What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Nonprofits and social enterprises generally lack extra funds to help out if things go wrong. Unlike traditional businesses, it’s hard to develop a rain day fund when donors (or investors) expect most of your money to toward changing lives.
Open Road Alliance is a philanthropic initiative that launched in 2012, and since it's inception, has provided $13 million in emergency grants or loans to organizations that might have otherwise folded. As Fast Company has reported, ORA has joined another effort alongside several major funders to rethink the issue. Called The Commons, it has provided, among other things, a toolkit for groups and funders to assess and plan for mission risks. But the group has also doubled-down on how to provide short-term monetary assistance.
This month, ORA launched a low-interest loan fund called Open Road Ventures, which has committed to distributing $50 million to groups in need over the next five years. “Financial instruments for nonprofits and social entrepreneurs are oddly missing in the philanthropic and social impact sector,’ says founder Laurie Michaels in an email to Fast Company.
Any organization can now apply for assistance and receive a below-market rate loan with a maximum two-year window for return. So far, none of ORA’s partners have defaulted, although the group expects about 5% to do so eventually. The return from low-interest rates will hopefully cover that while allowing the group to reinvest in other organizations that may need it in perpetuity. “The impact investing industry has questioned why there aren’t any social enterprise ‘unicorns’ yet,” Bressan says. “We believe it is because these organizations are operating without a safety net–one stroke of bad luck can throw their growth and social impact forever off track.”
Read the full article about a fund to bail out non-profits by Ben Paynter at Fast Company.