic military withdrawal. Immigration services are costly, and time is of the essence. Few Afghans have the funds necessary to pay for immigration services, and access to a 0%-interest, no fee immigration loan can be the difference between life and death for separated family members.

FJC has a long history of making loans to the nonprofit sector.  The majority of FJC’s loans are made from the organization’s Agency Loan Fund, a pool of donor capital that is actively managed by FJC staff and is invested in loans to nonprofits earning a floating interest rate of the prime rate plus 3 percent (currently 6.5%).   Donors may also recommend below-market rate loans (also known as program-related investments) using funds in their donor advised fund accounts, on customized terms of their choosing.

“We are honored to use FJC’s boutique philanthropic platform to galvanize support for Afghan humanitarian parolees at this historic moment,” said the donor, who wishes to remain anonymous. “Having resources set aside in our FJC account enabled us to provide CEO exactly the 0%-interest capital source they needed to launch this critical economic empowerment initiative.”

April 21, 2021 (New York, NY) – FJC hosted a webinar to highlight its strategic partner the Cultural Heritage Finance Alliance (CHiFA), a new initiative that promotes heritage-led regeneration through collaborative and innovative financing solutions.   The event was moderated by Sam Marks, FJC’s Chief Executive Officer and highlighted two promising examples of organizations that embody CHiFA intends to support: Doh Eain and Turquoise Mountain.

A full recording of the webinar is available at this link.

Mr. Marks kicked off the event by explaining FJC’s role providing operational and fiscal support to CHiFA.  As a foundation of philanthropic funds that brings economies of scale to philanthropists (by sponsoring Donor Advised Funds) and organizations (through fiscal sponsorship), FJC will provide operational and administrative support, including servicing CHiFA’s loan fund.  CHiFA is currently raising $3 million to provide catalytic, early stage capital to heritage regeneration projects around the world.  With FJC administering the loan fund, CHiFA will be able to stay lean and focused on mission.

CHiFA Co-Founder Bonnie Burnham described how CHiFA evolved out of her many decades of experience at the World Monuments Fund.   Her previous work was largely focused on revitalizing individual sites, using philanthropy to leverage public sector.  Her work at CHiFA has a more intentionally broader economic and social impact in mind, through nonprofit partners that facilitate investments in enterprises and the urban fabric.  “We’re trying to create a methodology that can be widely applied,” Ms. Burnham explained.  “Our goal is to bring the public sector and private sector together in joint initiatives.”

Aurora Kazi Bassett, the Director of Outreach & Policy for Doh Eain described a promising model of the type CHiFA has in mind: her organization’s work in Yangon, Myanmar.  Doh Eain is a social enterprise that uses private investment (and some grants) to restore and maintain small and medium sized, privately owned historic residential buildings, and also improve public spaces that can be used by the community.  “These are not the big, beautiful palaces that we go to visit on holiday, but the shops, houses, and office buildings that have been used by normal people’s homes.” Doh Eain’s model does not purchase the properties outright, but takes on the risks of revitalization during a discrete leasehold period and returns ownership back to the original owner-residents.

Shoshana Stewart, CEO of Turquoise Mountain, presented another model of heritage-led regeneration.  After describing some of the organization’s successes in the Old City of Kabul, Afgahnistan, Ms. Stewart described their vision for Umm Qais in Jordan, a unique architectural site at the crossroads of the Middle East, adjoining Syria, Lebanon and Israel.   With layers of architectural and cultural assets, including Roman ruins, Byzantine period mosaics, and a ruined Ottoman period village, Turquoise Mountain intends to leverage tourism, which a cornerstone of country’s economy. “Typically when international tourists come, they come to the big sites: Petra, the Dead Sea, Wadi Rum.  In the north of Jordan you’ve got a number of sites, but there is nowhere to stay.  If we can get the accommodations right, we have the potential for both international and domestic tourists. There’s significant potential.”

Common across the Doh Eain and Turquoise Mountain examples is an enterprise model that combines some philanthropic grant resources with more conventional investments that offer a return to investors.   In Doh Eain’s case, rental income from the residential and commercial, properties covers the cost of the physical revitalization, and also provides an income stream to the building owners and a return to impact investors.  Doh Eain uses some of the profits, along with grants, to implement public space work that is more purely subsidized.  Turquoise Mountain will seek investment capital to develop the ruined Ottoman village into accommodation (which will ultimately generate revenue).  Simultaneously, they work with a range of grantmaking partners, including development agencies and philanthropy, for the pieces of the project that are critical to its ultimate success but not expected to generate revenue.

In advance of their capital raise, CHiFA has documented the emergence of heritage regeneration NGOs with investable business models in their recently published white paper Impact and Identity, Investing in Heritage for Sustainable Development. Says Ms. Burnham, “We have to convince impact investors that heritage is a missing link in the circular economy strategy, bringing human environments into compliance with meeting our goals for sustainable development.  This is where there’s a tremendous opportunity.”

FJC celebrates the release of partner organization The Cultural Heritage Finance Alliance (CHiFA)’s report Impact and Identity, Investing in Heritage for Sustainable Development.  The white paper makes the case for historic resources as investable assets for the comprehensive and sustainable revitalization of many at-risk and culturally significant communities throughout the world. Particularly timely, the report reflects on successful models to define a path forward that is an antidote to environmental degradation, civic erosion, the loss of irreplaceable cultural treasures and the displacement of local populations.

The report presents studies of six examples from across the world where heritage investment has restored vibrancy to historic urban centers that had been in economic and cultural decline.  A housing investment company in Amsterdam, a World Bank loan in Fez, a visionary private investor in Mexico City, entrepreneurial businesses in Panama City and Yangon, and a government-supported loan program in the UK succeeded in catalyzing more than a billion USD in leveraged capital. 

FJC formed a strategic partnership with CHiFA last year as loan servicer and finance administrator.  As CHiFA raises philanthropic loan capital to invest in sites globally, FJC’s role will be to manage the operations of aggregating and deploying these funds, including servicing for its international project loan fund. This arrangement will allow CHiFA to remain lean and focused on mission, with FJC leveraging its scaled operational platform to deliver back office support and ancillary services. FJC will also manage payments for most of CHiFA’s day to day expenses.

The Cultural Heritage Finance Alliance (CHiFA) was founded in 2019 to promote heritage-led regeneration through innovative financing solutions.   Its goal is to position historically and culturally significant built environments as anchors of environmental, social and economic development.  Bonnie Burnham, president and founder of CHiFA and president emerita of the World Monuments Fund, stated: “Preserving heritage is among the targets set by the UN Sustainable Development Goals, but it is not on the radar screen of investors and institutions who are aligning behind sustainable development.  And yet there are inspiring and highly impactful examples of how it can transform the places we live, for the better.  We want to call attention to these examples so that people around the world can learn from them.”  

Public agencies are responsible for heritage preservation in most countries.  But with an increasing number of sites under protection, decreasing budgets, and low political priority, these agencies face a crisis of inadequate resources.  There is a tendency to focus on landmark structures, whereas the more encompassing urban fabric — where people live and work — offers the greatest potential for impact. While public commitments are necessary, dynamic success requires a complement of NGO engagement, private investment and mission-motivated entrepreneurs who together can advance heritage preservation at the urban and district levels. Currently, no entity exists within the heritage conservation field to facilitate these partnerships and to align capital to bring projects to fruition.

CHiFA’s research, conducted over the course of 2020, has revealed a spectrum of  successful models. The full case study analyses are linked to the appendix, and will be released as a second volume in early April 2021. 

Gary Hattem, a co-founder of CHiFA and former head of Global Social Finance at Deutsche Bank, concluded: “The experiences, ideas, strategies, and plans presented in this paper explore a new frontier: that of how to go about healing our planet and preserving the richness of the world’s cultural assets. CHiFA builds upon lessons learned to identify a financially viable ecosystem capable of validating heritage sites by leveraging their irreplaceable value to the benefit of existing residents.” 

As the leader of the World Monuments Fund over three decades, Bonnie Burnham saw firsthand how cultural heritage sites around the globe stimulate local economies and strengthen communities. “Heritage sites, whether buildings, landscapes, or structures,” explains Ms. Burnham, “have enormous cultural or historical value that with careful stewardship can be translated into economic value and job creation for a broad range of stakeholders.” Unfortunately, many heritage sites exist in places that have limited public resources for their upkeep.

Enter the Cultural Heritage Finance Alliance (CHiFA), which brings together expertise in conservation, architecture, urban planning, business and finance to orchestrate long-term strategies that create revenue and economic sustainability for heritage assets while supporting a range of Sustainable Development Goals. The goal of CHiFA is to raise loan capital from foundations and other mission-lenders to provide working capital loans that will catalyze significant public and private investment in these important places.

As Ms. Burnham and her team prepared for CHiFA’s formal launch, they realized they needed a strategic partner to manage the operations of their loan fund. Co-Founder Gary Hattem, formerly Head of Deutsche Bank’s Global Social Finance Group, made the introduction to FJC.

As CHiFA raises philanthropic loan capital to invest in sites globally, FJC’s role will be to manage the operations of aggregating and deploying these funds, including servicing for its international project loan fund. This arrangement will allow CHiFA to remain lean and focused on mission, with FJC leveraging its scaled operational platform to deliver back office support and ancillary services. FJC will also manage payments for most of CHiFA’s day to day expenses.

“This relationship will benefit us both,” said Bonnie Burnham, President of CHiFA. “For CHiFA, FJC brings the advantage of more than 25 years of experience in loan servicing and financial management, which will give us, our partners and investors confidence that we will launch our initiative with a high degree of operational excellence. We hope this alliance with a foundation partner will accelerate cultural heritage as an emerging impact investing theme.”

“We are thrilled to collaborate with CHiFA to execute this unique and innovative international program,” said Sam Marks, Chief Executive Officer of FJC. “The revitalization of cultural sites has enormous potential impact, not just as a worthy goal on its own terms, but as an engine for economic development and job creation. As a sponsor of Donor Advised Funds with a long history of lending to the nonprofit sector, it’s exciting to apply our operational model to advance the goals of partners like CHiFA, where money meets mission.”