CDFI Profile: The Natural Capital Investment Fund

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http://www.conservationfund.org/our-conservation-strategy/major-programs/natural-capital-investment-fund/young-loggers-buck-the-trend-grow/A previous blog post discussed the role of Community Development Financial Institutions, or CDFIs, in North Carolina. CDFIs are typically smaller financial institutions that engage in mission-driven lending intended to expand access to capital in low-wealth and underserved communities in order to foster economic development and revitalization. CDFIs are involved in community and economic development activities in a number of ways – from Program-Related Investments to support revolving loan funds in the case of the Mary Reynolds Babcock Foundation to the expansion of affordable housing in targeted geographic areas (Charlotte-Mecklenburg Housing Partnership). This post, the first in a series of posts profiling CDFIs with links to North Carolina, will highlight the Natural Capital Investment Fund (NCIF), a CDFI focused on sustainable development. NCIF is a non-profit, 501(c)(3) affiliate of The Conservation Fund, dedicated to providing debt financing to small, natural resource-based entrepreneurs and small businesses across rural communities in the mid-Atlantic and southeastern United States. 

Overview

Founded in 2001 in West Virginia, as a subsidiary of The Conservation Fund, NCIF was established to advise and support small- to mid-sized businesses, allowing them to grow and create jobs in economically distressed communities. NCIF provides loans to businesses that promote sustainable development and use natural resources responsibly through sustainable and value-added agriculture, renewable energy and energy efficiency, sustainable logging, recycling, heritage and ecotourism, natural medicine and water conservation and quality.

As parent organization to NCIF, The Conservation Fund is a well-known land conservation non-profit, established in 1985 and based in Alexandria, VA. Since its inception The Conservation Fund has been responsible for the preservation of over 7 million acres across the United States through outright conservation, as well as compensation for environmental impact, while also promoting economic development through support to small businesses that embody the organization’s conservation ethos. As a subsidiary of The Conservation Fund, NCIF is a U.S. Department of the Treasury-certified Community Development Financial Institution (CDFI) and Community Development Entity (CDE), meaning NCIF is eligible as a non-governmental entity to receive federal funds for distribution through targeted investments to underserved populations and distressed communities that meet both federal and NCIF requirements. Since 1994 the U.S. Treasury’s CDFI Fund has promoted access to capital and local economic growth in a number of ways including direct funding to CDFIs through Financial Assistance (FA) Awards, granting of New Market Tax Credits to individuals and corporations through CDEs, as well as other programs that incentivize bank lending to underserved populations, direct training to CDFIs through Technical Assistance (TA) Awards, and bond guarantees for community investment. Funding for NCIF’s revolving loan program is sourced through direct funding from these federal programs, in addition to contributions from mission-drive foundations, as well as other agencies, corporations, and individual donors.

NCIF’s financial services broadly span 5 general areas: business expansion loans, loans to firms seeking increased energy efficiency, logging and logging related business loans, small scale web-based lending up to $50,000 for agriculture and forest product entrepreneurs through NCIF’s ShadeFund, and New Markets Tax Credit Financing. NCIF’s revolving loan fund typically provides loans between $15,000 and $250,000, but as large as $500,000, with terms ranging from less than one year up to 15 years, depending on need and use of funds.

Sample Portfolio Companies

While NCIF’s ShadeFund provides small scale loans to forestry-related and small-scale agriculture producers all across the United States, many of the fund’s large projects are based here in North Carolina. Below is a brief summary of two interesting North Carolina-based companies NCIF is currently working with.

FLS Energy, Inc. – Asheville, NC

Following their goal to “make solar energy mainstream, sooner rather than later”, FLS Energy, Inc. has seen tremendous growth installing solar thermal and solar photovoltaic systems on residential and commercial properties across North Carolina, and now across the United States. Incorporated in 2006 the firm has benefited from growing awareness around global warming, passage of North Carolina’s 2007 renewable portfolio standards and increased availability of state and federal tax credits for solar energy installations. In 2008 NCIF engaged with FLS by providing $250,000 in working capital financing to fund growing inventory needs and development costs for a large solar farm. FLD continues to experience growth, engaging in more projects across the United States with 67 employees added over the past four years.

Misty Mountain Threadworks – Banner Elk, NC

Owned and operated by a group of high school friends from North Carolina, Misty Mountain Threadworks operates on the belief that “the world would be a better place if everyone went climbing”. In keeping with this, Misty Mountain has been producing high quality rock climbing harnesses and gear since 1985 with a commitment to sustainability in their operations, employment to skilled workers in a shrinking manufacturing economy, and sourcing of materials from local producers. NCIF engaged Misty Mountain to provide a $100,000 loan to ramp up harness production while also maintaining its sustainable production methods. Following the NCIF investment, Misty Mountain expects to add eight new positions as the firm continues its growth.

More can be learned about other small and growing natural resource-focused companies that NCIF engages with on the Natural Capital Investment Fund website.

Tanner Dudley is a graduate student in the Department of City and Regional Planning at UNC-Chapel Hill. He is also a Fellow with the Development Finance Initiative.

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