RSF Social

Organization Description: RSF Social Finance is a public charity and financial services organization “dedicated to transforming the way the world works with money.” Since 1984, RSF has financed more than $285 million in loans to enterprises committed to improving society or the environment. Additionally, through its philanthropic services division, RSF has gifted $130 million to nonprofit organizations.

Structure: The RSF SIF Note is a short-term cash investment. Investors earn monthly compound interest that is paid upon maturity. If investors do not redeem their earned interest, the amount is automatically invested back into the principal. Notes are unsecured, uninsured, and not tax-deductible, meaning that interest earned is taxable.

Interest Rate: In 2009, the RSF adopted a new approach to determining interest rates. Rather than base rates on conventional benchmarks such as LIBOR, RSF holds a quarterly “pricing meeting” where investors, borrowers, and RSF staff discuss and ultimately make a recommendation on how rates should be set. This recommendation is then sent to the Pricing Committee, which includes C-suite members of RSF; they make the final decision regarding RSF prime. This approach provides investors and borrowers with greater transparency and less volatility. With this process, RSF also seeks to balance the needs of clients with the financial sustainability of RSF. RSF lending operations are paid through net interest spread.

Performance: Since inception, no investor has experienced losses. RSF has a loan reserve pool that is maintained at around 10 percent of assets under management. Since 1984, the RSF has experienced losses of 2%.

Target Demographic: The RSF SIF Note was specifically created to attract retail investors who seek alternatives to traditional short-term cash investments.

Impact Focus: RSF focuses its efforts in the areas of food and agriculture, education, the arts, and ecological stewardship.


Note: Since the RSF SIF Note was created over ten years ago, the information provided in this section focuses on the latter stages of product development.


The RSF SIF incorporated on July 14, 2000 and was created to serve as RSF’s investing and lending program. Interested in ensuring accessibility to retail investors, the RSF Board of Directors explored the concept of a short-term investment product that paralleled its then-regional notes program available to individuals interested in investing in RSF directly.

Product Design

The RSF SIF remained largely dormant from its incorporation through early 2006 while regulatory matters regarding state securities laws and registration requirements for the Note were addressed. During that period, the RSF did not issue any Notes and did not originate any loans. However, in anticipation of the commencement of investing and lending activities, RSF received a gift of $3 million, a loan of $4 million, and a guarantee of obligations in the amount of $5 million from clients interested in the success of the fund.


In March 2006, RSF launched its initial offering of SIF Notes on a limited basis. In 2007, RSF’s SIF was issued a lenders license by the California Department of Corporations, opening the door to lending activities for the fund. RSF’s SIF has continued to expand its Note offing in additional states, complying with and satisfying state-specific securities laws and regulatory requirements along the way. The Notes are available in forty-seven states, and RSF intends to seek approval or exemption in the remaining three states in the foreseeable future.

RSF experienced slow but steady pick-up in activity. Retail investors are currently the largest cohort of Note holders—approximately 80% of investors. Investment amounts tend to be small and held for an average of four years by investors. The online portal is key for reporting to investors and maintaining their trust. RSF expects to see an increase in the number of young investors interested in the SIF Note.

Launch and Post-Launch

Since the launch of the SIF Note in 2006, RSF has employed strategies that enhance its ability to acquire clients, maintain relationships with investors, and deploy capital in line with its mission.

“Community gatherings are our attempt at shifting the power dynamic and trying to democratize the investment and granting process.”

Mark Herrera, Senior Manager Client Development

Client Acquisition

  • Field Building: Rather than advertise the SIF Note, RSF instead promotes the offering through field-building activities that support partner groups working in social finance or entrepreneurship. Presenting or sponsoring conferences, disseminating thought-provoking articles and papers[1] and convening money-related discussions are all aspects of field building.

Investor Relations

  • Investor Website: RSF has a website with an online portal that is only accessible to noteholders. The portal provides information on the aggregate portfolio, including financial performance and impact metrics. Updates are communicated to investors on a quarterly basis. Personal stories and testimonials are also provided by investees via the website.
  • Impact Measurement and Communication: Once a loan is deployed, RSF tracks impact metrics—collected both online and in-person—and communicates them to investors. RSF has created a questionnaire that focuses on understanding a) how a social enterprise views and assesses its own impact on the community, b) how transformative an enterprise’s practices are with regard to people, place, and the environment, and c) how working with RSF has informed or changed the organization’s understanding of the role of money. Once completed, the questionnaire is given a score. These scores are then aggregated into an overall portfolio score that translates the impact to investors.

Capital Deployment

  • Relationship Managers: Similar in function to lending managers, RSF relationship managers identify loan opportunities and strengthen relationships with current and prospective borrowers. Each manager focuses on a specific focus area (See “Impact Focus” above) and builds a body of subject matter expertise that supports the evaluation of new loans and projects.
  • Integrated Capital Approach: In 2012, RSF launched its first integrated capital initiative. Integrated capital uses a range of tools—including grants, debt, equity, and guarantees—to enhance RSF’s ability to deploy capital to organizations in need. (Note: grant funds are used for technical assistance and are paid directly to assistance providers.) The funds are used to support enterprises in various stages of growth. It enhances the security of loans, builds investor confidence, and allows RSF to deploy capital in a much more supportive manner.


Step 1: Any individual interested in the SIF Note can open an account with RSF with a minimum of $1,000.

Step 2: Capital from retail investors is pooled with capital from accredited investors.

Step 3: RSF independently evaluates investment proposals from non-profits and social enterprises. Investments, on average $676,000, are distributed to organizations on custom terms.

Step 4: Investors may elect to have interest accrued or to be paid out on a quarterly basis. Additional options include gifting the accrued interest to RSF operations or another RSF granting fund. Investors are also provided impact information on a private investor relations website.

Key Success Factors

RSF puts considerable effort towards maintaining and increasing the quality of its relationships with clients. “We strive to create transparency between the borrower and the investor,” says Mark Herrera, Senior Manager for Client Engagement. “We believe that human beings are best served by financial transactions when all parties are known to each other.”

Access to social finance for retail investors—with all its challenges and successes—and independence from large, opaque financial systems are seen as goals for RSF.




















[1] RSF Social Finance (2011). A New Foundation for Portfolio Management.