Guarantees Working Group

The Guarantees Working Group, launched in Spring 2016, explored the opportunities and challenges of structuring guarantees at scale in the context of urban-based U.S. community investing.

Overview

As a field-building organization dedicated to scaling the impact investing industry, the GIIN is committed to working with impact investors to address market and practice-oriented challenges by facilitating dialogue, action, and the development of new products and market infrastructure. Among the GIIN’s product development initiatives, the Guarantees Working Group engaged nearly two dozen GIIN member organizations to tackle the main barriers preventing the wider application of guarantees to attract much needed capital into community development sectors. The Working Group was complemented by a study led by the GIIN’s Research Team, which ran in parallel to Working Group activities. The Working Group served as a testing ground for research scope and findings, which culminated in an issue brief launched in April 2017, Scaling the Use of Guarantees in U.S. Community Investing.

Key Objectives and Activities

The Guarantees Working Group engaged in a series of activities to scale the use of guarantees in the U.S. community investing market. Through quarterly convenings, the group identified key barriers preventing wider deployment of guarantees, including the lack of standardization in structuring guarantee-backed deals and frequent misalignment or misunderstanding of motivations among stakeholders. To address these barriers, the Working Group pursued the following activities:

• Outlined Main Components of Guarantee-backed Investments. In an effort to streamline the structuring and negotiation process undertaken by investors and investees entering into guaranteed-back investments, a subset of the Working Group developed a list of the main components required by investors and investees when considering participation in and design of guarantee-backed deal. This resource also was published as a supplement to the research study and can be found on page 49 of the report.
  
  
• Mapped Stakeholder Considerations. In a focus group setting, the Working Group mapped key parameters and questions each stakeholder (namely the provider and recipient of the guarantee as well as the investee) considers when structuring a guarantee-backed deal. This resource is intended to align expectations and interests among stakeholders to underwrite a successful deal, and was published as a supplement to the research study. See pages 50-51 of the study to access this resource.
  
  
• Shared Knowledge through Case Studies. During each quarterly convening, Working Group members showcased and discussed a guarantee-backed investment they were engaged in, highlighting the structure, challenges, lessons learned, and potential for replicability and scalability. While not all of these presentations were captured in the research study, please refer to pages 17 – 28 for details outlining four guarantee case studies.

Members of the Guarantees Working Group included:

Annie E. Casey Foundation Arabella Advisors BNY Mellon The California Endowment Calvert Foundation Citi Community Investment Management LLC Deutsche Bank Enterprise Community Partners Ford Foundation Gary Community Investments Impact Community Capital

J.P. Morgan Chase & Co. John D. and Catherine T. MacArthur Foundation The Kresge Foundation* Nature Conservancy Nonprofit Finance Fund Orrick, Herrington & Sutcliffe LLP Overseas Private Investment Corporation (OPIC) Shared Interest Tideline Virginia Community Capital W.K. Kellogg Foundation

*We are grateful to The Kresge Foundation for their support of both the Guarantees Working Group and parallel research study, Scaling the Use of Guarantees in U.S. Community Investing.

For more information on the GIIN Guarantees Working Group, please contact the Membership Team at networkmembership@thegiin.org.