Tools & Resources

Investment in Neighborworks Montana

This case example appeared originally in Essentials of Impact Investing: A Guide for Small-Staffed Foundations
Investor: High Stakes Foundation
Investee: NeighborWorks Montana
Asset Class: Private Debt - General Recourse Loan
Investment Amount: $250,000
Impact Sector(s): Community & Economic Development; Housing
Date of Investment: 2019
Projected Exit: 2019
Financial Return Goal: Below Market Rate
The High Stakes Foundation supports visionary people and organizations that are leading and implementing changes that create a sustainable future for Montana. It strives to invest all its assetssustainably while spending them down over about ten years. The foundation likes to make PRIs where possible as one way of generating income from its mid-term investments. NeighborWorks Montana came to the foundation’s attention through a consultant who told the foundation about the resident-owned cooperatives that NeighborWorks Montana was organizing to help people living in manufactured housing to buy their housing parks.
The foundation made a $250,000 loan to NeighborWorks Montana for five years, 4 percent interest-only paid quarterly and a balloon payment at term. While the foundation’s initial interest was sparked by NeighborWorks Montana’s resident-owned cooperatives, it did not invest directly into one of the new cooperatives. Instead it invested in NeighborWorks Montana as a whole and provided capital to support all of NeighborWorks’ affordable housing work in Montana. This made the investment less risky because it is backed by NeighborWorks Montana’s balance sheet strength, rather than a single resident-owned housing cooperative.
The foundation is already experienced using debt as a philanthropic tool. In addition, it actively seeks cash placements that are more attractive than low-interest, low-social-return bank accounts. The foundation underwrote the NeighborWorks Montana investment alongside a trusted consultant and another individual Montana investor who was considering the same impact investment. High Stakes did not have a strong prior existing relationship with NeighborWorks Montana but knew its work. The organization provided a full notebook of financial and mission underwriting information for the foundation to review. The loan was documented with a several-page loan agreement provided by NeighborWorks Montana.
An individual Montana investor also lent money to NeighborWorks Montana during this investment process.
Projected Impact
High Stakes Foundation earns 4 percent annual interest. NeighborWorks Montana gained affordable capital for its work. This loan empowers residents in manufactured housing to stay in their affordable homes while becoming property owners who control their own land and cooperative enterprise. It can also support other affordable housing development by NeighborWorks Montana.

Have a question, website feedback, or idea to make our services better?



Please contact [email protected] if you have trouble logging in.