The T25

The applicant explicitly articulates that they seek returns of a social, relational and /or ecological nature. These returns are a key purpose alongside a targeted financial return and would not be successful without them. They consider return in varied, multiple, and holistic ways, including well-being as articulated by the Buen Vivir Fund as: “Everyday joy, thriving earth, cultural vibrancy and balanced relationship to money.”

• Social returns may include, serve the unbanked or underbanked with financial services, create quality jobs, improve well-being or self-worth of borrowers. 
• Relational returns may include, increase community cohesion, provision of essential or culturally relevant services, or create a sense of pride/belonging. 
• Ecological returns may include, access to renewable energy, increased biodiversity, use of regenerative / agroecological practices, or improved climate resilience.

The T25 does not have a financial return target. We observe that strong funds, banks and initiatives usually have an explicit financial return goal. It may be at 2X, 2%, 0% or 80% capital preservation (-20%). 

Past T25 Examples

• Navajo Power – Creating jobs, reducing GHG, clean energy for Indigenous communities
• Denkyem Coop – Businesses centering black ownership & leadership
• Barka Fund – Businesses tackling climate change led by African entrepreneurs

The applicant explicitly models alternative and democratized approaches to ownership and governance under the extractive financial system by shifting who owns the assets, who makes decisions about the assets, and how decision-making processes work. This could include shifting assets to community members or groups through worker cooperatives, community trusts, community ownership models, employee stock ownership plan, or social purpose trusts (see p. 21 of Transform Finance’s report on Alternative Ownership Enterprises). Also, the engagement of community or other non-traditional ownership structures is included in the investing process. E.g., Reciprocity Fund has an all-Indigenous Credit Committee and Kachwa Fund is set up as an investor cooperative.

Past T25 Examples

• Kensington Corridor Trust – community trust ownership of real estate
• Cooperative Fund of the Northeast – funds worker cooperatives

RSF Social Finance defines “integrated capital is the coordinated use of different forms of financial capital and non-financial resources to support strategies and enterprises working to solve complex social and environmental problems.” They illustrate the concept with the following graph and case studies.

Collective Action for Justice Finance asks: Does the fund, bank or initiative provide grants and/or technical assistance alongside finance (loans, equity, working capital, etc.) to their borrowers? Do they accept both grant and investment capital to accomplish their lending mission?

Past T25 Examples

• REDF Impact Investing Fund provides technical assistance to their borrowers
• Connect Up! Integrated Capital Fund offers grants alongside loans to their borrowers

A creative finance structure is “when a loan or investment is put together in a different, unusual or innovative way to create a circumstance where a person with a nontraditional credit history or lack of collateral can access those resources.” This includes practices such as patient capital (7-10 year loans), low or no interest, soft loans with no collateral, revenue-based finance, etc. The loan fund may request different types of capital such as recoverable grants, and subordinated debt or loan guarantees to offer this kind of capital and may structure themselves differently as an evergreen trust.

Past T25 Examples

• Michigan Good Food Fund – offers low interest patient loans
• IMPAQTO – offers revenue based finance options

The T25 Collective understands that mission alignment and diverse leadership are interrelated and reflect both a question of how and why finance flows. Transformative mission refers to a holistic measure of how the fund, bank or initiative aligns with the overall spirit of Collective Action for Just Finance’s work to exemplify how managers are transforming finance for people and the planet. Some of these principles include:

• Providing non-extractive, regenerative and inclusive finance
• Addressing racial and other social inequities by building relationships with community
• Investing in a Just Transition
• Place-based funds that create resilient local economies
• Requirements to report on gender-disaggregated data and workplace practices 
• Working to build reconciliation with Indigenous communities 

As Paul LaCerte of Raven Indigenous Impact Fund notes, “We are undoing hierarchy and replacing it with reciprocity. It is a form of return.”

Diverse teams are fundamental to transforming finance. Less than 2% of funds are managed by women and people of color, a fact that undermines the financial industry’s ability to address needs and leverage necessary expertise most effectively. We encourage the field to address questions like, “Do team members leverage their lived experiences, intersecting identities, and creativity alongside their financial acumen and skills to transform finance?”

The T25 requests that funds self-identify whether they are 50% or more BIPOC-led rather than the more traditional industry standard of classifying a smaller percentage of BIPOC representation as BIPOC-led teams. In addition, we request data on leadership representation among women and gender diverse-team members as well as Indigenous-led teams. The T25 sees diverse representation as critical to how the fund implements its programs. 

Past T25 Examples

• ʻĀina  Aloha Economy Fund, Hawai’i Investment Ready is an Indigenous-led and -designed fund.
• Black Farmer Fund is led by black women with farming experience.