Jeff Smith with RUSH Homes is project director for the conversion of historic Armstrong Elementary School in Lynchburg, Virginia into apartments, funded in part with the help of the Jessie Ball duPont Fund. (Photo courtesy of Virginia Community Capital)
In the last three years, the Jessie Ball duPont Fund has committed $3 million in program related investments to support development of housing and community facilities for low- and moderate-income families in Virginia and Delaware.
In places such as Sussex County, Delaware or Lynchburg, Virginia and the Northern Neck of Virginia, well-established community development lenders will be able to draw down Jessie Ball duPont Fund dollars to develop affordable rental housing, health clinics, day care centers and other community resources.
The $3 million in commitments were made as part of the Jessie Ball duPont Fund’s Program Related Investment initiative, which is helping the Fund ramp up its philanthropic investment in key communities.
“Traditionally, we think of the Fund primarily as a grantmaker, which it is,” said Sherry Magill, president of the Jessie Ball duPont Fund. “But the Great Recession caused us to imagine how we might deploy some of our investment assets, in addition to our grantmaking dollars, to help communities that were suffering economically. Could we invest a portion of our portfolio in local places and receive a social as opposed to a market return?”
Program Related Investments (PRIs) provide a positive answer to those questions. Simply put, PRIs are investments by a charitable foundation at below-market rates to support organizations that are addressing social or community concerns. PRIs often take the form of loans, promissory notes or equity investments. They are like grants in that they support organizations and activities that further the foundation’s mission. They are different from grants in that they must be repaid.
In 2011, the Jessie Ball duPont Fund’s trustees set aside $10 million from the Fund’s endowment for potential PRIs. After extensive market analysis and prospect due diligence, the trustees awarded:
Investing in Virginia
The commitment to Virginia Community Capital (VCC), made in early 2013, is targeted specifically to support two distinct activities in Virginia:
1) Lending for affordable housing and for projects promoting economic development and revitalizing or stabilizing low- or moderate- income communities in the Northern Neck of Virginia;
2) Lending for projects promoting economic development and revitalizing or stabilizing low- or moderate-income neighborhoods in communities where liberal arts colleges supported by Jessie Ball duPont Fund are located. These communities include, but are not limited to, Lynchburg, Lexington, Ferrum, Staunton and Ashland.
Virginia Community Capital is beginning its work in the Northern Neck by providing business planning assistance, financial planning and access to professional services to six small businesses. Meanwhile, it has taken advantage of an investment opportunity in Lynchburg: a loan from VCC along with an Affordable Housing Program grant from the Federal Home Loan Bank of Atlanta are supporting Armstrong Place, an historic adaptive reuse of the Armstrong Elementary School that will create 28 apartments for people with disabilities and low incomes. Fifty percent of the tenants served will have incomes less than or equal to 40 percent of the area median income and the remaining units will serve households up to 60 percent of the area median income.
“Creating and preserving affordable housing in Virginia is one of VCC’s core principles,” explained Monique Johnson, VCC senior loan officer who worked on the Armstrong Place project with developer RUSH Lifetime Homes. “Leveraging the loan through the Jessie Ball duPont Fund PRI advanced this project with uncommon speed. Residents will soon have safe, affordable housing available, and RUSH has converted an abandoned school into a community asset.”
Investing in Delaware
The Fund’s commitment to the NCALL Loan Fund, made in early 2014, may support work anywhere in the state of Delaware, but the Loan Fund’s emphasis on working in rural areas had particular appeal. In years past, the Jessie Ball duPont Fund provided numerous grants to support initiatives in Kent and Sussex counties in southern Delaware aimed at low-income and immigrant populations.
“Sussex County is a priority county for the [NCALL] Loan Fund,” according to Dave Callahan, NCALL’s Loan Fund manager, who notes that Sussex is the most rural county, and the poorest, in Delaware.
“Most of the Sussex County economy revolves around agriculture, and the poultry industry in particular (Sussex is one of the largest poultry producing counties in the U.S.),” Callahan states. “The agriculture industry has resulted in a large number of immigrants, mostly of Latino descent, moving to Sussex.”
The NCALL Loan Fund has loaned more than $16.7 million in Sussex County, supporting things such as Habitat for Humanity homebuilding, expansion of the La Red Health Center and development of Connections CSP Inc., a clinic for those with mental health and/or substance abuse issues.
Gaining Experience with PRIs
Through the Program Related Investment work, Senior Vice President Mark Constantine says, the Jessie Ball duPont Fund has identified some key lessons that guide decision making:
In both the Virginia and Delaware PRI commitments, the Jessie Ball duPont Fund has received assurances of a strong local presence and has conducted market analyses in advance to ensure adequate appetite and market readiness.
“In any new field of endeavor there are lessons to be learned,” Magill said. “We are pleased to have strong partners in Virginia and Delaware.”