After its largest social bond issue to date, the philanthropy-backed impact fund has now raised nearly $ 600 million to fund high-performing public charter schools in underserved communities.
Posted: October 26, 2021 at 3:30 p.m. EDT|Update: 1 hour ago
NEW YORK, October 26, 2021 / PRNewswire / – Equitable School Revolving Fund (ESRF) announced the closure of $ 250 million of the verified “Social Bond” rated A product to support its mission to provide affordable funding to public charter schools that promote social and racial equity across the United States The funds will help the ESRF program administrator , Equitable Facilities Fund (EFF), to expand a portfolio of school borrowers who currently provide excellent education options to more than 50,000 students.
The third set of bonds issued by the ESRF will recapitalize the EFF’s philanthropy-backed impact fund, which since its launch in 2017 has provided $ 568 million in funding to support more than 100 schools in 16 states. Notably, each of the fund’s bond series has achieved a social bond designation from Kestrel Verifiers, which signifies the high social impact of the school portfolio.
The latter offering continued to be in high demand from new and regular investors, bringing the total number of investors to 63.
“In 2017, we hypothesized that there was an appetite among investors for a product that could offer a double bottom line: high social return as well as reliable interest income, liquidity and strong credit.” , said the founder and CEO of EFF. Anand Kesavan. “Four years, three successful rounds and half a billion dollars later, we have proven the theory that doing good and doing good are not mutually exclusive. For those in the social impact community, the Equity in education is no longer an assumption, it is a no-brainer. It is also a moral imperative. For all children who deserve a high quality education, we must continue, no matter what, “says Kesavan.
While charter schools receive public funding, they often face significant financial barriers to accessing quality school facilities. EFF is explicitly designed to level these playing fields through impact investing, providing long-term, low-cost, fixed-rate loans for school facility projects. It is a strategy that has so far led more than $ 130 million in savings in the classroom.
EFF invests in public charter schools that provide transformative educational opportunities for students, especially in underfunded communities. Seventy percent of the students in the EFF portfolio are considered economically disadvantaged and 82% identify as people of color. Despite this, 90% of students in EFF schools outperform their peers in the district, demonstrating their commitment to academic and operational success.
Since its inception, the fund has received numerous grants and awards. In April, the ESRF was selected as the recipient in 2021 of the Environmental Finance Social Bond of the Year award for its 2020 bond issue, which at the time was the largest transaction in the education sector. in the United States to have obtained a social obligation designation from Kestrel Verifiers. ESRF’s latest offering is even broader and has retained its corporate designation of Kestrel.
For demonstrating innovative methods to help charter schools manage the costs of acquiring, constructing and renovating facilities, EFF also received two credit enhancement grants from the US Department of Education totaling $ 20 million.
Despite the pandemic-related disruption in the financial markets, EFF has remained dedicated to its mission using an inventive “Cap and Rebate” structure. Unlike most investors, the EFF continued to lend to schools throughout the crisis while capping interest rate hikes. When credit markets recovered, the EFF recalibrated each loan and repaid additional debt service expenses incurred by schools at the temporarily higher rate. “Supporting high performing public charter schools and their students during and beyond COVID-19 was not just a necessary public social good, it was a smart financial decision,” Kesavan said. “When the next crisis hits, we know what works and the schools know who will support them. “
The EFF is supported by the Walton Family Foundation’s Building Equity Initiative (BEI), an unprecedented effort to make public charter schools easier and cheaper to access fair and affordable facility finance.
About the Fair Trade Facilities Fund
Equitable Facilities Fund is a 501 (c) (3) not-for-profit social impact fund established to provide long-term, low-cost loans that allow high-performing public charter schools to maximize the resources they devote to students. High-quality public charter schools foster a bright future for children across America, and the EFF believes these schools should borrow on terms comparable to traditional public school districts. EFF operates an “A”-rated revolving loan fund, which recapitalizes with funds from Equitable School Revolving Fund bond issues, to provide scalable, long-term and fixed bond investment opportunities. on high credit. To find out more, visit www.eqfund.org or send an email to [email protected]
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