The funding that we provide from our trust funds is normally in the form of either a grant, a loan or an equity invesment (or a combination of all types). Because the loans that we make are to achieve our trust objectives (to reduce waste to landfill, improve the health of the environment and create sustainable development of Canterbury businesses) these are social loans or social lending (also called social finance).
Social Lending is a relatively new term to New Zealand, but growing in use as a term and in use by organisations. It has been utilised within the UK and USA for at least a couple of decades by such organisations as Triodos and Self Help. There is a solid group of social lenders in New Zealand (including Prometheus and the Tindall Foundation, to name a couple) who are focussed on helping their communities – rather than giving them a hand out focussing on giving them more of a helping hand through empowerment. I had the pleasure of meeting some of them at a social lender’s forum in December (organised by Philanthropy NZ).
Social lending is defined as “a tool to empower communities, organisations, families and individuals. It is a way to fund projects, buildings, businesses, ideas and dreams” ( Benedict, L (2010). Social Lending: A tool for grantmakers, an opportunity for communities, Ian Axford (New Zealand) Fellowships in Public Policy).
And that is exactly what SIFT does. We fund projects and provide businesses and individuals with advice and support around achieving their projects. For some we start off by with a grant to fund a feasibility study or develop a commercial business model, for others it is a loan for a machine that will recycle a waste and for others it is an equity investment in their company that has a great idea or business plan to reduce waste in a new, unique and innovative way but just needs some capital to make it happen.
The future for SIFT is to focus more on social lending and equity investments to have more of an impact on the enviroment and to achieve our trust objectives. This may also require collaboration and co-funding with other investors and organisations to create even greater impact. We will still be a grantmaker and give funding that requires only a social and environmental return but social lending will continue to grow in New Zealand as a great tool for our communities to achieve a sustainable future, and SIFT will be apart of that.
An excellent explanation on social lending in New Zealand is Laura Benedict’s research report (below and referenced above).