Dakota Foundation Invests in SJF Ventures

Investor: Dakota Foundation
Investee: SJF Ventures
Asset Class: Private Equity - Fund
Investment Amount: $50,000, spread out over time as opportunities arose
Impact Sector(s): Community & Economic Development; Employment & Job Related
Date of Investment: First investment made 1999; last investment made 2005
Projected Exit: Varies depending on when companies within the fund are sold
Financial Return Goal: Below Market Rate
 

The Dakota Foundation was founded to address social issues and enhance human capabilities through activities that combine business discipline with charitable intent. It has been actively engaging in PRIssince 1998, generally in the areas of economic development and job training in North Dakota and New Mexico. The foundation seeks to make PRIs to expand the range and impact of recipients’ programs. Its intent is to help the recipient attract other sources of capital, thereby reducing its dependence on grantfunds. As the PRIs are repaid, the funds become available for redistribution to the foundation’s other philanthropic projects. Thus, the foundation can recycle more of its resources to meet other funding needs. The Dakota Foundation chose to invest in SJF Ventures to further this goal.

 

The guiding purpose of SJF Ventures is to create quality employment for low-income individuals and communities by financing and assisting companies that generate social, environmental, and financial gains. It invests in expanding industrial and clean technologies, business services, and consumer products companies in the eastern United States.

 

The Dakota Foundation makes a great effort to streamline its PRI process. All of its loanprovisions adhere to the same loan agreement, although the specific terms are customized to the individual investments.

 

All loans are unsecured, full recourse obligations. In most cases, no principalpayments are required prior to the maturity date of the note. Loan recipients are permitted to prepay the loan in whole or in part. Interest payments are due semiannually. In several cases, the loan agreements have provided for postponing the interest due in the first one to four years and paying the postponed interest ratably over the remaining life of the loans. Reporting requirements for the recipients are also standardized and clearly stated.

 

None

 

The Dakota Foundation committed to invest $50,000 in the partnership. The partnership issued capital calls as funds were needed to invest in additional companies. The Dakota Foundation made nine separate investments over seven calendar years, averaging $5,000 each. Income and expenses of the partnership have been reported to the partners on an IRS Schedule K-1 (Form 1065), and periodic distributions have been made when companies the partnership invested in were sold. Since inception, SJF Ventures has created 7,039 jobs and funded 44 companies.