THE OFFICIAL WEB SITE OF THE MADISON TIMES WEEKLY NEWSPAPER

 

 

 

 

 

 

 

Finding fertile ground for local growth

by Anita Martin

Like buying locally, investing locally means having the opportunity to watch your dollars at work in your own backyard.

“The Dane Fund provides for socially responsible investing on a local level,” says its executive director, Salli Martyniak. “We’re all about community … where there is a need, we’re there.”

A Community Development Financial Institution (CDFI) sanctioned by the U.S. Treasury as a 501c(3), The Dane Fund is one of approximately 500 CDFIs nationwide, seven of which are in Wisconsin. Each has its own distinct mission.

The Dane Fund’s mission is to help strengthen and support nonprofit organizations in Dane County and to position them for success in the future (“building capacity for nonprofits”). This is accomplished by lending money to local charitable organizations at a lower- than-market interest rate and by providing no-cost technical assistance and twice-a-year training.

 “Because our mission is to help nonprofits, we include them in the decision making as well,” Martyniak says: The Dane Fund’s board is made up of individual investors, other nonprofits, and partners in the community.

A lending committee whose composition includes representatives from financial institutions and community nonprofits closely scrutinizes all loan requests, says Martyniak, and she is proud of their seven-year lending track record.  “We are not federally insured,” she said. “On the other hand, we have never lost a dollar of investor funds [and] have had zero defaults and no delinquencies.” She points out that investments in the stock market or in mutual funds are also not federally insured.

How does the give and grow process work?

“As an investor, you lend money to us, similar to how you might purchase a CD [Certificate of Deposit],” Martyniak explained. “You invest a minimum of $1,000 for a 12-month period and receive 0-3 percent in interest. We then use your money for a year. We relend it into the community, to nonprofit organizations. Then the nonprofit pays The Dane Fund back.” (Investment agreements  can also be established for five-year, 10-year, and 15-year periods).

Interest rates are negotiated on a case-by-case basis with individual investors. Some investors voluntarily take 0 percent interest, while others receive 3 percent. In terms of current CD interest rates, Martyniak says, The Dane Fund is very comparable. The average interest rate is 1.97 percent.

Monies go to help seed other programs and for neighborhood centers, economic development through business incubators, affordable housing, etc. Generally, eight to 10 nonprofits receive loans annually from The Dane Fund. Community loan recipients have included Madison Development Corp., Wisconsin Partnership for Housing Development, and Women’s Transit Authority.

Who are The Dane Fund’s investors? After financial institutions, the fund’s largest investment base is individual investors. Current investors include “people who have done their due diligence”; among them attorneys, accountants, and “even a woman who recently moved to a retirement facility,” Martyniak said. Individual investments typically start at $5,000.

To date, the largest investment from an individual has been $125,000. Most Dane Fund investors are in their 50s or 60s. Often these individuals have cash available from a recent home sale or due to the death of a spouse. Right now, we have one pair of investors, a couple  who is saving for a house through investing in The Dane Fund,” Martyniak said. “They said, ‘Instead of putting this money in a bank, we’d rather have it work for us in the community until we need it.’”

In addition to individual citizens within and outside Dane County Dane Fund, investors include banks, credit unions, religious institutions, foundations, and unions.

Locally owned for-profit corporations also invest, Martyniak explained. “They say, ‘I may need that money in two  or three years. I can’t afford to give that money to you, but I can afford to let you use that money for a year or two.”

What clearly amazes Martyniak, besides the phenomenonal fact that the fund has loaned more than $3.3 million over the past seven years with no defaults and no delinquencies, is the fact that all but two of their investors have rolled over the annual investments into The Dane Fund. (In the other two cases, deaths precluded rollovers.) By contract, in the event of a death, the investment goes back to the estate, at which point the survivor has the option of donating the money as a gift to The Dane Fund.

A suitable style of giving for “mixed couples?”

Martyniak says investing in The Dane Fund is “an alternative form of philanthropic giving,” one that appeals to both liberals and conservatives, because the gift is a loan, not a grant, requiring the organization to work for the money and then give it back. It’s not a handout; it’s a boost. Couples in which one person is liberal and the other conservative can find fertile, common ground to give and grow locally through The Dane Fund.

Summarizing the availability of this type of socially responsible investing, Martyniak says, “The biggest ‘ah-h-ha-a-a’ that people get when they find out about The Dane Fund, besides the fact that we’re even doing this … is that we’ve never lost money. That’s huge!”

To find out more about how you can make a difference by investing in our community, call 257-3863 or e-mail sallim@danefund.com.