Minnesota Afterschool Advance
Venn is partnering with Youthprise on a powerful new initiative called "Minnesota Afterschool Advance" (MAA), which has the potential to eventually unlock up to $250 million per year in afterschool funding for ~125,000 low-income Minnesota families and their ~250,000 children by helping them take full advantage of the longstanding but broadly underused Minnesota Education Tax Credit (METC). The METC provides families a 3-to-1 match on the dollars they spend on eligible afterschool services like music lessons and tutoring, up to $1,000 per child per year. However, families must pay for services up front and then wait to be repaid until they get their tax refund, sometimes more than a year later. Many low-income families do not have the cash flow for this model to work. MAA will eliminate this barrier by creating a loan pool to issue 0% loans to the families allowing them to pay for the activities. Youthprise and Venn are piloting MAA with 20-50 students in Northfield, Minnesota in Q3 and Q4 of 2018.
Venn is establishing an internal loan fund for MAA, from which Venn plans to make 0% loans of up to $500 per child to the 20-50 low-income students and families enrolled in the 2018 MAA pilot. The loan proceeds will pay for eligible afterschool services such as tutoring, music lessons, and arts enrichment for participating students. After the families file their taxes in early 2019, the State of Minnesota will repay the loans to Venn directly. Venn is offering its donors an opportunity to recommend that their Venn Account dollars be used to capitalize the 2018 MAA loan fund.
Recipient Name: Venn Foundation - MN Afterschool Advance 2018 Loan Fund
Beneficiaries: 20-50 students in Northfield, MN
Amount Raised: $20,000
Overview of Investment Terms:
Unsecured, 0% loan from Venn Accounts to the 2018 MAA loan fund
Repayment to Venn Accounts supporting this PRI will be determined entirely by what repayments the MAA loan fund receives from the State of Minnesota through the METC credit assignment process. Venn will not seek to recapture loans directly from families through separate legal action or collection activities.
The MAA loan fund will repay participating Venn Accounts pro rata based on their original contribution to the entire MAA loan fund with whatever loan principal has been received from the State of Minnesota on a quarterly basis starting with Q2 2019 and ending with Q2 2020.
The most that any participating Venn Account can possibly receive back from this PRI is its original principal. There is no opportunity for positive return. The financial return on this PRI is expected to be negative.
It is important to note that even negative financial returns allow Venn Account dollars to be recycled again and again. For example, even if the MAA loan fund returns to Venn Accounts only $0.80 for every $1 loaned, this means that each dollar can be used in this same way five times before being depleted. Compared to a one-time grant for a low-income student to access services, MAA offers powerful impact leverage.
Thanks to a generous operating grant from another philanthropic partner, there are no PRI administrative fees for Venn Accounts that recommend their dollars be invested in the 2018 MAA loan fund.