IMPACT INVESTMENT REPORT
SUMMER 2021
Table of Contents INVESTOR REPORT
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LETTER
ABOUT
THEORY OF CHANGE
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FUND AT A GLANCE
PILOT PROJECT: ITTY BITTY FARMS
PILOT PROJECT: LOOKOUT FARM
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FUTURE OF THE FUND
THANK YOU
Images from the Indigenous practice of the Three Sisters plant guild —corn, beans and squash— are used throughout this report. Our Impact Idaho Fund portfolio mirrors the wisdom of the Three Sisters, identifying and funding projects that amplify the impact of resilience work in our community. As Robin Wall Kimmerer writes in Braiding Sweetgrass, “Alone, a bean is just a vine, squash an oversized leaf. Only when standing together with corn does a whole emerge which transcends the individual.” 2
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Letter Dear Donors and Investors, You are helping to pioneer a new investment model for our community. The Pilot program has already administered two recoverable grants to Itty Bitty Farms and Lookout Farm, with more innovative and gap-filling projects in the pipeline. These first investments in our regional food and regenerative agricultural system advance all of the impact sectors embedded in the SVIR mission. To date, the funded projects have brought more nutrient-dense, local food to market and helped the farmers conserve water in a year of exceptional drought. Your investment and donations are also helping local farmers to make sound financial decisions, as technical assistance from SVIR staff is an integral part of the funding process. We continue to seek projects that create interconnections within our region and have positive impacts across food, water, land, energy and community. This first semi-annual impact investment report is designed to deliver insight into our vision, the state of the Fund and the impacts of current investments. Thank you for stepping up and leading the way on a new regional investment tool for building community resilience. None of this would have been possible without you.
Lexie Praggastis Executive Director
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About Us ABOUT SVIR The purpose of SVIR is to advance community resilience by investing, educating and collaborating to ensure that the economy, environment and people thrive.
INVEST
RAISE AWARENESS
COLLABORATE
Connect blended capital with resilient business ideas.
Bring attention to community resilience solutions.
Strengthen connections between regional stakeholders.
ABOUT IMPACT IDAHO FUND The Impact Idaho Fund brings investment capital to innovative projects advancing community resilience in central and southern Idaho.
In pursuit of community resilience, investments target the buildout of regenerative, sustainable and renewable practices related to food and farm, land, water and energy use.
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Theory of Change SYSTEM CHALLENGES & OPPORTUNITY FOR CHANGE The Impact Idaho Fund was designed to activate capital to address key challenges across the following interconnected pillars of impact: food, land, water, energy and community.
FOOD
Long and Complex Supply Chains:
Food Insecurity:
In 2019, Idaho exported $900M in food / agriculture products while importing $400M in food / agriculture products.1
Blaine County has the 5th highest grocery cost in the nation and 28% of our population is currently served by the local food pantry.2
LAND
WATER
Development Pressure:
Extreme Drought:
Idaho lost 68,800 acres of farmland to development between 20012016.3
More than 1.5M Idahoans live in drought impacted areas.4
ENERGY
COMMUNITY
70% of Idaho’s power is from hydroelectric and coal based power plants.5
Only 50% of small businesses survive after a 5-year period.6
Fossil Fuel and Water Dependent Systems:
1. 2. 3. 4. 5. 6.
Small Business Survivability:
“2019 Global Trade: Idaho.” Https://Commerce.idaho.gov/Content/Uploads/2020/09/2019-Global-Trade.pdf , Idaho Commerce, 2019, commerce.idaho.gov/content/uploads/2020/09/2019. “Our Research.” Feeding America, 2019, www.feedingamerica.org/research.farmlandinfo.org/statistics/idaho-statistics/. “Idaho Data and Statistics.” FIC, 13 Nov. 2020, farmlandinfo.org/statistics/idaho-statistics/. “Idaho.” Drought.gov, NOAA, 2021, www.drought.gov/states/idaho. “U.S. Energy Information Administration - Eia - Independent Statistics and Analysis.” Idaho - State Energy Profile Overview, U.S. Energy Information Administration, 2021, www.eia.gov/state/?sid=ID. ”Small Business Facts - Advocacy: the voice of small business in government.” Small Business Administration Office of Advocacy, U.S. Bureau of Labor Statistics, 2021, https://www.sba.gov/sites/default/files/Business-Survival.pdf.
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Theory of Change PILOT FUND OBJECTIVES The Impact Idaho Fund Pilot was formed to balance the urgency of action with the discipline of systems-learning; implementing a new investment model that seeks to disrupt and redirect traditional flows of capital toward building community resilience. The Pilot Fund is currently focused on regional food and regenerative agriculture as a keystone for achieving this vision.
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Strengthen the regional supply chain to create more reliable access to nutrient-dense food.
Fund sustainable food and agricultural practices that prioritize natural resource regeneration.
Demonstrate models to promote local, regional and state-wide resilience.
PILOT FUND STRUCTURE
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Fund at a Glance INVESTOR BREAKDOWN INVESTMENT CATEGORY
DOLLAR AMOUNT
COUNT
Recoverable Grants
$50,000
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Foundation Grants*
$155,000
3
Charitable Donations
$195,000
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Total Investment
$400,000
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$400k+ Capital Raised from 30+ Investors 9.5% RECOVERABLE GRANT 9.5% FOUNDATION GRANT 81% CHARITABLE DONATION
COUNT 32
12.5% RECOVERABLE GRANT 38.75% FOUNDATION GRANT
DOLLAR AMOUNT $400k
48.75% CHARITABLE DONATION
*includes $20,000 from Blaine County’s Land, Water & Wildlife Program
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Fund at a Glance INVESTMENT ALLOCATION ACTIVITY Direct Project Investment
Fund Implementation
CATEGORY
AMOUNT
Current Borrowers
$45,000
Current Applicants
$255,000
To-Date Setup and Execution
$20,000
To-Date Technical Support
$40,000
Ongoing Implementation
$40,000
11% CURRENT BORROWERS 10% ONGOING IMPLEMENTATION
DOLLAR AMOUNT
10% TO-DATE TECHNICAL SUPPORT
$400k
5% TO-DATE SETUP AND EXECUTION 64% CURRENT APPLICANTS
CURRENT BORROWERS $10K
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$35K
pg. 15-17
CURRENT APPLICANTS • Current applicants in project pipeline account for approximately $255k of funding. • Existing applicants span the due diligence process from readying financials for assessment to finalizing potential repayment terms.
FUND SETUP AND EXECUTION • Frameworks and templates of supporting documents (e.g., impact assessment framework, due diligence workbooks, borrower impact and financial reports, legal agreements) have been created. • Designed due diligence process to include impact, financial and risk assessments. • Due diligence process has been completed for two funded projects and is moving forward for projects in the pipeline.
APPLICANT AND BORROWER TECHNICAL SUPPORT • Provide applicant consultations, advising on regenerative agricultural practices, business practices and funding needs. • Support applicants in preparation for due diligence by developing financial statements and pro-forma financial models. • Assist borrowers in the semi-annual impact and financial reporting process.
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Fund at a Glance IMPACT ACHIEVED* FOOD
Increased the amount of locally produced, nutrientdense food through growing structures, season extension infrastructure and optimizing production areas. Contributed to import substitution goals, which aim to address regional supply chain weaknesses by shoring up local capacity. In total, borrowers harvested 1,450 pounds of locally consumed produce during the reporting period.
LAND
Expanded resilient farming practices grounded in regenerative agriculture that prioritize soil health and natural resource conservation. Currently, borrowers cultivate nearly 650,000 square feet of land using sustainable practices. Utilizing agricultural land for human food production ensures best-use of regional natural resources.
WATER
Decreased water usage through efficient irrigation and crop selection. For example, 2.5x less water is used to produce human consumption crops compared to livestock forage crops. Protected water quality through expanded farming practices that reduce nutrient run-off into nearby watersheds.
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ENERGY
Avoided carbon dioxide equivalent emissions through place-based investments in regenerative agricultural practices, which capture carbon in the soil, and local food supply chains, which decrease reliance on energy-intensive activities, such as transportation. Avoided approximately 433 lbs of carbon dioxide equivalents** by selling produce locally (versus nationally) through reduced transportation alone. The amount of carbon avoided is similar to the level of carbon sequestered by planting and growing 3.3 tree seedlings for 10 years.
COMMUNITY
Contributed to long-term business sustainability by providing technical support to applicants and borrowers, such as business planning and financial reporting. Promoted job creation and economic prosperity by supporting successful, growing businesses in the region.
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One of the single biggest barriers to farmers actually adopting regenerative techniques is the added costs and risks in changing in any given direction.
JENNIFER O’CONNOR Barriers For Farmers & Ranchers To Adopt Regenerative Ag Practices In The US *Reporting period January - May 2021. Impact achieved will increase substantially over the growing season **Modeled by SVIR using industry data and assumptions
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Pilot Project: Itty Bitty Farms FARM OVERVIEW Itty Bitty Farms is a farm, greenhouse and storefront operation in Carey that specializes in microgreens, salad greens, herbs and other vegetables. Their local, naturally-grown produce is sold at the Wood River Farmers Markets and delivered to Ketchum, Hailey and Bellevue. They also operate an on-farm store that serves the Carey community, a former “food desert”.
PROJECT OVERVIEW With a $10,000 recoverable grant, Itty Bitty Farms purchased two caterpillar tunnels (season extension structures) with over-head irrigation systems to increase its growing space by 800 square feet and extend its growing season by up to four months, aiming to expand food production by 10,000 lbs per season. They also purchased weed management tools to enable more efficient regenerative production methods and a cold storage unit to expand their on-farm retail store offerings to include local meat, fish and other frozen products.
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SPRING 2021 REPORTED IMPACT* FOOD
On the farm, approximately 740 pounds of nutrientdense food were locally grown and sold in the spring of 2021. The volume will increase substantially as the season progresses. In the retail store, over 100 pounds of local meat were sold through the new merchandiser freezer. Additional inventory will be stocked for sale in the coming months.
LAND
The amount of land under sustainable cultivation totaled 4,400 square feet. The growing area is expected to increase to about 10,000 square feet over the course of the current season. The expanded footprint is due to the caterpillar tunnels purchased via the recoverable grant through the Impact Idaho Fund as well as additional growing space made possible through internal re-investment by Itty Bitty Farms. Itty Bitty Farms will continue to cultivate additional square footage of the parcel over time. Maintaining agriculture use on this parcel of land reduces the likelihood of development.
WATER
Innovative weed mitigation tools uphold regenerative production practices and reduce soil disturbance, protecting water quality. Irrigation in the growing structures promotes efficient water use, conserving water in the region’s highdesert climate.
*Reporting period January - April 2021 **Modeled by SVIR using industry data and assumptions
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Pilot Project: Itty Bitty Farms SPRING 2021 REPORTED IMPACT*
COMMUNITY
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Avoided approximately 220 pounds of carbon dioxide equivalents** by selling produce locally (versus nationally). The amount of carbon avoided from reducing transportation is similar to the carbon sequestered by planting and growing 1.7 tree seedlings for 10 years. The magnitude of the impact will increase substantially as the growing season progresses. Itty Bitty provides critical access to food in a historically food scarce community. The innovative weed mitigation approach promotes operational efficiency, decreasing costs, increasing profitability and supporting business viability. Similarly, improved financial modeling and reporting also contribute to long-term business success.
One function of the grant funding that has had the most immediate effect is the freezer we were able to purchase for the Itty Bitty Farms Store. We were able to stock local meats, fish, and other frozen products. We have sold over 100 lbs of local beef already and expect to increase our sales as the community becomes more aware of our offerings. More frozen products are being added constantly. EMILY KNOWLES Owner, Itty Bitty Farms
*Reporting period January - April 2021 **Modeled by SVIR using industry data and assumptions
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ENERGY
Pilot Project: Lookout Farm FARM OVERVIEW Lookout Farm is a farm operation in Bellevue that specializes in seasonal vegetables and leafy greens. Lookout’s produce is sold through their community supported agriculture (CSA) offering, at the Hailey and Ketchum farmers’ markets and to nearby restaurants. Produce is also donated to a local non-profit organization serving domestic abuse survivors.
PROJECT OVERVIEW With a $35,000 recoverable grant, Lookout Farm purchased the equipment, tools and inputs needed to convert two acres from hay production to vegetable production, nearly doubling the amount of acreage available for growing and harvesting food for human consumption. Maintaining their commitment to regenerative practices, the Lookout Farm transition will utilize cover cropping and minimal tillage without the addition of synthetic chemicals. The transition will serve as a model for future land-use transitions by other local farmers in the region.
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Pilot Project: Lookout Farm SPRING 2021 REPORTED IMPACT*
FOOD
LAND
Approximately 710 pounds of nutrient-dense food were locally produced and sold in the spring of 2021. This volume was yielded from existing acreage; the acreage in transition is expected to yield produce for sale in 2023. The volume from existing acreage will increase substantially as the season progresses.
Of the 14.5 acres (630,000 square feet) under sustainable cultivation, 3 acres (130,000 square feet) are currently producing vegetables and an additional 2 acres (90,000 square feet) are being transitioned. Historically, production methods rely upon chemical herbicides to eliminate alfalfa from fields. This transition will utilize a combination of mechanical plant disruption and cover cropping to maintain soil quality under the guidance of regenerative, organic practices.
WATER
Vegetable production uses 2.5x less water per week compared to hay production. This differential is a conservative estimate that is anticipated to increase over time as additional flow meters are installed, demonstrating the water-saving potential of the hayto-vegetable transition. Leveraged precision farming and regenerative agriculture techniques to reduce nutrient and soil run-off and protect water quality.
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ENERGY
COMMUNITY
Avoided approximately 213 lbs of carbon dioxide equivalents** by selling produce locally (versus nationally). The amount of carbon avoided from reducing transportation is similar to the carbon sequestered by planting and growing 1.6 tree seedlings for 10 years. The magnitude of the impact will increase substantially as the growing season progresses.
Designing and executing a land-use transition model that can be used by other local farmers in the region. Hired seasonal labor to help transition acreage and harvest expanded growing space, creating local job opportunities. Improved financial modeling and reporting, contributing to long-term business success.
BRIANA SWETTE Owner, Lookout Farm
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Through this program, we’re able to transition more of our land from alfalfa hay production to food for our community, while modeling a water-smart, regenerative production model.
*Reporting period January - May 2021 **Modeled by SVIR using industry data and assumptions
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Future of the Fund LOOKING FORWARD NEXT STEPS
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Perform due diligence on projects currently in the pipeline to ensure impact and financial criteria meet the Pilot Fund’s objectives. Submit projects that have passed the due diligence phase to the Board of Directors for funding approval. If approved, legal agreements are signed and funds are distributed. Begin receiving payments from Pilot Fund borrowers by end of year. Receive the second round of impact and financial reports from current borrowers and deliver a second impact investment report to investors. Debrief processes, projects and impact for Pilot Fund to determine implementation plan for subsequent iteration of the Fund. Potential to initiate capital raising for next round of projects in 2022.
ONGOING DONOR & INVESTOR ENGAGEMENT OPPORTUNITIES
CHARITABLE DONATION No Minimum Donation
The grant amount repaid by borrowers will be recycled into the Fund and redeployed to future projects. Charitable donations may be made at any time. Visit sunvalleyinstitute.org/ donate.
RECOVERABLE GRANT OR PRI*
Up to 80-100% of the investment is recoverable. Repayment is anticipated Minimum Investment: $10,000 over 5-7 years.
*Program related investment
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Recoverable grants are accepted at select times. Reach out to impactfund@sunvalleyinstitute.org or visit sunvalleyinstitute.org.
Thank You DONORS Anonymous (6) Alexandra Babalis Diane Banta Blaine County Susan & Bradley Brickman Christensen Family Foundation Greg Carr Foundation Inc. Hecht 2008 Grantor Charitable Lead Annuity Trust Heinz Family Foundation Nancy Holcomb Sean Hollitz Jeri Howland & Jerry Edelbrock Ian Jameson Jan Philipsborn Gift Fund Susan Passovoy Mary & Stephen Malkmus The Marshall Frankel Foundation Nancy P. & Richard K. Robbins
Family Foundation Peter Curran / Peco Foundation Thomas Selby & Meaghan McGrath Lisa Stelck & Bill Boeger Kelley Weston
INVESTORS Aimée Christensen Earthshine Foundation The Lufkin Family Foundation Trust
ADVISORS & PARTNERS David Arkoosh Dana Dugan, NourishMe Lauren Grattan, Mission Driven Finance Harry Griffith Julie Johnson, NourishMe David Lynn, Mission Driven Finance Kim & Scott Pertel Tom Praggastis IMPACT INVESTMENT REPORT
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www.sunvalleyinstitute.org inquiries@sunvalleyinstitute.org (208) 788-4780 Post Office Box 3537 Hailey, ID 83333 EIN: 47-3151484