Dear friends, Warmly, Deborah Frieze Michael Frieze Aaron Tanaka. Matt Kahn Macken Toussaint Nene Igietseme

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1 2014 ANNUAL REPORT

2 Dear friends, In 2014, we met Brenna Nan Schneider, whose textile manufacturing company is revitalizing Lawrence, Mass., and preparing low-wage workers for jobs in the advanced manufacturing sector. We partnered with brothers Glynn and Sheldon Lloyd to support their Roxbury-based, triple-bottom line business in strengthening Boston s burgeoning urban food movement. And we teamed up with Tony Williams so he could bring even more of his unique dance classes to hundreds of Boston youth. Those are just a few of our city s astonishing entrepreneurs. As a placed-based impact fund, we ve been inspired by the passion and smarts of small business owners who put everything on the line to fulfill a vision, serve their customers and grow their livelihoods and the health of their communities. In 2014, the Boston Impact Initiative provided more than $700,000 in new loans, grants and equity investments to 11 local businesses and organizations. We also funded $250,000 in additional capital to support low-income entrepreneurs of color through our microfinance partners, making 26 small business loans and 534 microloans in the year. As a local economy innovator, we are committed to experimenting with new capital instruments and collaborative field-building projects that will transform the landscape of economic opportunity in Boston to one that is equitable, just and sustainable. We re grateful for our growing community of entrepreneurs, capital partners, friends and allies. As we celebrate our achievements in 2014, we look forward to growing a more vibrant and powerful local economy movement in Boston and beyond. Warmly, Deborah Frieze Michael Frieze Aaron Tanaka Matt Kahn Macken Toussaint Nene Igietseme

3 2014 Investments Overview 27.1% 2014 Direct Investments $0.7M Capital Type 69.5% Loans Grants Equity 8.3% 15.2% 37.5% 8% 2014 Direct Investments $0.7M Sector 31% Arts & Culture Environment & Energy Food & Agriculture Manufacturing Other 38.2% 12.1% 8.5% 41.2% BII Total Investment Types $1.6M (Historic) Direct Loans Direct Grants Equity Microfinance & Cooperative Funds BII 2014 Microfinance Outcomes Microfinance Partner Loan Sizes Loans Disbursed Loans Deployed Grameen USA $500 - $2, $829,000 Accion East $500 - $25, $215,675 3

4 PORTFOLIO STORY City Fresh Foods is a 20-year-old, nationally acclaimed enterprise that delivers fresh, wholesome meals to charter schools, eldercare facilities and other organizations throughout the Boston area. As one of Roxbury s major employers, City Fresh is respected as a triple bottom line business that brings returns to people, planet and profits. City Fresh plays an anchor role in Boston s burgeoning urban food movement, serving major customers such as Meals on Wheels while sourcing from area producers and advocating for increased local food production. BII partnered with Cienega Capital, an impact fund from California, to make an equity investment. We ve been thrilled to bring Boston Impact Initiative on as a minority shareholder of City Fresh Foods. Building this business has been a labor of love for my brother and I, so we re careful about the investors we work with. Not only does BII add value as a highly networked and savvy capital provider, but their creative orientation towards social justice prompted us to explore new ways of using investments to spread wealth. We re proud to be exploring a groundbreaking strategy to transition BII and Cienaga Capital s ownership shares to our 100+ dedicated employees over time. This kind of visionary problem solving is what makes Boston Impact so exciting to work with. -Glynn Lloyd, Founder and CEO 4

5 PORTFOLIO STORY 99 Degrees Custom is a light manufacturing company specializing in customized clothing and textile production. Based in Lawrence, MA, 99 Degrees Custom seeks to grow good manufacturing jobs in an region once known for its thriving industrial economy. Producing high quality me-commerce products, 99 Degrees Custom brings value adding manufacturing jobs that adapt to the modern economy. The company acts as a pipeline for employees into a growing advanced manufacturing sector in the region. The Boston Impact Initiative provided purchase order financing to 99 Degrees Custom to help secure a major contract. In 2014, BII funded our largest project to-date, a 19,000 piece order for a collaborative West Elm/FEED Projects order. This order marked a significant step forward for us. In addition to scaling our operations in 2014, we have grown from a team of 5 to a team of 15. Growth is not possible without financing options and BII filled a financing gap that would have otherwise been impossible to fill as an early stage manufacturing company. Thank you! - Brenna Nan Schneider Founder & CEO 5

6 PORTFOLIO STORY Tony Williams Dance Center (TWDC) is a studio in Jamaica Plain dedicated to providing quality dance instruction to Boston s diverse urban community. From ballet to salsa to hip hop, TWDC boasts one of the most diverse class offerings, faculty, student and parent populations in the Greater Boston Area. TWDC produces the highly acclaimed Urban Nutcracker, and has helped hundreds of Boston youth develop physical and mental discipline and emotional confidence through the arts. BII provided TWDC a loan to create more student scholarships and hire additional staff. Support from Boston Impact was really important for the success of my company and studio in BII s loan helped replace my higher interest business credit, and allowed me to keep more resources in house for administrative support. We re serving more students and providing more scholarships than ever, the Urban Nutcracker was again a major success, and I am more free to teach and be with the students who I love. BII is a wonderful local partner and we re lucky to have them in our community. - Tony Williams, Founder and Principal 6

7 MICROFINANCE SPOTLIGHT Boston Impact Initiative has helped capitalize two microfinance funds, Grameen America & Accion East. Both agencies are highly regarded non-profit microlenders who provide small loans for home based businesses and lowincome entrepreneurs. Adapted from an interview by our partners at Accion East about Ivy s experience as a small entrepreneur and microfinance recipient. In 2013, Ivy landed her first Whole Foods contract. Soon, Logwood Raw Honey was stocked on the shelves of 37 Whole Foods and 11 specialty stores in the New England region. Ivy was ready to expand, but she faced another challenge. It costs $10,000 each year to certify a product as USDA organic. Most specialty stores only focus on products that are certified organic. It makes it difficult for a small business to get into those stores without a large amount of money upfront, explained Ivy. Ivy needed to build her credit, and she needed somewhere to start. After working with an Accion Loan Consultant, Ivy received a $3,000 loan to build her credit and purchase critical materials. The Accion loan was certainly one of the catalysts for helping my business get to where it is today. I bought two skids of jars, which dropped my product costs down significantly and has allowed me to keep my shelf space while I move to organic certification. The loan also helps me establish business credit so I can access larger investments in the future. I am definitely on my way! 7

8 Special Project Solidarity Economy Initiative We are proud to partner with local funders to sponsor the Solidarity Economy Initiative, an incubator for communitybased economic justice organizations. While local non-profits play key roles in engaging and advocating for low-income residents, there is an observable separation between the fields of community organizing and economic development. When these sectors do intersect, we ve witnessed inspiring outcomes that advance transformative strategies for building local living economies, such as CERO co-op, a nationally known recycling and composting enterprise. The Solidarity Economy Initiative is funding 8 grassroots organizations to design a year-long learning and incubation process. The program will provide resources, training and support for grassroots organizations to explore the integration of cooperative economic development into their social change strategies. Groups are considering community land trusts and worker-owned cooperatives as two economic development strategies that grow low-income economic power and model our goals of democratic community-controlled enterprise and development. 8

9 Special Project Raising Community Capital Starting in June, 2014, the Boston Impact Initiative was proud to co-convene the Boston Community Finance Study Group in partnership with the Center for Economic Democracy and City Life Vida Urbana. The study group brought together some of Boston s most dynamic organizers, co-op developers and alternative finance practitioners to explore community controlled financial institutions that could help meet the economic development needs of Boston s low income communities of color. We studied a range of models that allow for unaccredited investors to pool their resources, including community loan funds, community development credit unions, community equity funds and cooperative investment clubs. Learning from the experiences of Boston Impact Initiative, participants explored the possibilities of crowdsourced, flexible and patient capital to advance transformative economic development projects in our communities. The Working Group will be engaging community stakeholders in a broad based feasibility study for the formation of a community controlled investment vehicle in the next year. 9

10 Special Project Social Good Marketing Wins Prize in Dorchester The Boston Impact Initiative was proud to sponsor a social impact prize for a local enterprise to receive free office space in the new Fields Corner Business Lab co-work facility. Founded by Michelle Miller, Social Good Marketing was chosen from a competitive field of dynamic businesses for its mission to bring effective and affordable marketing services to small businesses and non-profits. We were impressed by SGM s commitment to empowering local entrepreneurs and engaging a diverse network of young consultants. We congratulate SGM and FCBL for their role in growing a more resilient economy in Boston and beyond. 10

11 Portfolio, Partners & Team Team Deborah Frieze, Co-Founder & Managing Partner Michael Frieze, Co-Founder & Partner Nene Igietseme, Senior Associate Matthew Kahn, Chair, Investment Committee Aaron Tanaka, Managing Director Macken Toussaint, Attorney (Reimer & Braunstein) Partners Accion East Business Alliance for Local Living Economies (BALLE) JP Neighborhood Development Corporation Reimer & Braunstein, LLP Ropes & Gray RSF Social Finance Third Sector New England Pro-Bono Business Advisors Mark Bouckley Lee Goldberg Mark Lohr Rick Wynn Alison Moronta (JPNDC) Boston Impact Initiative Portfolio 88 Acres* 99 Degrees Custom* Accion BCCO CERO* City Feed City Fresh* Coop Fund of New England Crop Circle Kitchen Dorchester Co-op Fields Corner Business Lab* Food Project* Fresh Food Generation* Future Boston Alliance* Grameen Boston Renew Energy Partners* Smarter in the City* Sustainability Guild Tony Williams Dance Center* *Investments in fb: /bostonimpactinitiative