The Finding Impact Podcast

FIP 113: Funding for when things go wrong, with Caroline Bressan of Open Road Alliance

07.24.2019 - By Andy NarracottPlay

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This week on the Finding Impact podcast, we will be speaking with Caroline Bressan, the Director of Social Investments at Open Road Alliance. This incredible service at Open Road Alliance provides capital (loans or grants) to social impact organizations (non-profit and for-profit) facing an unexpected roadblock during implementation. On this episode you will learn: The story behind why it was set up: founded in 2012 by psychologist and philanthropist Dr. Laurie Michaels to address the need for contingency funds and the absence of risk management practices in philanthropy. It originally started as a grantmaking organization and then moved on to recoverable grants, and finally in 2018 launched Loan Fund Open Road Ventures which is a $50 million dollar commitment towards short term loans on solving this unexpected roadblocks and cash crunches. To date they have put out $18 million towards that $50 million target. Half of their portfolio is in East Africa. Fast response: from initial request to decision being made, it’s a period of 6 weeks. Examples of: Some organizations receiving bridge loans for accounts receivable and / or the large purchase order, and  Open Road Alliance speaking with actual investors to say that they can help and to not back out. The Roadblock Analysis Report which has around 150 data points which shows (among other things) that about half of these cash crunches are caused by funder created obstacles. E.g. An agricultural social enterprise in Kenya can look to see what are the top three risks likely to occur so that they can put a contingency plan in place. Caroline’s advice from the entrepreneur side: when talking to investors, first make sure they have already raised their funding and ask if they have made their first deal out of their new fund. Impact investors, particularly in East Africa, could do a better job about being clear and transparent regarding their application process, their timeline for disbursement, and criteria they use to make decisions. Open Road Alliances criteria for social entrepreneurs: 1) It has to be mid implementation (ie. you had all the money you needed and then something happened). 2) An “unexpected” criteria (ie. something external outside of the management teams control, like a funder pulling out, the government changing a policy, or an office being robbed, etc.). 3) Discreet criteria (ie. need to be able to fully solve the problem at hand, for example, the average loan is $300k and if you have a million dollar gap, Open Road Alliance won’t be able to fund you until you find that first $500k). 4) Catalytic impact criteria (ie. does this model have the potential to be system changing either in design or scale, and what is the probability of achieving that impact?) **Geography is not important. The process: an entrepreneur-centric approach. It typically takes 4 to 6 weeks, although the fastest they have ever moved is 7 days. You can connect through an existing investor or reach out to the OpenRoadAlliance.org email to start an initial conversation to talk through your model, ask questions about the roadblock(s), and Open Road Alliance can give a diagnosis to how well things are fitting into their criteria. The next stage is the application which is 4 pages and asks about your model, the roadblock, the solution, and the impact. Open Road Alliance can have a 1 hour call to give feedback to make the application as strong as possible before moving to the investment committee. Then a decision is made after that within a week. In between Open Road Alliance will check references, talk through repayment structures, etc. Open Road Alliance has only had 1 loss out of 60 loans. Links to Resources: Open Road Alliance website  Open Road Alliance funding inquiries email: [email protected]  Roadblock Analysis Report  Connect with Caroline: LinkedIn  Twitter  Open Road Alliance Twitter

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