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.