A COMMUNITY FOUNDATION MAKES AN IMPACT INVESTMENT INTO PRODIGY VENTURES
While community foundations have had the ability to make direct investments into social ventures (e.g. projects, nonprofits, for-profits, and funds) that support the mission of the foundation since 1969 (with both their unrestricted endowment dollars and their hundreds of donor-advised fund dollars), Colorado’s 18 community foundations are still just starting to use this tool. In the last few years, Rose Community Foundation, Community First Foundation, Telluride Foundation, and The Denver Foundation are four of Colorado’s community foundations that have been making direct impact investments. Last year, The Denver Foundation invested in Prodigy Coffeehouse. Prodigy Coffeehouse is not your average neighborhood cafe. It’s located in a Northeast Denver neighborhood often neglected by similar businesses and where the unemployment rate is high. As important, Prodigy is a nonprofit venture whose baristas come from the neighborhood’s vulnerable youth population to learn job skills while earning a wage.
Since opening its doors in July 2016, 47 low-income, disadvantaged youth age 18-24 have gone through its preapprenticeship program, and Prodigy has trained and hired 15 young people as full-service baristas. Today, not only can you purchase a perfectly poured latte, but the apprentice baristas can host your after-hour events for up to 100 people as well.
One more difference? If you take a look at Prodigy’s funding model, you find a unique mix of traditional grants and impact investments in the form of loans with the expectation of financial return.
It took founders Steph and Hillary Frances about a year and a half to raise enough funding to open Prodigy Coffee. As youth development experts, not experienced business owners, they started with foundation grants. That’s when The Denver Foundation opened a new door through impact investing.
The Denver Foundation’s Impact Investment Fund uses low-interest loans and investments, rather than grants, to advance the Foundation’s mission. Other recent investments by the Fund include: 1) the Rocky Mountain Microfinance Institute, a nonprofit that provides learning, lending, and coaching to grow Community Entrepreneurs, and 2) Community Enterprise Development Services (CEDS), which helps immigrant and refugee families in Aurora start and grow businesses.
Impressed with the Prodigy team and concept, the Foundation offered the startup a funding package that combined an initial $20K grant through its Economic Opportunity Community Grant Program, which was re-upped in 2017 for $25k based on the coffee shop’s strong financial and social performance; and a $25K loan at 3 percent interest for 5 years, with interest-only for the first two years.
In addition, members of The Denver Foundation’s Impact Investment Committee provided guidance in creating a business model that would work. Without The Denver Foundation’s creative approach to mixing grant and investment funding, Prodigy would not have opened when ii did, depriving its youth apprentices of training and income and the community around its location at 40th and Colorado of a top-notch coffee shop.
A year later, named “Best New Coffee Shop· by Westword, Prodigy and its team of apprentice baristas are thriving in a world where about only one-fifth of service businesses survive their first year. In fact, in its first six months, Prodigy earned enough revenue to cover almost 75% of its operating costs.
Visit Prodigy Coffee at https://www.prodigyventures.org for a lovely cup of coffee, to support Denver’s youth, or to put on your next event. And learn more about The Denver Foundation’s Impact Investing Fund at