Equitable Facilities Fund Announces Third Bond Issuance to Support Educational Equity
After its largest social bond issuance to date, the philanthropy-backed impact fund has now secured nearly $600 million to finance high-performing public charter schools in underserved communities.
NEW YORK, Oct. 26, 2021 /PRNewswire/ -- Equitable School Revolving Fund (ESRF) announced that it has closed over $250 million of A-rated "Social Bond" verified proceeds to support its mission to provide affordable financing to public charter schools that promote social and racial equity across the U.S. The funds will enable ESRF's program administrator, Equitable Facilities Fund (EFF), to expand a portfolio of school borrowers that currently provide excellent education options to more than 50,000 students.
The third round of bonds issued by ESRF will recapitalize EFF's philanthropy-backed impact fund, which since its launch in 2017 has provided $568 million in financing to support over 100 schools across 16 states. Notably, each of the fund's bond series have earned a social bond designation from Kestrel Verifiers, signifying the high social impact of the school portfolio.
This latest offering continued to see high demand from both new and repeat investors, bringing the total investor count to 63.
"In 2017, we hypothesized that there was an appetite among investors for a product that could deliver a double bottom line – a high social return alongside reliable interest income, liquidity and strong credit," said EFF Founder and CEO Anand Kesavan. "Four years, three successful rounds and half a billion dollars later, we've proven out the theory that doing good and doing well are not mutually exclusive. For those in the social impact community, education equity isn't a hypothetical anymore, it's a no-brainer. It's also a moral imperative. For all kids who deserve a high-quality education, we have to keep going, no matter what," says Kesavan.
While charter schools receive public funding, they often face steep financial barriers to accessing quality school facilities. EFF is designed explicitly to level this playing field through impact investing, providing long-term, low-cost, fixed-rate loans for school facility projects. It is a strategy that has so far directed more than $130 million in savings back into the classroom.
EFF invests in public charter schools that provide transformative educational opportunities for students, especially in under-resourced communities. Seventy percent of students in the EFF portfolio are considered economically disadvantaged, and 82% identify as people of color. Despite this, 90% of students in EFF schools outperform their district peers, a testament to their commitment to academic and operational success.
Since its inception, the fund has received numerous grants and awards. In April, ESRF was selected as the 2021 recipient of Environmental Finance's Social Bond of the Year award for its 2020 bond issuance, which at the time was the largest U.S. education sector deal ever to earn a social bond designation from Kestrel Verifiers. ESRF's latest offering is even larger and has maintained its social designation from Kestrel.
For demonstrating innovative methods of helping charter schools address the cost of acquiring, constructing and renovating facilities, EFF has also been awarded two credit enhancement grants from the U.S. Department of Education totaling $20 million.
Despite pandemic-related disruptions to the capital markets, EFF remained dedicated to its mission using an inventive "Cap and Rebate" structure. Unlike most investors, EFF continued lending to schools throughout the crisis while capping interest rate hikes. When the credit markets recovered, EFF recalibrated each loan and refunded the additional debt service expenses incurred by the schools at the temporary higher rate. "Supporting high-performing public charter schools and their students through and beyond COVID-19 was not only a necessary public social good, it was a smart financial decision," said Kesavan. "When the next crisis hits, we know what works, and schools know who will stand by them."
EFF is supported by the Walton Family Foundation's Building Equity Initiative (BEI), an unprecedented effort to make it easier and more affordable for public charter schools to access equitable, affordable facilities funding.
About Equitable Facilities Fund
Equitable Facilities Fund is a 501(c)(3) nonprofit social impact fund created to provide long-term, low-cost facility loans that allow high-performing public charter schools to maximize the resources they dedicate to students. High-quality public charter schools promote bright futures for children across America, and EFF believes these schools should borrow under terms comparable to traditional public school districts. EFF administers an 'A' rated revolving loan fund, which recapitalizes using funds from Equitable School Revolving Fund's bond issuances, to offer high-credit, long-term, scalable bond investment opportunities. To learn more, visit www.eqfund.org or email [email protected].
SOURCE Equitable Facilities Fund
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