More loans for Rhode Islanders as RI Foundation loans $500K to Capital Good Fund

Funds will enable the nonprofit lender to help more Rhode Islanders with affordable loans for COVID-19 relief, transportation, housing

The Rhode Island Foundation has made a $500,000 loan to Capital Good Fund. The Providence nonprofit will use the funding to make below-market, short-term loans to consumers who do not qualify for conventional financing for expenses related to the COVID-19 crisis and other key needs, such as buying or repairing a car and security deposits.

“Making loans and direct investments from our endowment enables this impact investing to align our financial investments with our mission. Investing directly from our endowment gives us the flexibility to support the work of our nonprofit partners in a way that supplements our grant programs,” said Neil D. Steinberg, the Foundation’s president and CEO. “We are proud to provide Rhode Island-based nonprofits like Capital Good Fund with resources to serve their mission.”

Launched in 2017, the initiative aims to invest up to five percent of the Foundation’s endowment, beyond traditional grant-making efforts, in Rhode Island-based nonprofits, for-profits and governmental agencies to support projects that generate measurable social impact as well as a financial return. Investments range between $200,000 and $2,000,000. Terms generally will be no longer than 10 years.

The five-year loan from the Foundation will enable Capital Good Fund to help an additional 250 borrowers. Capital Good Fund is a nonprofit, U.S. Treasury-certified Community Development Financial Institution that provides equitable loans to borrowers with low incomes.

“This investment will enable us to achieve our strategic goals, including increasing the number of Rhode Island families impacted by our products.”

– Andy Posner, Capital Good Fund founder and CEO

He continues, “The death of George Floyd in Minneapolis and the COVID-19 pandemic have exposed long-standing racial disparities in the financial system. We appreciate the Foundation’s support of our work aimed at closing the gap by ensuring that low-income Rhode Islanders have options other than predatory lenders that can cripple their finances.”

Capital Good Fund will use the funding from the Impact Investing program to offer personal loans ranging from $300 to $25,000 with an average interest rate of 14 percent, which is a fraction of what some so-called pay-day lenders would charge; in fact, the maximum allowed interest rate on a payday loan in Rhode Island is 261 percent APR.

“Our clients are people who can’t access mainstream loan products for a variety of reasons, ranging from being low-income, having poor credit or simply not trusting the financial system,” said Posner.

As borrowers pay off their loans, Capital Good Fund will use the proceeds to repay the Foundation with interest. About 95 percent of its borrowers repay their loans, according to the nonprofit, which also offers a nationally recognized Financial and Health Coaching program to help clients establish a financial plan that enables them to achieve their life goals.

With the loan to Capital Good Fund, the Foundation’s Impact Investing initiative has made 11 loans and investments totaling $9.8 million. The recipients include Urban Greens, which received a $300,000 equity investment to build an 8,000- square-foot, community-owned grocery store on the southside of Providence; and Horizon Healthcare Partners, which was awarded a $300,000 bridge loan to launch a behavioral health center.

Learn more about the Foundation’s Impact Investing initiative; learn more about Capital Good Fund.