IMPACT INVESTMENT REPORT Full Year 2021
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Table of Contents INVESTOR REPORT
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LETTER
ABOUT US
THEORY OF CHANGE
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FUND AT A GLANCE
PILOT PROJECT: ITTY BITTY FARMS
PILOT PROJECT: LOOKOUT FARM
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PILOT PROJECT: WILD SPACES FARM
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.”
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Letter Dear Donors and Investors, Over the past year and a half, we have worked to pioneer a new investment vehicle for our community. Your generous and continued support has allowed us to bring our vision to fruition, first building the foundation of an innovative program and then iterating and evolving alongside the needs of the entrepreneurs on the ground. To date, the Impact Idaho Fund Pilot has administered two recoverable grants to Itty Bitty Farms and Lookout Farm and approved a third to Wild Spaces Farm. The first borrower repayment was scheduled and successfully executed in December of 2021. These investments in our regional food and regenerative agricultural system advance all the impact sectors embedded in the SVIR mission. To date, Itty Bitty Farms and Lookout Farm have brought more nutrientdense, local food to market. At the same time, Wild Spaces Farm is addressing a tangible gap in raw and minimally pasteurized dairy. All our borrowers are leading the way by employing regenerative practices amid extreme climate conditions, including exceptional drought. Your investment and donations are also helping local farmers to make sound business and financial decisions, as technical assistance from SVIR staff is an integral part of the program for all applicants, regardless of whether they are ultimately approved for funding. We continue to seek projects that create interconnections within our region and have positive impacts across food, water, land, energy and community. This second semi-annual impact investment report is designed to provide an update on the current and future state of the Pilot Fund, including the impact achieved by portfolio investments, as of the end of December 2021. Thank you for continuing to believe in our investment thesis, as we work to connect capital to those building community resilience.
Nate Twichell Executive Director 4
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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.
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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
As recoverable grants are repaid by borrowers, portions that were funded by investors will be returned to them and portions that were funded by donors will be recycled into the fund, amplifying the impact of every dollar contributed. IMPACT INVESTMENT REPORT
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Fund at a Glance INVESTOR BREAKDOWN INVESTMENT CATEGORY
DOLLAR AMOUNT
COUNT
Recoverable Grants
$50,000
3
Foundation Grants*
$258,000
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Charitable Donations
$195,000
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Total Investment
$503,000
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$500k+ Capital Raised from 30+ Investors 8.8% RECOVERABLE GRANTS 14.7% FOUNDATION GRANTS
COUNT 34
76.5% CHARITABLE DONATIONS
9.9% RECOVERABLE GRANTS 51.3% FOUNDATION GRANTS
DOLLAR AMOUNT
38.8% CHARITABLE DONATIONS
*Includes $20,000 from Blaine County’s Land, Water & Wildlife Program
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$503k
Fund at a Glance INVESTMENT ALLOCATION CATEGORY
AMOUNT
Approved Borrowers
$120,000
Current Applicants
$90,000
Remaining Project Funds
$90,000
To-Date Setup and Execution
$34,000
To-Date Technical Support
$82,000
Ongoing Implementation
$86,000
ACTIVITY Direct Project Investment
Fund Implementation
6.8% TO-DATE SETUP AND EXECUTION
23.9% APPROVED BORROWERS
16.3% TO-DATE TECHNICAL SUPPORT
DOLLAR AMOUNT $503k
17.2% ONGOING IMPLEMENTATION
17.9% CURRENT APPLICANTS 17.9% REMAINING PROJECT FUNDS
WILD
$10K
pg. 14-16
$35K
pg. 17-19
C SPA ES F
$75K
M AR
APPROVED BORROWERS
pg. 20-21
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Fund at a Glance INVESTMENT ALLOCATION
CURRENT APPLICANTS •
Current applicants in the pipeline are requesting approximately $90k in project financing.
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Existing applicants span the due diligence process from readying financials for assessment (technical assistance) to finalizing potential repayment terms.
REMAINING PROJECT FUNDS •
If current applicants in the pipeline are approved for funding, then approximately $90k will remain in the Pilot Fund for future applicants.
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To further develop the project pipeline, the team will continue to raise awareness of the Pilot Fund and build relationships with entrepreneurs focused on regional food and regenerative agriculture.
FUND SETUP AND EXECUTION •
To set up the Fund, the team created frameworks and templates, including, but not limited to, the following: impact assessment framework, due diligence workbook, borrower impact and financial reports and legal agreements. Materials have been refined over time as the program has evolved.
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Through Fund execution, three projects have been approved for funding. Current and future applicants will also be subject to formal due diligence to ensure all investments meet the Pilot Fund’s financial, impact and risk criteria.
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APPLICANT AND BORROWER TECHNICAL SUPPORT •
All applicants and borrowers receive technical support, spanning from pre-application consultations to borrower reporting and repayment.
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First, the team schedules consultations with potential applicants, advising on regenerative agricultural practices, business plans and funding needs.
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Following consultations, the team supports applicants by developing financial models and projections, which are needed to perform the investment due diligence required to enable the flow of capital from donors and investors to borrowers.
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This process not only unlocks the potential for borrowers to receive capital from the Pilot Fund in the near-term, but also opens the door for them to access other types of funding in the future.
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The financial acumen and tools gained by borrowers as part of this technical assistance process also allows them to make more informed business decisions, contributing to longer-term business viability and sustainability.
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Thorough technical assistance is time-intensive, but it leads to strong due diligence outcomes and reliable investment decisions, enabling SVIR to be the most prudent stewards of donor and investor dollars.
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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 almost 26,000 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, it is anticipated that 2.5x less water will be 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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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.
ENERGY
Avoided approximately 7,786 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 58.4 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 - December 2021. Impact achieved will increase as projects expand production capacity. **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 The $10,000 recoverable grant administered to Itty Bitty Farms provided them with capital to increase their production space, build efficiencies into their weed management and irrigation systems and expand their store offerings to include more locally sourced frozen products, including meat, fish, butter and fruit. A portion of this investment was made by Blaine County’s Land, Water and Wildlife program. The Carey community has responded well to increased product availability. As Emily and Landon Knowles shared with us, “people are telling us how glad they are that they can get local, affordable, high-quality food right in town.” This project sets the stage for Itty Bitty Farms to increase their production while keeping fresh produce affordable to their neighbors. Itty Bitty Farms has begun repayment on their investment. The first repayment was scheduled for and successfully executed in December 2021. 14
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2021 REPORTED IMPACT* FOOD
On the farm, close to 2,500 pounds of nutrientdense food were locally grown and sold in 2021. The volume doubled from spring 2021 and will increase again in the 2022 season. In the retail store, over $60,000 worth of produce, dairy, eggs, meat and value-added goods were sold through the expanded inventory offered in 2021. New products available from the freezer include locally raised beef, pork, fish and fruit.
LAND
The amount of land under sustainable cultivation totaled 7,200 square feet. The growing area is expected to increase to about 10,000 square feet over the course of the next season. 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 - December 2021
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Pilot Project: Itty Bitty Farms 2021 REPORTED IMPACT*
COMMUNITY
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Avoided approximately 703 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 5.3 tree seedlings for 10 years. 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.
The high tunnels and other farm equipment have allowed us to increase our production of tomatoes and other less cold tolerant plants, making more food available to our local community despite the difficulties that we had with the growing temperatures this past season. This is very encouraging because we know that we will be able to steadily increase our efficiency and improve our production over the next few years. The addition of the freezer unit has been a game-changer for the storefront. We are now able to carry local beef, pork, fish, butter, and fruit in the freezer. EMILY KNOWLES Owner, Itty Bitty Farms
*Reporting period January - December 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. A portion of this project was funded by Blaine County’s Land, Water and Wildlife Program. During the second year of the conversion, Lookout Farm will begin producing vegetables on the majority of the two-acre conversion parcel. The remaining acreage will receive additional soil building and weed management attention. Despite the drought affecting most farmers in the region, Lookout Farm was able to continue forward on the land transition and is recording their successes and missteps. This information will provide a model for other regional farmers interested in transitioning their acreage from livestock forage production to food for human consumption.
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Pilot Project: Lookout Farm 2021 REPORTED IMPACT*
FOOD
LAND
Approximately 23,500 pounds of nutrient-dense food were locally produced and sold in 2021. This volume was yielded from existing acreage; the acreage in transition is expected to begin yielding produce in 2022.
Of the 14.5 acres (630,000 square feet) under sustainable cultivation, 3 acres (130,000 square feet) are currently producing vegetables and most of the 2 acres (90,000 square feet) in transition will be producing vegetable crops in the 2022 season. The remaining acreage is managed for animal forage production or native plantings. 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 hay-to-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 7,084 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 53.1 tree seedlings for 10 years. The magnitude of the impact will increase substantially as the growing area expands into the two-acre transition parcel.
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 - Decemeber 2021 **Modeled by SVIR using industry data and assumptions
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Pilot Project: Wild Spaces Farm FARM OVERVIEW Wild Spaces Farm is a new business launched by a third-generation farmer, Wilder Jones. Wild Spaces is a grass-fed, organic, micro dairy in Glenns Ferry that will produce raw and minimally pasteurized products for southern Idaho communities. Wild Spaces will start by selling organic, raw milk in glass bottles in late spring of 2022. This product will fill a gap in the market with the closure of Old Almo Creamery in the spring of 2021. As production levels increase, Wild Spaces is planning to offer value-added products, such as cream, butter, cheese and ice cream.
PROJECT OVERVIEW With a $75,000 recoverable grant, Wild Spaces purchased the infrastructure and equipment needed to launch the micro dairy. Funds also cover operating expenses during the initial startup phase. Wild Spaces will sell products into the Wood River Valley, Magic Valley and Treasure Valley, while also ensuring the community of Glenns Ferry has access to the farm’s high-quality, affordable dairy products. The dairy is implementing pasture-raised and organic methods, prioritizing animal and human welfare alongside sustainable packaging and responsible land use practices and will serve as a model for interested producers and entrepreneurs.
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Wilder Jones Owner, Wild Spaces Farm
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I’ve really enjoyed working with the people at the Impact Idaho Fund,” says Wild Spaces owner Wilder Jones. “I think I have an MBA now just from working through the process. It has been really illuminating to talk through expenses, margins and models. As I launch the dairy, it is incredibly valuable to be part of a team and not feel like I have to go at it alone.”
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Future of the Fund LOOKING FORWARD NEXT STEPS
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Continue developing the pipeline, sourcing new applications for funding. 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. Continue to receive borrower repayments in line with financial objectives, confirming the need for patient, flexible capital to drive community resilience. Receive the third round of impact and financial reports from current borrowers and deliver a third impact investment report to investors. Perform on-the-ground research and develop a regional risk matrix to identify expanded areas of impact. Debrief Impact Idaho Fund Pilot program to determine implementation plan for subsequent iteration of the Fund.
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 any time. Visit sunvalleyinstitute.org/donate.
RECOVERABLE GRANT OR PRI*
Minimum Investment: $10,000
*Program related investment
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Up to 80-100% of the investment is recoverable. Repayment is anticipated over 5-7 years. Recoverable grants are accepted at select times. Reach out to impactfund@sunvalleyinstitute.org or visit sunvalleyinstitute.org.
Thank You DONORS Alexandra Babalis Anonymous (7) Blaine County Land, Water and Wildlife Program Christensen Family Foundation Diane Banta Greg Carr Foundation Inc. Hecht 2008 Grantor Charitable Lead Annuity Trust Heart of Gold Fund in the Idaho Community Foundation* Heinz Family Foundation* Ian Jameson Jan Philipsborn Gift Fund Jeri Howland & Jerry Edelbrock Kelley Weston Lisa Stelck & Bill Boeger Mary & Stephen Malkmus Nancy Holcomb Nancy P. & Richard K. Robbins Family Foundation
Peter Curran / Peco Foundation Sean Hollitz Susan & Bradley Brickman* Susan Passovoy The Marshall Frankel Foundation Thomas Selby & Meaghan McGrath
INVESTORS Aimée Christensen Earthshine Foundation The Lufkin Family Foundation Trust
LEGAL ADVISORS David Arkoosh Tom Praggastis *Net new or follow-on donation since the prior semi-annual impact investment report from the summer of 2021
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www.sunvalleyinstitute.org inquiries@sunvalleyinstitute.org (208) 788-4780 Post Office Box 3537 Hailey, ID 83333 EIN: 47-3151484