Impact lending is a new – and important – tool REDF is employing to facilitate growth of employment social enterprises. Capital Deployment Manager Mike Gilliam talks about the goals of REDF’s new impact lending program and what has surprised him most about working with social enterprises.
For over 20 years, through a combination of grantmaking and deep technical assistance, REDF has successfully scaled employment social enterprises. Now, many of the social entrepreneurs that we support need more than just grants to continue growing – they need flexible capital in the form of loans. However, they are running into roadblocks securing loans from traditional lenders. They are either too small for a traditional commercial bank to take a chance on them, or their model is simply misunderstood.
After conversations with social entrepreneurs about their needs and the challenges they are facing, REDF realized that we are in a unique position to step in and provide that service – and educate other lenders in the process. In 2017, REDF launched an Impact Lending Program, expanding our offerings for employment social enterprises.
I am excited to serve as REDF’s first-ever Capital Deployment Manager and help build out this program. In addition to performing due diligence and executing loans, my focus is on monitoring the program to ensure that it is serving our employment social enterprises well. I am also working to codify our approach and results so that we can share our learnings and successes with other lenders. We are seeking to demonstrate to other philanthropic intermediaries, Community Development Financial Institutions (CDFIs), and traditional commercial banks that social enterprises are a smart, but historically overlooked, investment. While we are educating lenders on the field of social enterprise, we will also coach our entrepreneurs to be savvy borrowers and advise them on right times to take on debt to grow their business.
Working on an impact lending program like this is what drew me to join REDF. Previously, I worked at Credit Suisse, where I focused on capital debt markets and strategic advising for retail consumer companies. However, I developed an interest in impact investing and began to seek an opportunity to apply my financial and consulting background to social causes.
When I joined REDF two years ago, I thought the learning curve with social enterprises would be similar to my past experience in retail consumer companies. In my time at Credit Suisse, I was able to easily discover the patterns and similarities across these companies, and it did not take long to understand the business model of a new client. But this has not been the case with the social enterprises in REDF’s portfolio. I have been continually surprised by their nuances. Two businesses could be operating in the same industry but have a completely different model because of the target population they are serving. Or, two businesses could be serving the same population but with a different theory of change. You cannot take a one size fits all approach and I learn something new from each enterprise I work with. No matter the business model, though, I am consistently impressed by social entrepreneurs’ commitment to making smart decisions that recognize the connection between business and mission.
At the REDF office, I am fortunate to work with and learn from colleagues who also appreciate and understand this connection. Our organizational commitment to a growth mindset – allowing people the opportunity to make mistakes and learn from them – has deepened this shared learning and sense of teamwork. Working at REDF and with this team has been an incredible opportunity to use my skill set and experience to focus on more than just financial outcomes.
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