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The Walton Family Foundation today announced the creation of the Charter Impact Fund and Facilities Investment Fund. The two distinct non-profit funds are supported through the foundation’s Building Equity Initiative, an unprecedented effort to make it easier and more affordable for public charter schools to find, secure and renovate facilities. The Charter Impact Fund and Facilities Investment Fund will provide quicker access to long- and short-term financing, respectively.
“Big challenges require bold solutions,” said Alice Walton, Walton Family Foundation Board Member. “This effort will allow resources that were spent on facilities to be directed back into the classrooms, back to the teachers and back to where it should be—with the students.”
Freedom Preparatory Academy Charter Schools—whose entire inaugural graduating class of 2017 was accepted to four-year colleges and universities, in a neighborhood where only 10 percent of residents earn college degrees—are growing to meet the need for quality education options for children in their Memphis, Tennessee community. When Freedom Prep was ready to open its second elementary school, the only option was to start in a temporary facility, even though it meant moving a year later. “Charter schools deserve equal and more seamless access to facilities resources so that we can meet the need in our neighborhoods,” says Charlise Clark Gwin, Chief Financial and Operations Officer, Freedom Prep.
Currently, public charter schools spend, on average, 15 percent of all funding on facility or facility-related costs, a figure that does not include untold staffing hours and resources spent addressing these issues. Public financing is extremely limited: Less than half of all states that allow charter schools provide them with any per-pupil facilities allowance, and opportunities to share space with district schools are rare. According to research from the Charter School Facilities Initiative, nearly one in five public charter schools have delayed opening by a year or more due to issues finding and securing facilities. Nationwide, more than $3.6 billion is spent annually on public charter school facilities—resources that could be directed to support teaching and learning.
The Charter Impact Fund, a new, non-profit organization, will launch with $200 million in seed funding and provide long-term, fixed-rate loans—similar to a home mortgage—to high-performing charter schools anywhere in the country for up to 100 percent of project costs. The CIF provides charter schools with access to lower transaction costs and quicker loan execution —allowing each school to save several million dollars over the loan term. Adapting a revolving-loan fund model that has successfully supported clean water projects and affordable housing, the CIF is the first pooled fund of its kind for public charter schools, providing permanent, credit-enhanced loans at low cost.
“At Charter Impact Fund, we believe that the schools making the biggest impact for students should be empowered to grow. Borrowing through CIF realizes permanent savings for charter schools that they can put back into the classroom and serve even more families in their community,” said Anand Kesavan, CEO of the Charter Impact Fund. “We know the need because we’ve led and worked with charter schools, and we understand how to be a long-term partner for the school's success.”
Created in collaboration with Bank of America Merrill Lynch and managed by Civic Builders, the $100 million Facilities Investment Fund will offer public charter schools five-year fixed-rate loans for up to 90 percent of project costs for new construction or facility renovation. FIF loans are the only short-term loans available to public charter schools that meet three significant criteria: up to $20 million, low-fixed interest rates and high-percentage of project costs. The FIF is an innovative private-philanthropic partnership, combining commercial and foundation capital to drive down costs associated with finding and securing facilities.
“Making a significant impact in communities is an important consideration for projects we finance,” said Maria Barry, Community Development Banking national executive at Bank of America Merrill Lynch. “The Facilities Investment Fund will build on Bank of America Merrill Lynch’s work to provide more children access to high-quality public charter schools. Since 2000, BoAML charter school financing has exceeded $1 billion and created educational opportunities for more than 25,000 students at over 80 schools.”
“The charter school movement’s urgent challenge with facilities finance requires these kinds of innovative initiatives and public-private partnerships,” said Nina Rees, President and CEO of the National Alliance for Public Charter Schools. “Lack of access to facilities finance is among the biggest barriers to opening or expanding more high-quality charter schools in most communities across the country.”
The Building Equity Initiative marks the first time philanthropists have tried to catalyze system-wide improvements in how high-performing public charter schools access facilities financing.
In developing the CIF and FIF, the goal is to incentivize new and additional capital to public charter school facility projects at cost-effective interest rates. Through the Building Equity Initiative, there is now a large network of real estate experts, lenders, financiers, technical assistance providers and more resources available to help public charter schools when financing and securing facilities.
About the Walton Family Foundation
The Walton Family Foundation is, at its core, a family-led foundation. The children and grandchildren of our founders, Sam and Helen Walton, lead the foundation and create access to opportunity for people and communities. We work in three areas: improving K-12 education, protecting rivers and oceans and the communities they support, and investing in our home region of Northwest Arkansas and the Arkansas-Mississippi Delta. In 2016, the foundation awarded more than $454 million in grants in support of these initiatives. To learn more, visit waltonfamilyfoundation.org and follow us on Facebook and Twitter.