EVALUATING THE AGENCY LOAN FUND TO INCREASE UTILIZATION ANDIMPACT

FJC is a foundation of donor-advised funds for philanthropists
operating an innovative nonprofit called the Agency Loan Fund
(ALF). The ALF allows donor-advised funds to maximize their
charitable capital by investing their accounts in loans to nonprofits.
Interest payments grow the ALF pool and donor accounts, recycling
the funds for further impact. However, given a recent trend of lower
utilization—which creates a lessened impact on nonprofits—FJC
engaged the Capstone team to analyze how the loan program
could increase its utilization and impact. After conducting desktop
research, a stakeholder analysis, and data analysis, the team found
that the ALF’s low utilization rate is primarily due to high interest
rates to nonprofit borrowers, both in relation to the ALF’s ten-
year historical rates and to those of alternative lenders. The team
recommended FJC restructure its lending rate, untethering it from
the inflation-sensitive Prime index. The team developed a scenario
modeling tool to help FJC make strategic decisions supported by the
ALF’s historical loan data.