Exploring Program-Related Investments

Through its first Program-Related Investment—a low-interest loan—Barra is learning how it can use an emerging tool to support work that is changing a community. This financing will allow residents to remake their street while building readiness for conventional financing.

“This is a new world for foundations. It’s a real mindset shift for boards to think about changing the way we traditionally use our assets.”

Kristina L. Wahl, President, The Barra Foundation

This distressed street in the center of Chester, PA may look unremarkable, like any once-thriving commercial avenue in decline. But something unique is underway on the Avenue of the States that could not only change the game for Chester, but inspire other efforts to create an urban renaissance from within. And it provided The Barra Foundation the chance to try something new—providing a low-interest loan instead of a grant to an organization seeking transformational change.

It all begins with an entrepreneur named Devon Walls, a Chester artist who envisioned new life for this once-thriving street as an arts community owned and created by local artists. “I grew up in a family of artists,” Walls say. “One of my uncles wanted to put an arts and cultural district in the city of Chester.” When his uncle died with his dream unfulfilled, Devon decided to carry on—buying properties devalued by the fleeing middle class and turning them into community spaces for performances, classes, exhibits and events.

Walls worked closely with Barra on Bridges and Boundaries, a Barra-funded project which he co-directed with Widener University to build relationships between the campus and town. Through the project, Walls met Chuck Lacy.

“I was attracted to the project largely because of Devon’s vision, but also, his resilience and long-term commitment to Chester,” said Lacy, former president of Ben & Jerry’s and president of the Barred Rock Fund, a private foundation. While arts revivals are often initiated by artists from out of town seeking inexpensive rent, this is a homegrown effort by and for local artists. “This is an extraordinarily ambitious goal to create an arts district and arts identity for Chester and it’s going to take a wide range of skills. Not only does Devon have the skills but he’s been cultivating those skills among large groups in Chester.”

In 2015, Lacy and Walls created a partnership, New Day Chester, Inc., and to-date have acquired six properties on the Avenue of the States to create venues for Chester performers, painters, furniture makers, sculptors and clothing designers to develop their own businesses.

Using a relatively novel funding mechanism, Barra is providing a low-interest loan to the project which is too high-risk to attract traditional funders. The $250,000 loan to help complete renovations will potentially reassure future lenders that the project is financially viable—and it is an opportunity for Barra to model the use of Program-Related Investments (PRI) for other foundations.

A PRI is an emerging philanthropic tool that’s a hybrid of the investment and charitable functions of the foundation. It is an impact investment designed to advance a social cause aligned with the Foundation’s mission. New Day Chester was the perfect opportunity for Barra to not only advance innovation, but to model it as well.

So far, New Day Chester has rehabbed formerly vacant buildings into a 220 seat theater, an arts program center, a dance and photography studio, a community woodworking shop, and a soon to be opened coffee shop.

“Barra’s early support is giving other foundations the confidence to consider their own investments in Chester.” said Lacy. “As much as the investment, Barra’s continued engagement and connections made between Chester and regional foundations and expertise is making the difference.”

Lacy believes that Barra’s commitment and Wall’s devotion will enable a renaissance in Chester unlike others elsewhere. “Barra’s involvement is making local ownership possible,” Lacy said, “and local ownership is the key to long term community success.”

“My vision is to make this strip full of restaurants, galleries, living spaces, coffee shops, entertainment,” Walls said. “And then have people look at it and say, ‘If it could be done here, it could be done anywhere.’”

Catalyst Fund Investment

September 2016
$250,000/60 months

Several recent developments have provided an opportunity for mission-aligned investment in Chester, PA. After many years of decline and then vacancy, entrepreneurs are returning to Avenue of the States. With strong entrepreneurial leadership emerging, the arts are poised to ignite an urban renaissance in Chester. Unlike other artist driven urban revivals, the leaders are from Chester and are dedicated to developing and showcasing local talent for local audiences, nurturing arts enterprises and creating a distinct Chester arts movement. A Program-Related Investment (PRI) in the form of a low-interest loan to New Day Chester, Inc. will provide the funding needed to continue rehabbing three of the six buildings, which will be at the core of the arts district. Since this would be Barra’s first PRI there is a significant opportunity for Barra to learn, and share its learning, about this emerging tool for foundations and nonprofits.

Why We Funded

  • Opportunity for Barra to explore emerging funding mechanism
  • Provide support of Chester’s first African American community led economic development project
  • De-risk and build readiness for conventional financing

Learn More

To learn more about other recent examples of mission-related investing, visit the Ford FoundationSurdna Foundation and Patricia Kind Family Foundation. If you are a foundation, we encourage you to check out Mission Investors Exchange for resources.

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