Open Road Alliance is pleased to announce that our loan fund, Open Road Ventures, was recognized in the category of General Excellence as part of Fast Company’s 2019 World Changing Ideas Awards.
Open Road was founded in 2012 with the mission of Keeping Impact on Track™. From the beginning, we offered charitable grants to organizations facing unexpected, external roadblocks with a discrete solution. Several years into grantmaking, however, we realized that oftentimes nonprofits and social enterprises don’t necessarily need grants, but loans. They don’t need money generally, they need money now. In other words, whatever the cause of the problem, the result in financial terms is simply a cash-flow issue. Without access to traditional financial products that purely profit-driven businesses have a cash crunch could put even a high-achieving social enterprise out of business. So after a successful pilot, Open Road Alliance officially launched our loan fund, Open Road Ventures (ORV).
ORV offers below-market rate loans to bridge to committed funds; situations where funding is forthcoming, but bills need to be paid today. There are countless reasons why organizations seek funding from ORV, but the main profile of borrowers are for-profit social enterprises experiencing delays in committed funding, whether it be an investment, grant, or other capital. For nonprofits, it’s often delayed disbursements from donors. When the promised funding comes in, Open Road is repaid. For Open Road, this is an example of “impact arbitrage.” We’re able to step in with a bridge loan, take little risk, and capture all of the impact upside, by ensuring the organization stays on its existing trajectory.
In addition to filling a financing gap for social entrepreneurs, ORV is accelerating sustainable growth of the social sector as a whole.
First, ORV’s flexible, impact-focused terms allows organizations to grow in a sustainable way. Fast, flexible funding at critical junctures in a social enterprise’s development means that social entrepreneurs don’t have to make hard choices between compromising impact versus financial performance; and in this way, ORV is not only serving social enterprises, but also impact investors by de-risking their incoming investments. By solving for the short-term problems of individual social enterprises, ORV is strengthening the social sector — and its capacity for impact — as a whole.
Second, ORV is proving the model works. ORV has had zero losses to date, demonstrating that these social enterprises are more creditworthy than the current market gives them credit for. ORV is, in part, advocacy in action — encouraging other funders to join in providing flexible capital and focusing on keeping impact on track. If banks think these companies are too risky, it is our role as philanthropic capital providers to prove them wrong.
We believe that all investments have impact – a dollar is a dollar and, therefore all investments ought to be evaluated comprehensively for their returns including impacts. A thriving social sector, led by social enterprises and fueled by impact investors, is key to recalibrating the global marketplace that has excluded too many across the world. ORV helps ensure that the organizations working to evolve a new, inclusive economy don’t go off the rails in the process.
So far, ORV has disbursed $15.35 million in loans to 46 social enterprises, keeping over $144.7 million of impact on track. We’re honored to support our partners as they do the hard work of managing a business while building a better tomorrow.