Government
With billions of federal stimulus dollars flowing into state treasuries for the purpose of funding green energy projects and other sustainable initiatives, state governments see extraordinary benefits for their citizens through increased jobs and a cleaner environment. In an effort to realize these economic and environmental benefits quickly, many states are looking for the most effective way to utilize stimulus funds.
While the appropriation of stimulus dollars earmarked for government works projects is straightforward, the allocation of those earmarked for private sector projects proves much more problematic: Implementing a typical government grant program would provide only a one-time benefit and would likely create significant additional work for state employees already resource-constrained by recession budget cuts. Completely handing over distribution of the stimulus dollars to a single financial institution greatly reduces state control over how the funds will impact its citizens and concentrates risk by trusting distribution to a single organization.
Fourth-Sector’s solution allows state and local governments to distribute stimulus dollars via a Revolving Green Loan Fund (“RGLF”), which is a public/private partnership that is coordinated by Fourth-Sector, involves state administrators in setting “green guidelines” and leverages the state’s local financial institutions for making the actual loans to small business and consumers. It provides a multitude of advantages over traditional grant programs or singular private outsourcing, such as:
- State control over how funds are deployed by setting key green and distribution criteria such as geographic location or type of green project,
- Reporting capability for active performance monitoring and transparency to constituents on the benefits of the stimulus dollars,
- Distribution of stimulus dollars via the state’s existing financial institutions, allowing those funds to be available to all institutions, not just a single organization,
- Stimulus dollars are recycled via the revolving loan structure of the solution, greatly enhancing the size and scope of long-term economic and environmental benefits from the stimulus funds.
The solution works by deploying stimulus dollars as a RGLF via Fourth-Sector’s technology platform to institutions in the state banking system for the purpose of making green loans. The financial institutions in your banking system compete to borrow stimulus funds from the state RGLF to then re-loan those stimulus dollars to either business and/or consumers in your state for green projects per the loan criteria you stipulate. As the businesses and consumers repay their loans, the financial institutions in turn repay the RGLF, making those funds available for a new set of loans. In this manner, the stimulus dollars are recycled to provide long-term benefits to your state or municipality.
If you would like more information, please feel free to contact us.
