To achieve our mission of creating a vibrant region, The Trust needs great partners, which is why we value our relationship with SeaChange Capital Partners.
Established in 2007 by senior Wall Street executives to help nonprofits facing complex financial and organizational challenges, SeaChange “envisioned itself as a ‘merchant bank’ for the nonprofit sector, a modern-day version of the merchant banks in medieval times that provided money, expertise, and contacts to entrepreneurial networks,” said Managing Partner John MacIntosh.
FACILITATING NONPROFIT MERGERS AND COLLABORATIONS
For its first act in New York, SeaChange created the New York Merger and Collaboration Fund (NYMAC) with Trust support in the aftermath of the 2008 Great Recession. This pooled fund continues to help nonprofits explore and implement mergers and other sustained collaborations and has become an important part of the city’s philanthropic infrastructure.
Nonprofits large and small come to NYMAC seeking grants and advice, as well as connections to experts and consultants. Part bankers, part executive coaches, part therapists—MacIntosh and the SeaChange team are highly valued and respected for their expertise, and for their discretion: just as in the private sector, confidential conversations are often needed in the early stages of mergers and collaborations.
NYMAC has made 80 grants assisting nearly 200 nonprofits that covered fees for attorneys, accountants, and communications experts, as well as one-time costs such as buying out a lease or moving expenses. A recent assessment found that 71 percent of these grants resulted in expanded services, while 21 percent saved programs that would otherwise have been eliminated.
IMPACT INVESTING
Foundations such as ours can help the causes we care about by investing our capital for social good in addition to our grantmaking. Impact investing lets donors seek both a financial return and a positive measurable social impact from invested capital. Impact investments can take many forms—including low-interest loans, credit, and equity—and like most investments, there is no guarantee of a return.
But impact investing can be complicated and expensive for foundations to do on their own. In response, SeaChange created the New York Pooled Program Related Investment Fund (NYPRI), to make it easier for foundations like The Trust to provide loans to nonprofits. NYPRI has made $21.5 million in loans to 24 city nonprofits. Loans range in size from $120,000 to $6.6 million. The average interest rate is 4.4 percent.
NYPRI projects are complicated, typically involving a blend of funding for unusual expenses, such as acquisition and construction loans to build or upgrade facilities or bridge loans while awaiting capital campaign commitments.
NYPRI “deals” have included:
- a combined public library neighborhood branch and affordable housing complex in Inwood/ Washington Heights;
- a “shower bus” for people experiencing homelessness; and
- two state-of-the-art performance venues with affordable rehearsal space.
One of NYPRI’s earliest projects—a loan to finance the acquisition and build-out of Gibney Dance Theatre’s lower Manhattan studio—has already been paid back. Founder Gina Gibney said the loan made all the difference. “We wouldn’t have been able to make this project happen without NYPRI’s timely and strategic injection of money,” she said.
NEW WAY TO PUT DONOR-ADVISED FUNDS TO WORK
Last year, The Trust once again turned to SeaChange when it piloted an impact investing vehicle that let our donor-advised funds invest up to 10 percent of their assets in Impact New York 2022, which in turn makes loans to city nonprofits in need. Payments on loan principal are then recycled back into the investment vehicle.
CREATING AFFORDABLE HOUSING
As the city’s housing crisis worsens, SeaChange has created more impact investment opportunities that foundations are investing capital in.
Its New York Shelter Acquisition and Predevelopment Fund, a partnership with the Adams administration, offers loans of up to $3.7 million at 7 percent interest to help nonprofits with startup costs for developing shelters with associated housing, including deposits, appraisals, site assessments, and legal fees. The effort should result in 10 new shelters over the next four years.
Additionally, SeaChange created the New York Investment Opportunities Fund as a vehicle for foundations to support market-rate investments in social good projects, including mixed-income, mixed-use real estate development.
SeaChange has fulfilled its vision. It is a pivotal financial resource for the nonprofit sector, and its knowledge and expertise make it the hub for a network of foundations, consultants, and volunteers. Most importantly, it is an influential and consistent advocate, helping to support a more dynamic, resilient, and impactful New York City nonprofit community. We couldn’t have found a better partner.
GOT CAPITAL? WANT CAPITAL?
- If you are a donor and want to learn more about impact investing opportunities at The Trust, please contact Kerry McCarthy, vice president for philanthropic initiatives, at kem@nyct-cfi.org.
- If you are a nonprofit and want to learn more about loans, contact SeaChange at info@seachangecap.org.