Copying forbidden Terzo Valore, the Italian way to crowdfunding: high social value, low interest rate, no risk Social Entrepreneur Have your say! "Innovative financing for social enterprises: Crowdfunding, Social stock exchanges and Social Impact Bonds”

2 What Terzo Valore* is is a Web platform to attract social involvement and to reduce the cost of funding with no risk for the lender Nonprofit organizations (NPOs) can post their projects and turn to the «crowd» to raise the money needed to finance them. The crowd may contribute with loans (or donations) Social Entrepreneurs Have Your Say! Strasbourg January 2014 (*) Terzo Valore belongs to Banca Prossima and it is therefore regulated by the Bank of Italy and Consob - Italian & Securities and Exchange Commission – for its operations

3 How does Terzo Valore work  Banca Prossima commits to finance up to 100% of the project at market rates.  Terzo Valore makes two-thirds* of the total loan available to be taken up by «social bankers», i.e. people or organizations that lend or donate to the NPO. In case of default of the borrower, Banca Prossima guarantees through the NPO the full repayment to the “social bankers” (i.e. loans are fully protected)  The NPO has an opportunity to showcase its initiatives widely and to let its supporters choose the amount and the interest rate on the funds they lend (actually the NPO states a maximum rate which it is willing to pay to the lending «crowd»). «Social bankers» can choose also a lower or «zero» interest rate, with no risk  The average interest rate (banks +«crowd») paid by the NPO dramatically reduces Social Entrepreneurs Have Your Say! Strasbourg January 2014 * Maximum limit recommended by the Bank of Italy

4 Terzo Valore – roles & rules Banca Prossima:  Checks the NPO’s project’s creditworthiness and sets up credit lines  Posts the project on  Defines the amount that it finances directly, depending on the amount raised via Terzo Valore  Takes care of all legal and tax aspects connected to the loan in the name and on behalf of the NPO The client (NPO):  Presents the project to the bank  Provides publishable documents  Promotes fundraising amongst its supporters  Reports the progress of the financed project Social Entrepreneurs Have Your Say! Strasbourg January 2014

5 Terzo Valore – Main advantages Terzo Valore’s main advantage is the opportunity to raise money from two sources : loans with smaller cost than standard bank rates (and/or donations)  Sustainable cost: the lender may opt for lending at any interest rate (including zero), not greater than the maximum rate set by the NPO  Opportunity to reduce debt: donations can cover part of the total financing needs  Simplicity: Terzo Valore portal ( automates paymentswww.terzovalore.com  Transparency: the updated situation of the project and the funding is always on the website  Support: Banca Prossima provides consultancy, general support toward project setup and publication, and management of loans from «crowd» lenders Social Entrepreneurs Have Your Say! Strasbourg January 2014

6 Terzo Valore – Main achievements since June 2012  35 completed projects and 22 in pipeline  Main area: social and health care (50%), Main source of funding: loan (in 40% of cases, maturity is 10 years) Average amount funded: over 350,000 €  Value of completed projects: €5,980,000  Total social lending amount: €2,651,000 Total donations value: €537,000  520 lenders and 84 donors  More than €500,000 interest charges will be saved by clients over their loans’ maturity  Average interest rate required by social bankers: 0,96% (range 0% - 3%) Social Entrepreneurs Have Your Say! Strasbourg January 2014

7 Social lending Social Entrepreneurs Have Your Say! Strasbourg January Social lending is an effective financial instrument for social business. It is less expensive than standard loans, it facilitates liquidity and complements donations. It is important to minimise the financial risk borne by personal lenders in order to generate an high interest about social lending. 2.In the countries where NPOs are not allowed to pay out dividends, a «secured» crowdfunding is the only possible direct way to invest in the social sector with a financial return 3.Social lending could be also enforced by a public/private system of guarantees (i.e. whereby European financial instruments -under such initiatives as EaSI’s Axis III or Creative Europe’s guarantee facility- fund a pool of money to be used as collateral.) 4.Social lending needs a soft regulation without too many constraints. A tax regulation with fiscal benefits for investors and social enterprises would strongly enhance the development of the social business

8 Social lending Social Entrepreneurs Have Your Say! Strasbourg January «Secured» social lending with the participation of a financial institution taking charge of the assessment process could increase public confidence, which would translate in a rise of the number of investors and average value of loans (and/or donations) 6. A second stage of development of social lending activity could also involve using social lending alongside other types of financing (bonds, equities, institutional donations, government transfers …). This is most easily accomplished by, for instance, supplying funds for guarantee schemes on condition that the project is co-financed by some of the above sources. The same objective can also be pursued in reverse, for instance by conditioning European social funds use to the simultaneous fundraising through CF platforms 7. Social lending empowers social enterprises but it is also an instrument of community building and involvement for the common good

9 Social Entrepreneurs Have Your Say! Strasbourg January /01/2012Euro Project total amount900,000 social lenders at 1.57% interest rate 600,000 bank at 5.78% interest rate 300,000 Maturity year 10 Mixed interest rate2.9% Interest cost saving estimated yearly average 16,000 Total interest saving160,000 Fostering of youths in order to cover their educational needs and develop in them an appreciation of the beauty of life

10 Social Entrepreneurs Have Your Say! Strasbourg January 2014 Serving local community (from young to aged people) 02/20/2013Euro Project total amount900,000 social lenders at % interest rate 240,500 bank at 3.63 % interest rate 300,000 Donation359,500 Maturity year 10 Mixed interest rate 2.27% Interest cost saving estimated yearly average 11,000 Total interest saving110,000

11 Social Entrepreneurs Have Your Say! Strasbourg January /14/2013Euro Project total amount750,000 social lenders at 0.23 % interest rate 450,000 bank at 7.12 % interest rate 148,450 Donation33,050 Maturity year 10 Mixed interest rate2.65% Interest cost saving estimated yearly average 11,500 Total interest saving115,000 Education (from nursery to high school)

12 Social Entrepreneurs Have Your Say! Strasbourg January 2014 Assistance for local disadvantaged people 12/19/2013Euro Project total amount350,000 social lenders at 0 % interest rate 182,000 bank at 6.8 % interest rate 151,630 Donation16,370 Maturity year 10 Mixed interest rate3.09% Interest cost saving estimated yearly average 7,500 Total interest saving75,000

13 Social Entrepreneurs Have Your Say! Strasbourg January /11/2013Euro Project total amount300,000 social lenders at % interest rate 189,000 bank at % interest rate 99,000 Donation12,000 Maturity year 10 Mixed interest rate1.97% Interest cost saving estimated yearly average 5,000 Total interest saving50,000 New school in Uganda