 I am here today, I'm Sundia, I'm here today with my colleagues, Lauren and Lem. I am coming from Community Credit Lab, which, if you haven't heard the news, we were just recently acquired by Common Future. So Community Credit Lab works with community-rooted organizations to facilitate community-led impact investing to shift power, and then Common Future incubates, co-creates and funds community wealth-building solutions and uses their platform to influence others to bring in capital to continue to test and iterate new ideas. And I'm going to pass it to Lauren to introduce herself. Thank you, Sundia. Good morning. I am Lauren Gratton, I'm co-founder and Chief Community Officer of Mission-Driven Finance and Impact Investment Firm and B Corporation based in San Diego, California, but working across the country. We started with our own place-based private debt fund, intending to support inclusive entrepreneurship and economic opportunity, and then had folks coming to us across the country to say, what does that look like for us? How can we create strategies that get capital flowing into our community, too? So that's what we do now. We help design, develop, and manage those impact capital vehicles that center community first and help to put together these vehicles that crowd in many different kinds of investors. I'm delighted to be here today and I'll hand it to Lim. Good morning, everyone. I'm Lim White, the co-CEO at Possibility Labs, which is a San Francisco-based social finance and social movement infrastructure platform. We support folks who are funders and investors to make impact investments through donor-advised funds, sometimes through community pooled funds that support community governance, mostly in black and brown communities, and low-income communities, so that there's self-determination and that the capital is staying in the communities and that it's building power in those communities instead of being driven by funders. And then also support the back office of things like community loan funds, co-ops, mostly movement groups that are sort of on the cutting edge of building self-determination in the communities. And I'm glad to be here with you all today. I'll pass it back. Yeah, thank you. Today just a quick run of show. We'll be starting off with Lauren and Lim doing a quick intro to what is it that we're actually talking about when we talk about impact-first investing? And then Lauren, Lim, and I will share a couple of examples of the frameworks that we use at our respective organizations to do and actually practice impact-first investing, as well as examples, and then we will turn it over to you all to do a little bit of workshopping around a question that we have prepared for you all, and we'll be circulating if you all have any questions, and then we'll come back together at the end. So with that, I will pass it to Lauren to start us off. So as we get to our slides, it was here at SoCAP, I think in 2019 before the pause, that I heard from Andrea Armeni from Transform Finance, and he had this great metaphor that capital is the gas in a car, but yet we have been using it to dictate where the car is going, to decide and build this kind of built environment based on what the gas wants to do, and instead if we can consider first where do we want to go and then let the capital be the gas that helps us get there, then we can change how that capital flows. So really considering what is the role of capital, how can we consider first what is its purpose before saying, all right, this is what I need to get out of it. So that's what we're talking about with impact investing. Other friend, Ted Levinson, who's probably been here, has used this statement saying mainstream investing is moving money based on the future you predict, and we love this, that impact investing is moving money based on the future you want. This framework that you see on the screen is probably familiar to you, it comes from Sonon Capital, and we see a lot of frameworks that help with the left side of the screen. Those environmental, social governance strategies, public market strategies, those are a lot of frameworks that have been built out because it's a traditional financial space. If you click one more time, we're going to focus today on this right side. What does that mean? Impact first investing in philanthropy, it doesn't actually get into tactics. So that's what we're talking about today. How can we get this into practice? So this is a lot of words on here. The slides will be available afterward, I promise. You can also take pictures of it. But expanding that right side of the screen, the impact first pieces, we have grants on the far right side for operations. It's a classic nonprofit space to subsidize the access to programs and services. Those, we've got this objective. What's the intention of this capital on the top part? And then it's what does this look like in practice can be on that bottom row. But we see opportunities to move actually from grants, which frankly are 100% financial loss, that's money that is going out, never to come back to the grant making organization. But between 100% financial loss and say 15% preferred return, you have a whole lot of wiggle room. There's a lot of structures that you can put in place, such as recoverable grants, forgivable loans, guarantees that help to absorb risk in order to unlock that capital that is usually just the left side of the prior screen, that its intention is to pay and be repaid. So there are many, many strategies that we have and tools and tactics that we can use that center community first in order to crowd in more money. So building on that, one of the things that we all focus on is moving from money as an investor, an investee in a transactional relationship to a more transformational relationship. And when we think about impact first investing, the goal is to transform, whether it's our communities, the environment, whatever it is, we're trying to transform. And the folks that are closest to the problems that we're trying to transform typically also are closest to the solutions that will transform those things. And so when we think about impact first investing, moving from the transactional to the transformational, going from charity, which is often kind of a savior complex, or it's really about the donor and feeling good to trust-based giving, which is centering the needs of the community and those receiving the money to design their futures and think about what do they really need and how they need that money to come and be structured. Going from single grants to integrated capital. So often times with foundations or funders, there's a philanthropic portfolio with foundations that's 5%, with donor advice funds that tends to be something like 20%. And then there's a bunch of money sitting and not undeployed. And so how can we think about integrated capital, whether that's patient capital, whether it's recoverable grants or things like that, other tools, other finance tools that we can use to really build power in the communities. Going from funder governance to community governance. So thinking about as a funder or investor, how are you moving power as you make the investment? So are you retaining the power? Are you the decision maker constantly? Or is that power moving to the community as the money moves? And then just thinking about long-term economic power. Is the money as it's moving, creating long-term economic power in the communities where you're investing? Or is it extractive and intended to sort of extract from that community? So I think as we think about impact first investing, really centering community needs is a powerful place to start. As we're investing in communities. So yeah, hand it back. Thank you, Lem. So now we're going to move into how do we actually do this in practice? This was a lot of words, a lot of frameworks, but doing this work, I would just pause and say that each three of our organizations are building the infrastructure to be able to be very flexible and responsive to the different types of investments needed and the different types of structures that are needed to center community. So in this conversation, we're bringing forward a lot of the learnings that we've had over so many years. We weren't just coming into the space knowing what was needed. A lot of what has informed what we are talking about today is through trial and error, is through working with different communities, understanding and seeing what it is that was working and what it is that wasn't working. And listening and eternalizing that and then building our own frameworks off of that. So I'll start with Community Credit Lab, and this goes hand in hand with Common Future as well. And the example that I'll be providing with was actually a joint project that we both worked on. So at Community Credit Lab, everything that we do is community defined and community led. The frameworks that we use when we're trying to identify different opportunities for us to get involved fall within these three pillars of our work. The first one is increasing affordability. So we know that and we have heard and we have seen that wealth cannot be created in communities if we continue to charge them higher interest rates, if we continue to continue to extract more capital from them rather than allowing them the flexibility and patience to test and try new ideas and keep that capital, that interest within their communities. The second piece is increasing access. So when we talk about increasing access to capital, that's thrown around a lot in our sector. And the way that Community Credit Lab and Common Future defines this is that the people that are closest to the communities that are experiencing this lack of affordable capital and these capital gaps in their communities should be the ones designing the underwriting criteria. Who gets capital? Who doesn't get capital? They should be making the decisions. They should be designing those terms. They should be telling us what is it that they need in their community, not the other way around. And so we work with our different community partners to co-create some of that design together. And then this third piece that we've started to hint towards throughout this conversation and what Lem was talking about with that community governance and community led is this piece around shifting power. Shifting power means that at Community Credit Lab, we're not the ones deciding who gets the loans. We're not the ones deciding who gets the investment. It's our community partners who are saying, this is the small business in my community that needs capital and they need it at these terms and we have been working with them and we know who they are and they need that capital at this term, make it happen. So we make it happen and we're shifting power. We're allowing our partners to take that space and we're not allowing it. We're just setting the stage. We're allowing them to come in and take that power and show us what is actually needed. So we actually worked with Common Future about a year and a half ago to design what is called a character-based lending fund. And typically how capital maybe flows or is designed in maybe the traditional spaces, the traditional finance spaces, is you decide, okay, I have this much capital, this is the return I need and so now I'm going to go out and seek out opportunities that match with that. But we know that doesn't work for our communities that lack access to capital that need something that is different. So Common Future played an integral role as a convener, not only a convener of partners but a convener of capital. And Community Credit Lab played the role of a facilitator, meaning that we are facilitating the design process for facilitating the actual lending process. And then we have our capital allocators who are Native Women Lead, ConnectUp Institute, and Mortar. The process of this fund was actually instead of starting with, hey, we have a million dollars and we want to get 2% rather than start there, we said, okay, Native Women Lead, ConnectUp Institute, and Mortar, what is the capital that you need in your community? What do your businesses need that you're working so closely with? And they told us, this is what we need. These are the terms that would be accessible for our businesses. And it was different. It was way different from what they're seeing out there. These are really, really patient, flexible terms between zero and 3% interest, loans between three and seven years, repayment terms that were, you had a delayed repayment of six months to allow their businesses to get capital, to receive that capital, do something with it, and then start earning revenue to start repaying those loans. And they have the flexibility to tell Community Credit Lab, hey, actually I can't make this payment this month, so let's skip it and make it another month. So they designed the loan programs, Community Credit Lab and Common Future came together and said, okay, here's the vast number of programs that exist. What's the capital that we need to fund that? And that's how it was designed. And so we went out to the market and we raised grants, recoverable grants, promissory notes at 0% interest to be able to provide the flexibility experimentation that's needed for each of our enterprise support or entrepreneur support organizations to do what they needed. So when I think about this, and then after the capital is raised, they're the ones telling us, hey, this is where the capital needs to go, make this loan, do that, make that loan, help us assess if this is working or not. So why is this working? These are the three pieces, kind of the three pieces of our framework around increasing access, increasing affordability and shifting power. So we started with the Community Routed Organizations to design the program rather than deciding what terms they needed to be designed at in terms of affordability. Again, we're not saying what capital needs to be, what's the return we're seeking, we're saying what's the return that the community wants and that's match the capital to do that work. And then shifting power, our partners are allocating this capital. They are directing where it needs to go. They're using different governance structures within their own communities to decide how capital needs to flow. So I will pause there and shift it to Lauren to talk a little bit about mission-driven finances method. Thanks, Sandhya. And this is just adding onto what she shared earlier, the three of us are doing infrastructure work. We are effectively capital plumbing, which is dreadfully unsexy a lot of the time, but we work with so many different examples. As questions come up, feel free to put them into the app. I will figure out how that works and we'll follow up with you afterward if you have specific questions from examples that come up through this. I mentioned that we work with clients and partners across the country to design, develop, and manage impact capital vehicles. I'm happy to say so many of them are here today at SoCAP, so we'll get to share some of those examples. But what that looks like in the design process, it can go deep into the building and the managing, but in the design, that's the key piece, is we start with why, but why and who. You may have heard from Simon Sinek who has this fantastic TED talk, Start With Why. I have a variation on it that has who and why. You already heard from Sandhya that thinking about who are the communities that are most impacted, whose voices have been overlooked and underestimated, who understands the challenge that is happening on the ground, and how can we center those voices, those experiences? What do they need? How can we then think about what, how do we wanna be in relationship with that? What is our process that's going to be respectful and also have the right voices at the table? And from there then getting to, well then what does that actually look like in practice? What, the what comes last, instead of it being, I'm looking for a 6% return and quarterly interest payments, thank you so much. We start with what does the community need and then what is the right capital structure that allows that to come into being. So, next slide has another example. They're gonna sound, a thesis, excuse me. I use this formula, very simplified way to get into what does it look like to create an investment thesis, but if we invest X kind of capital and Q kind of support into Y initiatives, then we expect Z impact in financial returns. And using this simple formula helps you to be really clear about who are you centering with those Y initiatives? What are they trying to do to create that Z impact? And from that impact, then you also have with this nice if then statement, have a good framework for selection and for ongoing monitoring, is this working? How is this going? So, it's a great way to simplify very complex financial strategies into a four part formula. An example, building off of the one that Sandia shared, some of the same folks that we've been in relationship for a long time, the matriarch revolutionary fund with indigenous women in New Mexico, have been working with us to say, how can we add onto the program that we ran with co-op capital, up to $10,000 loans, and then working with Sandia as their team, I think 10 to $50,000 loans. What about those businesses that grow beyond the 10 to $50,000 loans? How can we help them continue to scale and grow? So their thesis boiled down into, if we invest $50 to $250,000 at three to 5% interest and provide this technical assistance network, helping indigenous women entrepreneurs to navigate all those different webinars and workshops and back office bookkeepers that are so critical to business growth, then we can help them to both return investor principle and also rematriate economic power. To indigenous women are the centers of their families, they are the primary breadwinners, and so lifting up indigenous women is a way to lift up all of the indigenous communities. And so that's the thesis. That's what this looks like in practice. And three to 5% came from if we can get cheaper capital to them, cheaper than what the SBA puts out, cheaper than what a lot of CDFIs put out, no offense to all of our friends, that we can increase what they can do. You meet a lot of scrappy entrepreneurs and they can stretch a dollar. So if you can get that capital into their hands, they will do more for their communities. They will invest more in their teams, and that's what we're looking for. One last example, because I know they're here and a completely different instructor, a LA clean tech incubator working with Haider, who's I think somewhere in the back, but they work with early stage clean tech companies and entrepreneurs that are trying to get really cool and innovative technologies going, but they can't get from getting a contract, their first contract or a grant from the National Science Foundation or something else, they can't bridge to actually execute on that contract. So he said, what does it look like to provide first customer financing? You landed a cool contract with a municipality in Southern California, fantastic. How are you gonna do it? So we have one of the loans that we make is an interest only structure so that you can just make very light payments. And then when that big payday comes in when you get reimbursed, then you pay the loan back. But that's a higher risk structure. It is something that said, this is what we have heard from working with clean tech entrepreneurs for a decade. And what they need is a product that serves this specific gap. So that's where we started, is really listening to them, what do they need? So when Possibility Lab started, we, like Community Credit Lab and Mission Driven started with this thesis that if we send to the people who are most impacted in finance, in thinking about infrastructure for finance, in thinking about community development, we could create new infrastructure and in partnership collectively, we could just kind of create a whole way like a whole new way of doing finance. And I think that's a lot of the stories that we just heard. And one of the problems that kept coming up over and over again is a lot of the folks that were in our communities, we're trying to do new innovative sort of cutting edge power building in their communities. It might look like launching a new co-op. It might look like really fast paced land acquisition that took housing off the speculative market so folks in our community could afford it. There are a variation, it might look like starting up a lot of new businesses, starting a community loan fund that was very community driven and centered the needs of black and brown and low income communities in terms of loan terms or integrated capital deployment and things like that. But the infrastructure for it wasn't really there. And by infrastructure, we mean people data process and underneath that, how risk is assessed, what kind of data you're collecting, how underwriting works, how you get something up and started, the process that it takes to be able to get enough capital to get something up and started and have the infrastructure right away to move quickly. So all of those things, people were having a hard time finding resources to do that. And so that was the impetus for possibility labs. And as we designed it, we came up with this sort of, I shouldn't say we came up with it. We deployed this formula, focusing on people data and process. People, who's at the table? Who's in our communities? What do they need? Those kinds of things. Who's driving? Is the power shifting that direction? And yeah, what are the real needs in the community? And we found some of the similar things, flexible terms, being able to structure how they're receiving capital. Sometimes it's being able to structure how they're deploying capital, being close to folks. So we're working with a group that's funding black and brown farmers across both the Midwest and the South. And they're finding things like that are very old, like being able to start, equipment co-ops, they're so under-capitalized because you need so much money to buy equipment in these communities. And so you need to have access to that capital. And it needs to be, you need to have access to it for a long time, because you're not starting from the same place to say be able to pay it off in five years or 10 years. Like some of the terms on the equipment is to begin with. And so they're designing these integrated capital tools where there are pretty substantial guarantees. They're first lost in the pools and they're deploying the capital at 1% interest and they're being able to acquire the capital at 1% and 0% interest as well, which is going a long way to solve a problem. There's 1% of farmers are black, 1% of farm owners, I should say, are black in the United States. And so like to start from that point and try to build power in those ways, you're just starting from a lot lower place of capital. So to be able to deploy it so flexibly is really important. But this group also didn't have the infrastructure to be able to raise the capital and deploy the capital. And some of the things that they didn't have is the groups where the capital is coming from, even though it was very flexible terms, require them to have a much bigger balance sheet. Or because they're deploying, they're getting low interest capital, they had to have tax exemption. So the IRS wants us to charge certain interest rates and if you're not gonna charge the interest rate, you need to be tax exempt to get that capital. And so we're helping them be able to take in that capital and they're taking it into possibility labs and deploy it in ways that really center the needs of the farmers. And these are some of the folks in the group from finance and some are farmers themselves. But they're able to deploy it in community and in community practices and in community traditions without all the sort of headache of the old stodgy finance infrastructure that I know all of us want to blow up if we could and we have to be compliant at the same time. And so that is some of the things that we're helping with as well. So I think that's a concrete example of what it means to center people. The data piece is twofold. One, it's about understanding what are the metrics that communities find important and that's about shifting power. The other is what are the metrics that say the SEC or the IRS or our investors find important. And so being able to track both of those things and part of what we do is build integrated data infrastructure that takes the burden off of and some of what y'all do as well that takes the burden off of the community. So we're working with a community loan fund that's actually a black organizing project is how they started their raising capital at a pretty successful rate. They're targeting about $20 million for this year and they just don't have the infrastructure to do the SEC reporting that's necessary to run a loan fund and in a state that hasn't really had nonprofit loan funds before. And so we're helping them build out their back office infrastructure sort of deploying what we've already built and already invested in for them to be able to do that without the headache and at a cost that's manageable. So I think it takes a lot of money to build out integrated data infrastructure and yet that data is what is needed to be able to raise capital at the scale that folks need. And so for them to be able to sort of stick to the community organizing practices even in how the capital is deployed it's gonna be funding black businesses and they'll be doing patient capital loans and going in places where CDFIs and banks just like their risk assessment doesn't allow them to do that. And so rethinking how risk works and doing it in a trust based way they still have to comply with how that states SEC sees risk. And so we've been able to help them with that. And then process again starting with people how what kinds of processes get to the solutions that our communities really need. It's certainly not having to go through big loan applications. It's not having to go through these like harder with underwriting processes and even thinking about what it feels like sometimes to be a black or brown person in a low income community and you walk into a bank taking that emotional experience and reverse engineering it so it's totally different and it feels good and it feels powerful and it feels like you have self determination when you do that. I think that's what we think about when we think about how do we create processes that really center the needs of our communities. And then how do we integrate all these things so that what we get is capital and infrastructure that's both moving at the speed of trust and also at the speed of business. And so that is what we're focused on. Thank you, Lam. I'm actually gonna call in audible because this question came up in my head as both of you were talking. And I'm curious from both of your perspectives and you can take either direction you want. What's the question that you wish either an investor or a community partner asked during a process of like designing a investment that was supposed to be community led or community driven or solving a problem for a community? I love that question. I work with about a dozen partners that I'm like the lead consultant. So that's a lot. But there, my favorite questions to get into are structural and governance, which is not always the most exciting. But again, Lem was touching on, there is a lot of compliance. And if you are trying to unlock millions of dollars, unfortunately, this is why I got into Impact Investing. I worked in nonprofits and philanthropy before. What gets given away is insufficient to address the social challenges that we have. There's just drop in the bucket. So how can we activate more capital for social change? We need to be able to use the tools that are the regulations of their current investment industry. And that is really boring. I'm not gonna lie. I read a lot of STC compliance manuals and what constitutes investment advisory services. So we don't wanna put that burden onto community partners. They want a fund to exist. They do not wanna figure out how to run a fund. They do not wanna figure out how to run capital calls. But talking about who should own the legal entity of a fund and how are other roles that could happen if they don't own the equity of the vehicle, can they have the benefit of working with a partner like Mission Driven Finance to be able to meet the STC compliance, meet investor standards, and yet continue to center voice. That's my favorite question to get into is what can the structure look like that allows a lot of different voices to be heard at different stages of the process? I love the question and that question. I think it would be where do I sit at this table? On both sides. So I think I wish that when investors were coming to the table and they were trying to figure out how to do impact-first investing or how to do a structure-specific deal, the question would be where do I sit at this table as in how do I center community power in this conversation? On the flip side, I think that sometimes in our communities, we've sort of been trained to cater to power in ways that are not helpful. And so I think I would say the same question, like where do I sit at this table as in, where's the power seat at the table? And how do we get our community in that seat? Cause that's where we should be in this conversation. Yeah, what about you? Yeah, I think that both of those questions are really like hitting at the center of where I was trying to go as well. So it was a good job, you guys. But I think the main question that I would maybe center is how do we step completely outside of the box that we know that is comfortable and that will provide maybe certain returns or certain safety nets that we thought we needed? And how do we lean into building relationship first so that we can operate from a place of trust rather than operating and building in all of these complex structures to make sure that when there's a downside, there's some protection. How do we build relationship first together so that we can do away with a lot of the things that are actually saddling a lot of this investment from actually moving forward? As my attorneys like to remind us, all investments have risk. Yes. And we have had outside of the box we have had outsized perceptions of risk in the communities that we're talking about. Folks who have been overlooked and underestimated, they're not actually defaulting on loans as much as one might think they are. So how can we push on those structures of seeing that one client that was told by a bank will invest if we have 100% loan loss reserve? And I said, hold on, let's unpack that for a second. That means you believe every single loan to entrepreneurs of color is gonna go bad day one. That's what you're saying. You're saying, I don't believe in you. And so how can we flip that again to be in relationship first, to be in trust first, to see possibility, possibility labs. How can we see that opportunity and center that? Thank you. So now over to you all. How will you shift? How will you shift power? How will you shift the way that you're currently operating? So we have a little prompt for you. I won't read it completely out loud, but essentially there's a group of enterprise or entrepreneur support organizations. They're seeing that capital is not coming to their communities and they want to design something. They want to design a fund to support those local businesses and attract local investors to see that fund. So if you're in the room today and you're typically someone who is seeking capital, I want you to play the role of someone who is actually an investor or a local investor and kind of work through some of the questions that we have here. And then if you're someone who is typically deploying capital, sit across the table or in someone else's shoes and be the one who's seeking capital and what are some of those questions that you would start asking? So I just wanted to make sure that we leave you with takeaways and these tangible practices. Again, you can access each of us through the app. I can't promise how quickly we'll respond to you, but you can access us through the app for a long time and be able to follow up with questions on implementation because that's where things get dicey. So I wanted to leave everybody with some final thoughts and some key takeaways. Yeah, and also one more plug in the app. There is a framework that both, or I should say all three of us worked on together over the past few months that starts with questions and not answers. So a lot of the conversation that we've been having today is how do we understand what our communities need? How do we show up in a place? How do we provide capital in place that is right-sized? So in the app, or in the app on our session, there is a link to a document that has a whole framework of questions that we've co-designed to help you all on your journey going forward. And as Lauren mentioned, in that is also our contact information. So feel free to reach out if you have any questions along the way. I guess I will start with Lem to just have one key takeaway for the group today. Thanks, yeah. So I would say thinking about how you're shifting power and going back to the sort of moving from the transaction to the transformation, like how is the impact transformational and how is the power shifting in any money that's moving? Thanks, Lem. And adding to Sonia's point on questions, I am a philosophy major, so I love a Socratic method. People try and distill designing an impact thesis into like perfect little boxes. It's going to vary community by community. It's going to vary case by case. And so these questions are meant to be a guide for the kinds of conversations to have and even the way to ask the questions so that you're not reinforcing funky power dynamics. So just being mindful of the way that we phrase things and my only takeaway was hearing from some folks that really wanted to continue having a lot of impact reporting after an investment and thinking about that too as a request of energy that can be extractive and so balancing what is the right level of information to be requesting from the folks that you invest in to say we're on the right track versus I am making you spend a lot of time filling out a report. So just thinking about where the energy gets invested. Thank you, Lem and Lauren. My last comment will be that we're trying to actually change systems. We are trying to change a traditional financial investment system that's not working for everyone and to do that we all have to get deeply uncomfortable and ask a lot of questions and look inward in order to best support our entire community. So if you're not feeling uncomfortable or feeling a little bit like, am I supposed to be shifting in this way? It's okay, we can be deeply uncomfortable. That's what's required because if we're not uncomfortable we're just kind of plugging into the same system. So yeah, uncomfortable. And thank you all for joining us today. Appreciate you all engaging with us and engaging in these questions that we asked of you all. I hope you all had a chance to also connect with everyone at your table. Lauren, Lem and I will be on the side over here if you want to ask us any questions and we'll be at SoCAP for the rest of the day. So feel free to stop us if you see us. Thank you.