The problem

• The lack of access to appropriate facilities and sufficient financing has been widely documented as the largest hurdle facing charter and alternative school operators and has resulted in facilities that are in no way comparable to those of traditional public schools.

The strategy

• The EFFC invests in the development and expansion of local educational facilities funds and nonprofit charter management organizations through its national Educational Facilities Loan & Guaranty Fund. This $35 million Fund consists of a $10 million loan from the Walton Family Foundation, a $20 million loan from Prudential Insurance, and $5 million in LISC monies. The Fund is secured by a $10 million federal grant awarded by the U.S. Department of Education’s Credit Enhancement for Charter School Facilities Program and supported by $4 million in grant monies for technical assistance and predevelopment recoverable grants.
  
  Capital from the national Loan & Guaranty Fund is used as an incentive for local lenders to establish and participate in state and local facilities funds. The EFFC and local LISC program offices work closely with coalitions of public and private funders to pool grant and loan resources to create local funds dedicated to the development, renovation or new construction of school facilities in a particular city, state or region. The goal is to match each dollar from the national Educational Facilities Loan & Guaranty Fund with two to three dollars raised locally from for-profit and philanthropic lenders and donors.

The result

• The EFFC has committed $10.5 million in loan and guaranty investments in five local funds, together with $750,000 in companion grants. These investments are projected to help stimulate $165 million in financing for 62 schools. Each investment is unique and is structured to meet the needs and resources of the particular market: two funds utilize New Markets Tax Credits (NMTC); one is a loan fund that employs the credit benefits of a municipal moral obligation pledge; one is a guaranty fund; and one is a revolving loan fund.