Impact Investment Profile

Investor

The Rockefeller Foundation

Investee

Disability Opportunity Fund

Founded in 1913, the U.S.-based Rockefeller Foundation makes grants and investments to promote the well-being of humanity. The Disability Opportunity Fund is a community development loan fund that provides financing to increase access to housing that promotes the independence for the disabled. The foundation's USD 750,000 senior unsecured debt investment will help grow the fund's balance sheet and increase its lending to organizations serving the disabled.

Investor Targeted Impact

Improve the lives of poor or vulnerable people

Investor

Name The Rockefeller Foundation
Investor description The Rockefeller Foundation (RF) is a global philanthropic organization based in New York, U.S. that was started in 1913 by John D. Rockefeller. RF's mission is to promote the well-being of humanity by supporting work that expands opportunity and strengthens resilience to social, economic, health and environmental challenges. The foundation operates globally and has assets in the range of USD 3.5-4 billion. The foundation also oversees a USD 25 million program-related investment (PRI) portfolio, in the form of loans, equity, and guarantees, which aligns with the foundation's issue areas.

Investee

Fund/product name Disability Opportunity Fund
Manager information The Disability Opportunity Fund, Inc. (DOF) is the first and only community development financial institution (CDFI) in the U.S. focused on providing access to financing specifically for the development of affordable housing and other services for people with disabilities. Based in Albertson, NY, DOF was created in 2007 to meet the needs of organizations such as for-profit and nonprofit developers, social services agencies, and hospitals interested in developing those services. DOF lends to U.S. real estate developers, communities, and organizations to fund projects which address the shortage of housing, schools, and vocational training centers for people with disabilities. It provides a range of financial loan products to help clients acquire, build, or refit buildings in order to create housing and other solutions that promote independence for those with disabilities. DOF also funds community facilities, provides technical assistance, and undertakes policy advocacy in pursuit of its mission.
Sector Affordable Housing; Financial Services
Geography North America - United States
Asset class Debt
Size of fund/product As of March 31, 2012 DOF had a lending portfolio of approximately USD 2 million.
Fund/product description DOF provides loans for projects that benefit disabled individuals. Examples of the types of projects they have financed include affordable housing and schools. DOF offers four types of loans: - Pre-development loans (used for market studies, architecture, engineering, permitting, and/or site development)- Property acquisition and rehabilitation loans - Construction loans- Mini-perm loans (short-term financing for developers used before a project begins generating income)DOF offers its clients terms that differ by product type. Generally the tenor can range from 1-7 years and typical annual interest rates are between 4 and 7 percent.
Motivations for investment Twenty percent of the U.S. population--approximately 60 million Americans--identify as people with mental or physical disabilities, making it the single largest minority group in the country. However, existing public and private service and support organizations for this segment are inefficient and uncoordinated. Thus, the disability market, or services and products for the disabled, presents a growing, yet largely untapped, opportunity to provide needed financing to ventures that generate social value. In addition to serving this population, DOF seeks to catalyze systems change and attract additional investments by demonstrating that the market providing these services can be efficient, coordinated, and profitable. RF's investment will provide DOF capital to grow its balance sheet and enable it to increase the number of loans made and beneficiaries affected. RF found the investment attractive because it fills a previously unmet market need for financing that will create significant positive social impact and improve and expand the system for addressing a historically underserved population. In addition, the risk profile of the investment is attractive--for example, three borrowers have fully repaid their principal and DOF has experienced zero losses and no delinquencies to date.

Investment

Instrument Debt - Senior Unsecured Loan
Investment size USD 750,000
Investment term 10 years
Investment impact objectives Through this investment, RF seeks to improve the lives of low-income, disabled individuals in new and more equitable ways. In addition, RF hopes to bridge DOF to larger, more diversified pools of capital by enabling it to develop a track record. This investment will also demonstrate the potential of the disabilities market by leveraging dollars through the syndication of loan participations with traditional lenders, other CDFIs, and government entities.
Social and environmental metrics tracked on investment Metrics are tracked against targets which were set in the loan agreement:Total number of disabled individuals impacted by the final product supported by the loan (for both housing and other products) Percentage of deals syndicated In addition, RF specifies that the proceeds of the loans must be used for:Housing-related loans in which 100 percent of the beneficiaries must be disabled and low-income and come from low-income family households (those with incomes equal to or less than 80 percent of the area median income)Other loan products in which 100 percent of the beneficiaries must be disabled and 75 percent of the beneficiaries must be low-income and come from low-income family households

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