Copying forbidden Terzo Valore, the Italian way to crowdfunding: high social value, low interest...
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Copying forbidden Terzo Valore, the Italian way to crowdfunding: high social value, low interest rate, no risk Social Entrepreneur Have your say! "Innovative
Copying forbidden Terzo Valore, the Italian way to
crowdfunding: high social value, low interest rate, no risk Social
Entrepreneur Have your say! "Innovative financing for social
enterprises: Crowdfunding, Social stock exchanges and Social Impact
Bonds
Slide 2
2 What Terzo Valore* is www.terzovalore.com is a Web platform
to attract social involvement and to reduce the cost of funding
with no risk for the lender Nonprofit organizations (NPOs) can post
their projects and turn to the crowd to raise the money needed to
finance them. The crowd may contribute with loans (or donations)
Social Entrepreneurs Have Your Say! Strasbourg 16-17 January 2014
(*) Terzo Valore belongs to Banca Prossima and it is therefore
regulated by the Bank of Italy and Consob - Italian &
Securities and Exchange Commission for its operations
Slide 3
3 How does Terzo Valore work Banca Prossima commits to finance
up to 100% of the project at market rates. Terzo Valore makes
two-thirds* of the total loan available to be taken up by social
bankers, i.e. people or organizations that lend or donate to the
NPO. In case of default of the borrower, Banca Prossima guarantees
through the NPO the full repayment to the social bankers (i.e.
loans are fully protected) The NPO has an opportunity to showcase
its initiatives widely and to let its supporters choose the amount
and the interest rate on the funds they lend (actually the NPO
states a maximum rate which it is willing to pay to the lending
crowd). Social bankers can choose also a lower or zero interest
rate, with no risk The average interest rate (banks +crowd) paid by
the NPO dramatically reduces Social Entrepreneurs Have Your Say!
Strasbourg 16-17 January 2014 * Maximum limit recommended by the
Bank of Italy
Slide 4
4 Terzo Valore roles & rules Banca Prossima: Checks the
NPOs projects creditworthiness and sets up credit lines Posts the
project on www.terzovalore.com Defines the amount that it finances
directly, depending on the amount raised via Terzo Valore Takes
care of all legal and tax aspects connected to the loan in the name
and on behalf of the NPO The client (NPO): Presents the project to
the bank Provides publishable documents Promotes fundraising
amongst its supporters Reports the progress of the financed project
Social Entrepreneurs Have Your Say! Strasbourg 16-17 January
2014
Slide 5
5 Terzo Valore Main advantages Terzo Valores main advantage is
the opportunity to raise money from two sources : loans with
smaller cost than standard bank rates (and/or donations)
Sustainable cost: the lender may opt for lending at any interest
rate (including zero), not greater than the maximum rate set by the
NPO Opportunity to reduce debt: donations can cover part of the
total financing needs Simplicity: Terzo Valore portal
(www.terzovalore.com) automates paymentswww.terzovalore.com
Transparency: the updated situation of the project and the funding
is always on the website Support: Banca Prossima provides
consultancy, general support toward project setup and publication,
and management of loans from crowd lenders Social Entrepreneurs
Have Your Say! Strasbourg 16-17 January 2014
Slide 6
6 Terzo Valore Main achievements since June 2012 35 completed
projects and 22 in pipeline Main area: social and health care
(50%), Main source of funding: loan (in 40% of cases, maturity is
10 years) Average amount funded: over 350,000 Value of completed
projects: 5,980,000 Total social lending amount: 2,651,000 Total
donations value: 537,000 520 lenders and 84 donors More than
500,000 interest charges will be saved by clients over their loans
maturity Average interest rate required by social bankers: 0,96%
(range 0% - 3%) Social Entrepreneurs Have Your Say! Strasbourg
16-17 January 2014
Slide 7
7 Social lending Social Entrepreneurs Have Your Say! Strasbourg
16-17 January 2014 1.Social lending is an effective financial
instrument for social business. It is less expensive than standard
loans, it facilitates liquidity and complements donations. It is
important to minimise the financial risk borne by personal lenders
in order to generate an high interest about social lending. 2.In
the countries where NPOs are not allowed to pay out dividends, a
secured crowdfunding is the only possible direct way to invest in
the social sector with a financial return 3.Social lending could be
also enforced by a public/private system of guarantees (i.e.
whereby European financial instruments -under such initiatives as
EaSIs Axis III or Creative Europes guarantee facility- fund a pool
of money to be used as collateral.) 4.Social lending needs a soft
regulation without too many constraints. A tax regulation with
fiscal benefits for investors and social enterprises would strongly
enhance the development of the social business
Slide 8
8 Social lending Social Entrepreneurs Have Your Say! Strasbourg
16-17 January 2014 5. Secured social lending with the participation
of a financial institution taking charge of the assessment process
could increase public confidence, which would translate in a rise
of the number of investors and average value of loans (and/or
donations) 6. A second stage of development of social lending
activity could also involve using social lending alongside other
types of financing (bonds, equities, institutional donations,
government transfers ). This is most easily accomplished by, for
instance, supplying funds for guarantee schemes on condition that
the project is co-financed by some of the above sources. The same
objective can also be pursued in reverse, for instance by
conditioning European social funds use to the simultaneous
fundraising through CF platforms 7. Social lending empowers social
enterprises but it is also an instrument of community building and
involvement for the common good
Slide 9
9 Social Entrepreneurs Have Your Say! Strasbourg 16-17 January
2014 06/01/2012Euro Project total amount900,000 social lenders at
1.57% interest rate 600,000 bank at 5.78% interest rate 300,000
Maturity year 10 Mixed interest rate2.9% Interest cost saving
estimated yearly average 16,000 Total interest saving160,000
Fostering of youths in order to cover their educational needs and
develop in them an appreciation of the beauty of life
Slide 10
10 Social Entrepreneurs Have Your Say! Strasbourg 16-17 January
2014 Serving local community (from young to aged people)
02/20/2013Euro Project total amount900,000 social lenders at 0.594
% interest rate 240,500 bank at 3.63 % interest rate 300,000
Donation359,500 Maturity year 10 Mixed interest rate 2.27% Interest
cost saving estimated yearly average 11,000 Total interest
saving110,000
Slide 11
11 Social Entrepreneurs Have Your Say! Strasbourg 16-17 January
2014 05/14/2013Euro Project total amount750,000 social lenders at
0.23 % interest rate 450,000 bank at 7.12 % interest rate 148,450
Donation33,050 Maturity year 10 Mixed interest rate2.65% Interest
cost saving estimated yearly average 11,500 Total interest
saving115,000 Education (from nursery to high school)
Slide 12
12 Social Entrepreneurs Have Your Say! Strasbourg 16-17 January
2014 Assistance for local disadvantaged people 12/19/2013Euro
Project total amount350,000 social lenders at 0 % interest rate
182,000 bank at 6.8 % interest rate 151,630 Donation16,370 Maturity
year 10 Mixed interest rate3.09% Interest cost saving estimated
yearly average 7,500 Total interest saving75,000
Slide 13
13 Social Entrepreneurs Have Your Say! Strasbourg 16-17 January
2014 07/11/2013Euro Project total amount300,000 social lenders at
0.329 % interest rate 189,000 bank at 5.125 % interest rate 99,000
Donation12,000 Maturity year 10 Mixed interest rate1.97% Interest
cost saving estimated yearly average 5,000 Total interest
saving50,000 New school in Uganda