Calvert Social Investment Foundation, Inc.
7315 Wisconsin Avenue, Suite 1000W, Bethesda, MD 20814 ∂ 800.248.0337 ∂ www.calvertfoundation.org
Prospectus
MARCH 31, 2017
Calvert Foundation Community Investment Note
Calvert Foundation Community Investment Notes
Total Aggregate Offering
$500,000,000*
Term/Maturity
Various terms of 6 months to 20 years
Rate
Various rates from 0% to 4%, corresponding to term
Minimum Investment Requirement
$20 or $1,000, depending on the purchase method**
Status
Senior Unsecured Debt
*Investor dollars are not used to pay sales commissions, existing debt, or any other Foundation expenses.
**Investment minimums depend on purchase method and could be changed in the future.
Calvert Social Investment Foundation, Inc. (the “Foundation”),
is a 501(c)(3) non-stock corporation located in Bethesda, MD.
The Foundation may from time to time issue Calvert
Foundation Community Investment Note (the “Note” or
“Notes”), a security that channels investor capital to highimpact community development initiatives. Specific terms of
the Notes will be described in a separate application, online
listing, or pricing supplement. The Foundation will use
proceeds of the Notes for the Foundation’s general investing
purposes or as part of a program of targeted investment. The
Notes include Direct Notes, Online Notes, and Brokerage
Notes.
The Foundation may offer Notes directly or through registered
broker-dealers. Depending on the method of sale (see page 6),
the Notes may be offered to or through Incapital LLC, as an
agent for resale. The agent is not required to sell any specific
amount of Notes but sells the Notes on a best-efforts basis.
The Notes are subject to certain risks, discussed
beginning on page 3.
Investors are cautioned not to rely on any information not
expressly set forth in this prospectus, any related application,
online listing, or pricing supplement. Investors are advised to
read this prospectus and any related application, online listing,
or pricing supplement carefully prior to making any decision to
purchase these securities. No person has been authorized to
give any information or to make any representation in
connection with this offering other than those contained in this
prospectus, and if given or made, such information or
representation must not be relied upon as having been made
by the issuer.
Neither the Notes nor the adequacy of this prospectus have
been approved, disapproved or passed on by the Securities
and Exchange Commission, any state securities commission
or any other regulatory body. Any representation to the
contrary is a criminal offense.
This prospectus does not constitute an offer nor the solicitation
of an offer to sell to any person in any state or any other
political jurisdiction in which such offer or solicitation may not
lawfully be made. This prospectus does not constitute an offer
by a broker-dealer in any state where said broker-dealer is not
qualified to act as a broker-dealer. Federal and state securities
laws may affect the Foundation’s ability to continue to sell the
Notes in certain states.
The Notes are being offered under an exemption from federal
registration pursuant to Section 3(a)(4) of the Securities Act of
1933, as amended (the “Securities Act”) and Section 3(c)(10)
of the Investment Company Act of 1940, as amended (the
“Investment Company Act”). The Securities and Exchange
Commission has not made an independent determination that
these securities are exempt from registration.
There is not expected to be any secondary market in the
Notes. The Notes may not be transferred or resold except as
permitted applicable federal and state securities laws.
Accordingly, investors should be aware that they may be
required to bear the financial risks of this investment for an
indefinite period of time.
The Notes are not and will not be insured or guaranteed by the
Federal Deposit Insurance Company (“FDIC”), the Securities
Investment Protection Corporation (“SIPC”), or any other
agency.
Incapital LLC has advised the Foundation that in rare situations
it may purchase and sell Brokerage Notes, but that it is not
obligated to make a market in the Notes and may suspend or
permanently cease that activity at any time.
The Foundation has not set a date for termination of this
offering.
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FOR RESIDENTS OF ALABAMA ONLY:
THESE SECURITIES ARE OFFERED PURSUANT TO A
CLAIM OF EXEMPTION FROM REGISTRATION UNDER
SECTION 37(H) OF THE ALABAMA SECURITIES ACT AND
SECTION 3(A)(4) OF THE SECURITIES ACT OF 1933. A
REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS NOT BEEN FILED WITH THE ALABAMA
SECURITIES COMMISSION OR WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION. NEITHER
THE ALABAMA SECURITIES COMMISSION NOR THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION HAS PASSED UPON THE VALUE OF THESE
SECURITIES, MADE ANY RECOMMENDATIONS AS TO
THEIR PURCHASE, APPROVED OR DISAPPROVED OF
THE OFFERING, OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PAGES 3 AND 5) WILL NOT BE OFFERED TO GEORGIA
INVESTORS. THE FOUNDATION WILL REQUIRE WRITTEN
NOTICE OF INTENT TO RENEW FROM GEORGIA
INVESTORS AT OR PRIOR TO THE MATURITY OF THEIR
INVESTMENT, AND IN THE ABSENCE OF SUCH WRITTEN
NOTICE, THE NOTE WILL BE CLOSED AND THE
PRINCIPAL OF THE NOTE, TOGETHER WITH ANY
INTEREST PAYABLE, WILL BE RETURNED TO THE
INVESTOR.
FOR RESIDENTS OF ARIZONA ONLY:
IN ARIZONA, THE EFFECTIVE TERM FOR THE OFFER,
SALE AND RENEWAL OF THE INVESTMENT NOTES IS
ONE YEAR, WITH THE OPTION TO RENEW FOR
CONSECUTIVE ONE-YEAR PERIODS AS PROVIDED
UNDER SECTION 44-1899 OF THE ARIZONA REVISED
STATUTES. THE RENEWAL OR AUTOMATIC
REINVESTMENT OF ANY INVESTMENT NOTE, AS
DESCRIBED ON PAGES 6 AND 7 OF THIS PROSPECTUS,
WILL BE CONTINGENT UPON THE NOTES HAVING A
VALID REGISTRATION AT THE TIME OF MATURITY AND
RENEWAL.
FOR RESIDENTS OF INDIANA ONLY:
THE INDIANA SECURITIES DIVISION HAS NOT IN ANY
WAY PASSED UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, THE
SECURITIES OFFERED, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
CORRESPONDINGLY, THE FOUNDATION HAS
ESTABLISHED AND WILL MAINTAIN BANK ACCOUNTS
WITH FIRST AMERICAN CREDIT UNION, LOCATED IN
CASA GRANDE, ARIZONA, AND WESTERN ALLIANCE
BANK, LOCATED IN PHOENIX, ARIZONA. THE
FOUNDATION WILL ENSURE THAT THE BANKS CONTAIN
FUNDS EQUAL TO OR GREATER THAN THE NOTES
PAYABLE TO ARIZONA INVESTORS IN THE CURRENT
FISCAL YEAR. BY JANUARY 1 OF EACH YEAR, FUNDS
WILL BE DEPOSITED TO SATISFY ALL ARIZONA
MATURITIES FOR THE SUBSEQUENT TWELVE MONTHS.
FOR RESIDENTS OF CALIFORNIA ONLY:
THE FOUNDATION HAS REGISTERED TO SELL UP TO
$500,000,000 OF NOTES.
FOR RESIDENTS OF FLORIDA ONLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED IN
THE STATE OF FLORIDA. THE SECURITIES WILL BE SOLD
PURSUANT TO THE ELEEMOSYNARY EXEMPTION IN
FLORIDA STATUTES SECTION 517.015(9).
FOR RESIDENTS OF GEORGIA ONLY:
THESE SECURITIES ARE EXEMPT FROM REGISTRATION
WITH THE SECURITIES COMMISSIONER OF THE STATE
OF GEORGIA PURSUANT TO RULE 590-4-2-.07. THE
SECURITIES COMMISSIONER, BY ACCEPTING THE
NOTICE FILING, DOES NOT IN ANY WAY ENDORSE OR
RECOMMEND THE PURCHASE OF ANY OF THESE
SECURITIES.
IN ORDER TO REMAIN IN COMPLIANCE WITH THE
POLICIES ESTABLISHED BY THE GEORGIA DIVISION OF
SECURITIES AND BUSINESS REGULATION, AUTOMATIC
REINVESTMENT AT MATURITY (AS DISCUSSED ON
AS REQUIRED BY STATE LAW, ALL RESIDENTS OF
GEORGIA HAVE THE OPTION OF RESCINDING THEIR
INVESTMENT WITHIN 72 HOURS OF THE EXECUTION OF
A WRITTEN AGREEMENT TO PURCHASE OR TO
REINVEST A NOTE AT MATURITY. PLEASE NOTE THAT
NO INVESTOR IN THE STATE OF GEORGIA HAS EVER
EXERCISED THIS OPTION.
FOR RESIDENTS OF KENTUCKY ONLY:
THESE SECURITIES ARE ISSUED PURSUANT TO A CLAIM
OF EXEMPTION FROM REGISTRATION UNDER SECTION
KRS 292.400(9) OF THE KENTUCKY SECURITIES ACT.
FOR RESIDENTS OF LOUISIANA ONLY:
THESE SECURITIES HAVE BEEN REGISTERED WITH THE
SECURITIES COMMISSIONER OF THE STATE OF
LOUISIANA UNDER SECTION 51-705(B) OF THE
LOUISIANA REVISED STATUTES. THE SECURITIES
COMMISSIONER, BY ACCEPTING REGISTRATION, DOES
NOT IN ANY WAY ENDORSE OR RECOMMEND THE
PURCHASE OF THESE SECURITIES.
FOR RESIDENTS OF MICHIGAN ONLY:
THESE SECURITIES ARE OFFERED PURSUANT TO
EXEMPTION MCL 451.2201(G) OF THE MICHIGAN
UNIFORM SECURITIES ACT. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS NOT
BEEN FILED WITH THE OFFICE OF FINANCIAL AND
INSURANCE SERVICES, SECURITIES SECTION,
MICHIGAN DEPARTMENT OF LABOR & ECONOMIC
GROWTH, OR WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION. NEITHER THE OFFICE OF
FINANCIAL AND INSURANCE SERVICES NOR THE
COMMISSION HAS PASSED UPON THE VALUE OF THESE
SECURITIES, MADE ANY RECOMMENDATIONS AS TO
THEIR PURCHASE, APPROVED OR DISAPPROVED THE
OFFERING, OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
FOR RESIDENTS OF OHIO ONLY:
IN ORDER TO REMAIN IN COMPLIANCE WITH POLICIES
ESTABLISHED BY THE OHIO DIVISION OF SECURITIES,
AUTOMATIC REINVESTMENT AT MATURITY (AS
DISCUSSED ON PAGES 6 AND 7) WILL NOT BE OFFERED
TO OHIO INVESTORS. THE FOUNDATION WILL REQUIRE
POSITIVE AFFIRMATION FROM OHIO INVESTORS AT OR
PRIOR TO THE MATURITY OF THEIR INVESTMENT IN
ORDER TO REINVEST THEIR NOTE, AND IN THE
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ABSENCE OF SUCH POSITIVE AFFIRMATION THE NOTE
WILL BE CLOSED AND THE PRINCIPAL OF THE NOTE,
TOGETHER WITH ANY INTEREST PAYABLE, WILL BE
RETURNED TO THE INVESTOR.
FOR RESIDENTS OF OREGON ONLY:
IN ORDER TO REMAIN IN COMPLIANCE WITH POLICIES
ESTABLISHED BY THE OREGON DIVISION OF FINANCE
AND CORPORATE SECURITIES, AUTOMATIC
REINVESTMENT AT MATURITY (AS DISCUSSED ON
PAGES 3 AND 6) WILL NOT BE OFFERED TO OREGON
INVESTORS. THE FOUNDATION WILL REQUIRE POSITIVE
AFFIRMATION FROM OREGON INVESTORS AT OR PRIOR
TO THE MATURITY OF THEIR INVESTMENT IN ORDER TO
REINVEST THEIR NOTE, AND IN THE ABSENCE OF SUCH
POSITIVE AFFIRMATION THE NOTE WILL BE CLOSED
AND THE PRINCIPAL OF THE NOTE, TOGETHER WITH
ANY INTEREST PAYABLE, WILL BE RETURNED TO THE
INVESTOR. THE FOUNDATION WILL REGISTER TO SELL
$500,000,000 OF NOTES IN OREGON THIS YEAR.
FOR RESIDENTS OF PENNSYLVANIA ONLY:
A REGISTRATION STATEMENT WITH RESPECT TO THE
SECURITIES OFFERED BY THIS PROSPECTUS HAS BEEN
FILED IN THE OFFICES OF THE PENNSYLVANIA
DEPARTMENT OF BANKING AND SECURITIES IN
HARRISBURG, PENNSYLVANIA. SUCH REGISTRATION
STATEMENT INCLUDED CERTAIN EXHIBITS ONLY
SUMMARIZED OR ALLUDED TO IN THE PROSPECTUS,
AND ARE AVAILABLE FOR INSPECTION AT THE
HARRISBURG OFFICE OF THE COMMISSION DURING
REGULAR BUSINESS HOURS. THE HARRISBURG OFFICE
IS LOCATED IN MARKET SQUARE PLAZA, 17 N SECOND
STREET, SUITE 1300, HARRISBURG, PENNSYLVANIA,
17101. REGULAR BUSINESS HOURS ARE MONDAY
THROUGH FRIDAY, 8:00 AM TO 5:00 PM.
IF YOU HAVE ACCEPTED AN OFFER TO PURCHASE
THESE SECURITIES MADE PURSUANT TO A
PROSPECTUS WHICH CONTAINS A WRITTEN NOTICE
EXPLAINING YOUR RIGHT TO WITHDRAW YOUR
ACCEPTANCE PURSUANT TO SECTION 207(M) OF THE
PENNSYLVANIA SECURITIES ACT OF 1972, YOU MAY
ELECT, WITHIN TWO BUSINESS DAYS AFTER THE FIRST
TIME YOU HAVE RECEIVED THIS NOTICE AND A
PROSPECTUS (WHICH IS NOT MATERIALLY DIFFERENT
FROM THE FINAL PROSPECTUS) TO WITHDRAW FROM
YOUR PURCHASE AGREEMENT AND RECEIVE A FULL
REFUND OF ALL MONEYS PAID BY YOU. YOUR
WITHDRAWAL WILL BE WITHOUT ANY FURTHER
LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS
WITHDRAWAL, YOU NEED ONLY SEND A WRITTEN
NOTICE (INCLUDING A NOTICE BY FACSIMILE OR
ELECTRONIC MAIL) TO THE ISSUER (OR UNDERWRITER
IF ONE IS LISTED ON THE FRONT PAGE OF THE
PROSPECTUS) INDICATING YOUR INTENTION TO
WITHDRAW.
FOR RESIDENTS OF SOUTH CAROLINA ONLY:
A DEFAULT IN PAYMENT EITHER OF PRINCIPAL OR
INTEREST ON ANY ONE COMMUNITY INVESTMENT NOTE
SHALL CONSTITUTE A DEFAULT ON THE ENTIRE ISSUE.
IN SUCH SITUATION THE RIGHTS OF THE NOTEHOLDERS
IN DEFAULT SHALL INCLUDE THE RIGHT OF THE
NOTEHOLDERS OF 25% IN THE PRINCIPAL AMOUNT OF
THE NOTES OUTSTANDING TO REQUIRE THE
INDENTURE TRUSTEE TO DECLARE THE ENTIRE ISSUE
DUE AND PAYABLE
FOR RESIDENTS OF TENNESSEE ONLY:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST
RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND
THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY
OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT
TO RESTRICITONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
The paying agent for Brokerage Notes is The Bank of New
York Mellon Trust Company, N.A. (“BONY”), located at 225
Liberty Street, New York, NY 10286. The phone number is
212.495.1784.
The broker-dealer authorized to transact Brokerage Notes
through its selling group is Incapital LLC, located at 200 South
Wacker Drive, Suite 3700, Chicago, IL, 60606. The phone
number is 312.379.3700.
IT IS THE POSITION OF THE PENNSYLVANIA
DEPARTMENT OF BANKING AND SECURITIES THAT
INDEMNIFICATION IN CONNECTION
WITH VIOLATION OF SECURITIES LAWS IS AGAINST
PUBLIC POLICY AND VOID.
iii
iv
TABLE OF CONTENTS
OFFERING SUMMARY
1
RISK FACTORS
3
DESCRIPTION OF THE NOTES
6
DISTRIBUTION
8
FINANCIAL REPORTING
8
USE OF PROCEEDS
9
INVESTMENT POLICY
10
CAPITALIZATION
11
FINANCIAL HIGHLIGHTS
13
BOARD OF DIRECTORS
14
KEY PERSONNEL
15
RELATED PARTIES
15
LEGAL MATTERS
15
INVESTOR GUIDE
16
CERTAIN KEY INDENTURE PROVISIONS
17
ADDITIONAL INFORMATION—APPENDIX I
18
PURCHASE METHODS CHART—APPENDIX II
19
COMMUNITY INVESTMENT NOTE APPLICATION—APPENDIX III
20
AUDITED FINANCIAL STATEMENTS
22
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OFFERING SUMMARY
This section summarizes the legal and financial terms of the Notes that are described in more detail in the section entitled "Description of the
Notes” beginning on page 6. Final terms of any particular Note will be determined at the time of sale and will be contained in the accompanying
application, online listing, or pricing supplement relating to those Notes. The terms in that application, online listing, or pricing supplement may
vary from and supersede the terms contained in this prospectus. Before you decide to purchase a Note, you should read the more detailed
information appearing elsewhere in this prospectus and in the accompanying application, online listing, or pricing supplement.
What is Calvert Social Investment Foundation?
The Notes are issued by Calvert Social Investment Foundation, Inc. (the “Foundation”), a 501(c)(3) Maryland non-stock corporation established
on September 20, 1988.
The Foundation’s goal is to harness the power of investing to connect, cultivate, and inspire those who want to shape the world for good. The
Foundation’s work is focused on connecting investors to organizations that strengthen communities and sustain our planet.
The Foundation achieves its goal by providing investor capital to support the financing needs of domestic and international community
development organizations, projects, funds, and other social enterprises, that we refer to collectively as our “investment partners.” These
investment partners, in turn, work in underserved communities to support development in areas like affordable housing, small business
development, job creation, environmental sustainability, energy access and efficiency, and other economic and social development. . Our
investments are primarily loans, but can also take the form of equity investments (including limited or general partnership interests) or other
investments.
Who is the Issuer of the Notes?
Calvert Social Investment Foundation, Inc.
What are the terms of the Notes being Offered?
The Foundation is offering up to $500,000,000 of Senior Unsecured Notes with
various terms of 6 months to 20 years.
The specific terms of the Notes will be described in a separate application,
online listing, or pricing supplement.
How Can I Purchase Notes?
The Notes are available for purchase in three different forms:
(1) Direct Notes, which may be purchased directly through the Foundation or
registered broker-dealers (see Appendix III for the application). Direct Notes
may also be referred to as Definitive Notes;
(2) Online Notes, which may be purchased through the Foundation’s website;
and
(3) Brokerage Notes, which may be purchased electronically through the
investor’s brokerage account and settled through the Depository Trust Company
(“DTC”). Brokerage Notes may also be referred to as Book-Entry Notes, as
ownership and transfers of these Notes shall be made through book entries by a
Clearing Agency as described in Section 2.09 of the Trust Indenture.
Settlement Methods: Brokerage Note transactions settle through the Depository
Trust Company (“DTC Settlement”). The Foundation acts as the registrar and
paying agent for Direct Notes (“Direct Settlement”). Goldstar Trust acts as
registrar and paying agent for Online Notes (“Custodial Settlement”).
Please see “How To Invest / Purchase Methods,” on page 6 for further
descriptions of the Notes and instructions for purchasing them. For a chart
depicting differences in the administration of the Note among the different
purchase methods, please see Appendix II.
The Notes are not mutual funds and were created by the Foundation. They
should not be confused with any Calvert Research and Management-sponsored
investment product.
How will the Foundation use the Proceeds of the Notes?
The proceeds from the Note sales are placed as direct Impact Investments in
our investment partners who have missions that include affordable housing,
small business development, job creation, environmental sustainability, energy
access and efficiency, and economic and social development of disadvantaged
communities. The funds are invested in these investment partners at rates that
reflect the general current market as well as the positive social and/or
environmental impact the organizations are creating. Investment partners are
selected based on their financial standing and their ability to contribute to
growing local economies and to provide low-income communities with avenues
to economic self-sufficiency. (See the full section entitled “Use of Proceeds” on
page 9.)
The proceeds of the Notes support the Foundation’s global portfolio, including
investments in the portfolio sectors and initiatives that investors have the option
to target. While the Foundation attempts to allocate its portfolio in line with
1
investor’s targeting preferences, there is no guarantee it will be able to do so at
any specific point in time. A targeted investment in the Note does not provide
direct or sole exposure to the targeted sector or initiative. All investments in the
Notes are subject to the same risk and supported by the Foundation’s overall
portfolio and capitalization. All Notes are general unsecured obligations of
Calvert Foundation.
Summary Financial Information
The following table sets out certain summary financial information derived from the more detailed audited financial information included in this
prospectus. Additional quarterly financial information may be found on the Foundation’s website http://www.calvertfoundation.org* and upon
request to the Foundation.
*The inclusion of our website address in this prospectus does not include or incorporate by reference the information on or accessible through our
website into this prospectus.
Financial Inform ation
Total Assets
Total Liabilities
Net Assets
Support and Revenue
Expenses
Change in Net Assets
$
$
$
$
$
$
2016
374,036,116
336,451,840
37,584,276
18,709,006
18,192,220
7,198,092
$
$
$
$
$
$
2015
315,669,823
285,283,639
30,386,184
16,564,498
16,175,305
1,308,322
$
$
$
$
$
$
2014
292,887,822
263,809,960
29,077,862
18,146,046
15,373,762
2,634,461
2
RISK FACTORS
Investment in the Notes involves certain risks. You should carefully consider the risks described below and the other information contained in
this prospectus before deciding whether to purchase Notes.
I. Risks Associated with the Notes and the Offering
Notes are subject to all the risks associated with unsecured investments.
The Notes are unsecured general obligations of the Foundation and are not deposits or obligations of, or guaranteed or endorsed by, any bank,
and are not insured by any federal or state agency, including the FDIC. Payment of principal and interest will depend solely upon the financial
condition of the Foundation. Further, no sinking fund or other similar deposit has been or will be established by the Foundation to provide for
the repayment of the Notes (residents of Arizona should refer to “For Residents of Arizona Only” above). Therefore, the relative risk level may
be higher for the Notes than for other securities.
The Foundation is offering the Notes on a best-efforts sales basis and there is no minimum sales requirement.
The sale of the Notes is a best efforts offering and there is no minimum sales requirement. Because the Foundation has already established the
appropriate systems and processes to administer this offering along with its existing Notes, a low sales volume will not prompt cancellation of
the offering or cause the Foundation to refund Note purchases to existing investors.
The interest rate applicable to a Note is fixed at the time of issue.
Interest rates offered for the Notes may change at the Foundation’s discretion, within the available range of 0%-4%. Should commercial rates
rise, the Foundation is not legally obligated to pay a higher rate or to redeem the principal or allow a partial withdrawal of a Note prior to its
maturity. A penalty may be charged against interest accrued in the event of an early redemption or partial withdrawal. Interest rates offered for
the Notes may not be as high as those offered by other institutions for similar securities. Furthermore, risks of investment in the Notes may be
greater than implied by relatively low interest rates on the Notes.
Investors should be aware of the procedures for automatic reinvestment of Notes at maturity for Direct Notes.
Direct Notes: The Foundation’s practice is to provide a notice to investors within a reasonable period of time prior to the maturity of their Note,
providing instructions for redemption and reinvestment. If an investor does not respond to this notice, both principal and interest are
automatically reinvested at comparable terms consistent with the current offering. If the original interest rate is not offered at the time of
reinvestment and the investor provides no instructions, renewed Notes may be assigned a lower rate. Please see “Options at Maturity /
Reinvestments” on page 7 for further details.
Online and Brokerage Notes: The practice of automatic reinvestment does not apply.
Holders of Notes may be subject to a penalty upon early redemption.
Early redemption is possible only at the Foundation’s sole discretion and on such terms as the Foundation may require. This may result in a
penalty. If an investor desires to request the Foundation to redeem all or part of their investment, they should contact Calvert Foundation to
discuss.
The Foundation will issue additional Notes that will rank equally with the Notes purchased by any holder.
The Foundation may issue additional Notes under the Indenture pursuant to supplemental indentures, without the consent or approval of the
owners of any Notes then outstanding. Those additional Notes will be issued on a parity with any of the other Notes. The Indenture does not
limit the amount of additional Notes that may be issued, except as related to the balance sheet and liquidity ratio covenants discussed on page
17.
Changes in the Indenture Trustee may impact holders.
The resignation or removal of The Bank of New York Mellon Trust Company, N.A. as Indenture Trustee or Paying Agent may delay payments
to holders of Brokerage Notes. There is no requirement that a successor trustee be appointed prior to the effective date of the Indenture
Trustee's resignation or removal.
Holders of Notes will depend in part on the Indenture Trustee enforcing provisions of the Indenture.
The Foundation has made arrangements with The Bank of New York Mellon Trust Company, N.A. to serve as Indenture Trustee. The Indenture
defines the possible events of default that could cause the Indenture Trustee to accelerate the Foundation’s Note payment obligations (see
page 17). The Indenture Trustee's ability to enforce the provisions of the Indenture depends on the Foundation providing accurate and timely
information as to, among other things, the identity of holders of the Direct and Online Notes and the status of payments and non-payments to
them. Although the Foundation has a Trust Indenture, such indenture does not ensure or secure the repayment of the Notes.
Individual holders of Notes may be unable to control actions taken under the Indenture.
The consent or approval of the holders of a specified percentage of the aggregate principal amount of all outstanding series of Notes is required
before various actions may be taken under the Indenture. These actions include the appointment of a successor Indenture Trustee following an
Indenture Trustee resignation, the amendment of the Indenture under specified circumstances, the waiver of Events of Default, and certain
other events. There can be no assurance that an individual investor’s interests with respect to actions under the Indenture will coincide with
those of other investors.
Holders of Brokerage Notes can only act indirectly through DTC and the Indenture Trustee.
Brokerage Note transactions are settled through the Depository Trust Company (“DTC”). As is standard to faciliate such electronic transactions,
DTC represents such Notes with one or more certificates registered in the nominee name of “Cede & Co.,” the nominee of DTC, rather than in
the name of the investor or investor’s nominee. To exercise their rights under the Indenture, beneficial owners can only act indirectly through
DTC and its participating organizations under their established rules. The Indenture Trustee does not track the beneficial owners of Brokerage
Notes.
3
No Funds will be Held by the Indenture Trustee as Security.
The Notes are payable solely from amounts held by the Foundation, and the Indenture Trustee holds no funds pledged to Noteholders. The
Foundation serves as Paying Agent for Direct Notes and Goldstar Trust serves as Paying Agent for Online Notes; the Indenture Trustee has no
access to any such payment prior to the occurrence of an Event of Default. Further, there is no assurance that the Indenture Trustee will have
access to such funds after the occurrence of any Event of Default. No insurance or guarantee of the Notes will be provided by any government
agency or instrumentality, by any affiliate of the Foundation, by any insurance company, or by any other person or entity.
There are limitations in the subordination of the Foundation’s subordinated loans.
The Notes are senior in the right of payment to the Foundation’s subordinated loans only if the Notes are in default or if there is an event of
bankruptcy or other liquidation proceeding against the Foundation. Short of these circumstances, Noteholders have no ability to block payment
to subordinated debt holders, including accelerated payment triggered by a default under any of the subordinated loan documents. A default
under any of the subordinated loan documents does not automatically constitute a default pursuant to the terms of the Notes or the Indenture.
There is not expected to be any secondary market in the Notes.
The nature of this program does not afford the opportunity of a public or secondary market. Consequently, the purchase of a Note should be
viewed as an investment to be held to maturity.
II. Risks Associated with the Use of Proceeds
The Foundation has a considerable degree of discretion in investing the Note proceeds.
Calvert Foundation’s investment committees exercise discretion in investing the proceeds of this offering by conducting a rigorous due diligence
of an applicant’s financial and program information, credit history, capital structure, liquidity, and management track record. Nevertheless, there
can be no assurance that losses in the Foundation’s portfolio will not occur.
Repayment of the Notes will depend on the ability of the Foundation’s investment partners to repay their investments to the
Foundation.
Proceeds from the sale of the Notes are invested in domestic and international community development organizations, projects, funds, and
other social enterprises. These investment partners have a social or environmental impact mission and work to provide solutions to intractable
problems facing underserved populations. These organizations may be smaller, more concentrated in their operations, have less diversified
customer bases, have access to fewer resources, be dependent on charitable donations, or carry other risks that organizations without a social
or environmental impact mission may not. Accordingly, the ability for organizations to repay their investments in a timely manner, or at all, may
be affected.
There is no guarantee that investment partners will repay the Foundation, and the Foundation relies on such repayments to pay the
Notes.
Although the Foundation has established rigorous due diligence and payment monitoring procedures, there can be no guarantee that
investment partners will repay the Foundation promptly. While the Foundation intends to pay its investors on schedule, defaults or untimely
repayments of investments may result in the Foundation having insufficient loss reserves and subordinated capital to satisfy all outstanding
Notes.
Investors can expect to be paid only from cash and reserves held by the Foundation, and not from any other entity.
Note proceeds may be invested internationally and such investments would be subject to additional risk associated therewith.
Additional risks associated with international investments include the limited availability of information, currency fluctuations, and the volatility of
political and economic conditions in some areas. Fluctuations in exchange rates may adversely affect the repayment of investments. Political or
social instability may prevent borrowers from operating effectively and hinder repayment to the Foundation.
The investments made by the Foundation with proceeds from the Notes are typically illiquid.
Investments made by the Foundation with proceeds from Note sales are typically illiquid. While investment diversification, credit analysis, and
limited maturity can reduce the risk of loss, there can be no assurance that organizations will repay the Foundation promptly or that losses will
not occur.
III. Risks Associated With the Foundation
Changes in federal and state regulations may adversely affect holders of Notes.
Future changes in federal or state laws, rules, or regulations regarding the sale of securities by religious, charitable or other non-profit
organizations may make it more costly and difficult for the Foundation to offer and sell the Notes. Such an occurrence could result in a
decrease in the amount of Notes sold by the Foundation, thus affecting the Foundation’s operations and ability to meet its obligations under the
Notes.
Holders of Notes may be adversely affected by a change by the Foundation in its current operations or existence.
The Foundation is not obligated to continue offering the Notes or to continue its current operations or existence as a not-for-profit entity. Any
such change in its operations or status could negatively impact its ability to repay the Notes.
The Foundation is dependent upon the continued services of certain key personnel.
The President and Chief Executive Officer or any member of the senior management team could leave the Foundation at any time, leaving a
temporary vacancy in a key position. The Foundation tries to ensure a depth of management such that a departure will not impede the
Foundation’s functioning. However, there can be no assurance of continuity in the Foundation’s key personnel nor does the Foundation
maintain Key Man Insurance.
4
Holders of Notes are subject to risk associated with bankruptcy or insolvency of the Foundation.
If the Foundation or another affiliated company seeks relief under bankruptcy or related laws, a bankruptcy court could attempt to consolidate
its assets into the bankruptcy estate, possibly resulting in delayed or reduced payments to Noteholders. While the Foundation or the Indenture
Trustee are permitted to hold certain segregated funds as Paying Agent under the Indenture, the enforceability in bankruptcy of any pledge of
such segregated fund may be limited. Furthermore, there is some risk that a bankruptcy court would deem funds held by the Indenture Trustee
as assets of the bankrupt estate.
Holders of Notes should be aware of certain tax consequences.
The principal amount of a Note is not tax-deductible, and all interest paid or accrued on the Notes is taxable as ordinary income to investors. If
a Direct Note investor opts to irrevocably donate earned interest to the Foundation, such a donation may be tax-deductible as a charitable
contribution (see “Interest Accrual” on page 7).
If interest paid is determined to be below the market interest rate as defined by the Internal Revenue Service, the Noteholder must generally
report imputed interest income up to the market interest level. Loans to charitable organizations are presently exempt from the imputed interest
rules if the amount does not exceed $250,000.
The Foundation’s loan loss reserve may not be adequate.
The Foundation’s investment portfolio maintains a loss reserve that is reviewed quarterly by the Board of Directors (see “Loss Reserve” on
page 10). However, please note that the loss reserve may not be adequate to meet all potential losses.
Other investments of the Foundation may adversely impact holders of Notes.
A portion of the Foundation’s liquid assets may be invested in cash equivalents and readily marketable securities and is subject to various
market risks that may result in losses if market values of investments decline.
INVESTORS ARE ENCOURAGED TO CONSIDER THE CONCEPT OF INVESTMENT DIVERSIFICATION WHEN DETERMINING THE
AMOUNT OF NOTES THAT WOULD BE APPROPRIATE FOR THEM IN RELATION TO THEIR OVERALL INVESTMENT PORTFOLIO AND
PERSONAL FINANCIAL NEEDS.
5
DESCRIPTION OF THE NOTES
What is Impact Investing?
Impact investing (also known as community investing) directly finances socially, economically, and/or environmentally beneficial organizations
affecting disadvantaged communities that generally cannot attract efficient financing through traditional market mechanisms. The mission is to
invigorate local communities and provide them with avenues to economic self-sufficiency, while producing positive social impact. Impact
investing provides an alternative source of capital and a more efficient way to channel funds to these organizations. It is a method of investing
focused on generating both some financial return and a positive social and environmental impact. Long term, it is intended to create a
mainstream financial mechanism for the general public to invest in these opportunities.
What is a Community Investment Note?
The Community Investment Note is Calvert Foundation’s sole securities offering that is designed to support the growth of impact investing for
the purposes of promoting affordable housing, small business development, job creation, environmental sustainability, energy access and
efficiency, and economic and social development of disadvantaged communities. The Notes provide a fixed rate of interest for the term of the
Note as set forth in the applicable supplement.
Seniority / Security
The Foundation’s Notes are senior to $10.06 million of program related investments provided by Wells Fargo, The Piton Foundation, Calvert
Investment Administrative Services, Columbia Bank, PNC Community Development Company, and others (See “Capitalization,” page 11). The
Notes are not, and will not become, subordinate to any other indebtedness of the Foundation. The Notes are unsecured.
Who Can Invest?
The Notes are marketed to individual investors and selected institutional investors; they are not restricted to any limited class of investors.
Uniform Gifts to Minors Act (“UGMA”)
For accounts opened under the Uniform Gifts to Minors Act, you, the account owner, are the custodian. By opening this type of account, you
agree that all assets belong to the minor and that you will only use them for the minor’s benefit – even after the assets have been removed from
the account.
How to Invest / Purchase Methods
The Notes are available for purchase in three different forms: (1) Direct Notes, (2) Online Notes, and (3) Brokerage Notes. For a chart depicting
the differences in administration between these forms, please see page 19. Interest rates are fixed at the outset of the investment and are paid
as simple interest.
Direct Notes are Notes purchased directly from the Foundation by completing the Community Investment Note Application found at
http://www.calvertfoundation.org - a sample of which is found in Appendix III of this prospectus - or by calling the Foundation at 800.248.0337.
Direct Notes may also be purchased through any broker-dealer with whom the Foundation has a Sales and Compensation Agreement. A list of
eligible broker-dealers may be obtained by calling the Foundation. Payment for purchases of Direct Notes are made by check, bank wire, or
Automated Clearing House (“ACH”) transactions.
Online Notes are Notes purchased through the Foundation’s website through custodian Goldstar Trust. To purchase an Online Note, investors
must register their personal information and then select from the available options (“listings”). Payment for purchases of the Online Notes will be
processed through an ACH transaction linked to an investor’s bank account custodied with Goldstar Trust.
Brokerage Notes are transacted electronically through the investor’s brokerage account and settle through the Depository Trust Company
(“DTC”). The DTC arrangement is described in Appendix I. The Bank of New York Mellon Trust Company, N.A. serves as registrar and paying
agent of Brokerage Notes. The Foundation has contracted Incapital LLC, as the selling agent, which in turn has established a selling group of
over 600 broker-dealers. Brokerage Notes may be purchased through any broker-dealer participating in the Incapital selling group, a list of
whom may be obtained from the Foundation. Investors must consult the current pricing supplement, available from participating brokerages, in
addition to this prospectus for applicable Brokerage Note terms.
Settlement Methods
Transactions of Notes are settled either by the Depository Trust Company (“DTC Settlement”), with the Foundation acting as registrar and
paying agent (“Direct Settlement”), or with Goldstar Trust acting as registrar and paying agent (“Custodial Settlement”).
Direct Notes: Direct Settlement.
Online Notes: Custodial Settlement.
Brokerage Notes: DTC Settlement.
CUSIP Numbers
The Foundation may assign a CUSIP number at the time of investment for Brokerage Notes. For more information regarding CUSIP numbers,
please call the Foundation or visit its website at http://www.calvertfoundation.org/invest#Brokerage.
Trust Indenture
All Notes are subject to a Trust Indenture, with The Bank of New York Mellon Trust Company, N.A. serving as Indenture Trustee. Under the
Trust Indenture, the Indenture Trustee will be available to take specified actions on behalf of Noteholders in the event of a default on the Notes.
The Indenture Trustee also serves as Paying Agent for the Brokerage Notes (the Foundation serves as Paying Agent for Direct Notes and
Goldstar Trust serves as Paying Agent for Online Notes). Certain issues relating to the Trust Indenture are set forth on page 17. Upon request,
the Foundation provides copies of the Trust Indenture, which defines the rights of Noteholders.
6
Interest Accrual
Direct Notes: Direct Notes begin to accrue interest upon the deposit of funds sent by the investor to the Foundation. Both the anniversary and
maturity dates of Direct Notes correspond to the date that the Foundation deposits investor funds. Interest accrues on a 360-day year of twelve
30-day months, and investors may elect to have their annual interest payment paid out, reinvested, or donated to the Foundation as a taxdeductible contribution. Should an investor not provide specific instructions with regard to preference in any given year, interest will be
automatically reinvested.*
Online Notes: Online Notes begin to accrue interest upon the successful deposit of funds sent by the investor through an automated
clearinghouse transaction to the Foundation’s escrow account with Goldstar Trust, which generally takes one to five business days. Both the
anniversary and maturity dates of Online Notes correspond to the date the Foundation receives investor funds in its escrow account at Goldstar
Trust. Interest accrues on a 360-day year of twelve 30-day months. Interest is paid out annually and cannot be reinvested.
Brokerage Notes: Brokerage Notes begin to accrue interest on the settlement date, three business days after the trade date. Both the
anniversary and maturity dates correspond to the trade date. Interest accrues on a 360-day year based on twelve 30-day months. Interest is
paid out annually and cannot be reinvested.
Increasing an Investment
Investors may not increase the principal balance of Online or Brokerage Notes. The Foundation, at its discretion, may allow additional deposits
to the principal balance of Direct Notes.
Options at Maturity/Reinvestments
Direct Notes: The Foundation’s practice is to mail a notice to investors approximately 45 days or more prior to the maturity of their Notes,
providing instructions for redemption and reinvestment, and, upon receipt of investor response, to follow investor instructions. If an investor
notifies the Foundation in writing or email by the maturity date that the investor elects not to reinvest the Note, then at maturity, the Foundation
shall promptly repay the principal and accrued interest. If an investor does not respond to this notice, both principal and interest are
automatically reinvested for the same duration as the previous Note consistent with the current offering.* If the original interest rate is not
offered at the time of reinvestment and the investor provides no instructions, renewed Notes may be assigned a lower rate.
Online Notes: Thirty days prior to Note maturity, and again 15 days prior to maturity, holders of Online Notes will receive email notification(s)
providing instructions for redemption or reinvestment. If an investor notifies the Foundation in writing, email, or online selection by the maturity
date that the investor elects not to reinvest the Note, then at maturity, the Foundation shall promptly repay the principal and accrued interest. If
an investor does not respond to this notice, both principal and interest are paid out. Investors opting to reinvest must invest in a new Note
selected from the currently available offerings, which may not include the original targeting preference and have a different duration and interest
rate. Such reinvestments are administered without transferring funds back to the investor.
Brokerage Notes: Brokerage Notes are redeemed automatically at maturity. While investors are encouraged to purchase a new Note with the
proceeds, no reinvestment option is available.
* Automatic reinvestment at maturity will not be offered to investors residing in the states of Georgia, Ohio, and Oregon. Unless the Foundation
receives documented positive affirmation of intent to renew from investors residing in these states, principal and interest will be paid out in full
at maturity.
Early Redemption
Early redemption is allowed only at the Foundation’s sole discretion and subject to such terms as the Foundation may require. This may result
in a penalty. If an investor needs to redeem all or part of their investment, they should contact Calvert Foundation to discuss.
Partial Withdrawal
Partial withdrawals of principal are possible only at the Foundation’s sole discretion and subject to such terms as the Foundation may require.
This may result in a penalty. Partial withdrawals will not be considered more than twice in a year per investor each year throughout the term of
the Note.
Events of Default
Notes will become immediately due and payable upon the occurrence of the “Events of Default” specified in Section 5.01 of the Indenture. Said
Events of Default include, among other things, non-payment of principal or interest.
Transfer on Death Accounts
Transfer on Death (“TOD”), or Payable on Death (“POD”) accounts are not offered for the Notes.
Minimum Account Balance
Direct and Online Notes: The minimum investment amount on a Direct or Online Note is $20, subject to available offerings.
Brokerage Notes: The minimum investment amount for a Brokerage Note is $1,000.
Partial withdrawals that cause the remaining Note balance to fall below the minimum account balance may, at the Foundation’s discretion,
result in the Note being closed and the remaining principal value being returned to the investor as an early redemption.
Secondary Market
The nature of this program does not presently afford the opportunity of a secondary market. The Foundation may make secondary market
transactions, but it is not obligated to do so. Consequently, the purchase of a Note should be viewed as an investment to be held to maturity.
However, early redemption and partial withdrawals are sometimes possible, as described in sections above.
7
Interest Payments and Tax Reporting
Interest is paid once a year on the anniversary date of a Note. In general, cash-basis taxpayers are required to report interest on their tax return
only after the interest has been paid out. For example, a holder of a Note with an issue date in May 2016 would receive the first interest
payment on the Note in May 2017 and report this interest on the tax return for 2017. Noteholders will be provided with a Form 1099-INT in
January of each year indicating the interest earned on their Notes in the prior year. If interest paid is determined to be below the market interest
level as defined by the Internal Revenue Service, the Noteholder must generally report imputed income up to the market interest level. Loans to
charitable organizations are presently exempt from the imputed interest rules if the amount does not exceed $250,000. Note purchases are not
tax deductible. Federal and state tax is due on the interest earned on the Note. Donated interest payments will still receive a Form 1099-INT, as
the interest was earned by the Noteholder prior to the contribution. Consult your tax advisor regarding the effect on your taxes, if any, of
accepting a below-market rate of return on your investment.
Portfolio Sector and Initiative Targeting
Calvert Foundation allows investors the option to target their support to portfolio sectors and initiatives that are within the portfolio’s “Use of
Proceeds.” Targeting options include, but are not limited to: Affordable Housing, Age Strong, Benefit Chicago, Community Development,
Education, Equal Exchange, Environmental Sustainability, Health, India, Microfinance, Oikocredit, Ours To Own Baltimore, Ours To Own
Denver, Ours To Own Twin Cities, Raíces, Renewable Energy, Small Business, Sustainable Agriculture, and WIN-WIN Women’s
Empowerment. Calvert Foundation uses targeting to inform its portfolio focus, and attempts to allocate in accordance with investor preferences,
but its ability to do so is not guaranteed. Calvert Foundation reserves the right to stop a targeting option, and therefore an investment in the
Note program might need to become untargeted or re-targeted to other available options during its duration or upon reinvestment.
A targeted investment in a Note does not provide direct or sole exposure to the targeted sector or initiative. All investments in the Notes,
whether they are targeted or not, are subject to the same risk and supported by the Foundation’s overall portfolio and capitalization. A targeted
investment in the Note is not a separate investment product from an untargeted investment in the Note, is not subject to any additional risk, and
does not provide any special security or repayment arrangements. All Notes are general unsecured obligations of Calvert Foundation.
DISTRIBUTION
The Foundation, as issuer of the Notes, serves as the distributor of the Notes, along with certain authorized broker-dealers. Please note that
proceeds from the sale of the Notes will not be used to pay commissions or any other costs related to the sale of the Notes; all commissions or
related costs will be paid from the Foundation’s operating budget and will therefore not be charged to investors.
Direct Notes: The Foundation has entered into various Sales and Compensation Agreements authorizing participating broker-dealers to make
available to the public, at their own expense, Direct Notes at the stated rates of return in accordance with the terms and conditions of this
prospectus. Prospective investors should call the Foundation to obtain a list of broker-dealers transacting the Notes. In their capacity under the
Sales and Compensation Agreement, broker-dealers have no authority to act as an agent for the Foundation. Registered broker-dealers may
earn an annual trailer payment of up to 0.25% of the total Note value each year throughout the term of the Note. Direct Notes are also sold
directly by issuer-agents at Calvert Foundation. These issuer-agents are employees of Calvert Foundation and do not receive a commission or
any sales-related compensation above their salary.
Online Notes: Online Notes are available through the Foundation’s website.
Brokerage Notes: Brokerage Notes are sold by agents and dealers of Incapital LLC, pursuant to a Selling Agent Agreement. This selling group
consists of over 600 broker-dealers and securities firms. The agents have entered into selling agent agreements with Incapital and have the
ability to effect sales of the Notes. The agents and dealers who effect transactions have agreed to sell Notes in accordance with the terms of
this prospectus. Prospective investors may contact Incapital at [email protected] for a full list of selling group members. Through this program
with Incapital, the Foundation receives net proceeds from sales after sales compensation to Incapital based on the maturity of the Notes sold
(per $1,000), ranging from $998 for 1-year securities to $983.75 for 15-year securities. While the Foundation receives net proceeds after sales
of less than the full par value, the Foundation uses operating funds to cover the discount such that each investor receives the full par value of a
Note.
FINANCIAL REPORTING
Within 90 days of the fiscal year end, the Foundation sends or makes available to all current investors in the Note the audited financial
statements for the most recent fiscal year end. Additional quarterly financial information may be found on the Foundation’s website
http://www.calvertfoundation.org and upon request to the Foundation.
8
USE OF PROCEEDS
Note proceeds are pooled together into one portfolio and invested in domestic and international investment partners with the intent to increase
access to opportunity and access to capital, and to address the challenges and impacts of climate change. These organization operate in
urban and rural communities and across a diverse array of geographies and impact sectors. The Foundation generally plans to invest
approximately 60% of the total pool of assets in the United States and approximately 40% internationally over time. These numbers are
estimates and may change over time.
Projected Use of Note Proceeds
Amount (000)
US Investments
$270,000
International Investments
$ 180,000
Total Investments
$ 450,000
Liquidity
$ 50,000
Total
$ 500,000
The Foundation pays all operating expenses with sources other
than investors’ dollars.
The goal of the Foundation is to raise $500 million from
individuals and institutions over the next three years. These
funds will be invested in investment partners. See also
Capitalization Table on page 11.
Investments are primarily made in intermediary organizations and fund structures across a variety of impact sectors, including community
development, microfinance, affordable housing, small business, renewable energy, environmental sustainability, education, health, and
sustainable agriculture. All proceeds are deployed as impact investments; proceeds are not directly used to pay current outstanding Notes as
they come due, or any other Foundation expenses.
Interest rates are established depending on the investment’s risk level and terms and are approved for each transaction by the Foundation’s
investment committees. By design, investments offered by the Foundation may serve communities and organizations with limited access to
traditional capital sources. Organizations may be charged fees to cover certain expenses and committed capital.
With its investments, the Foundation seeks to create, strengthen, and scale effective intermediary capacity to provide financing solutions that
address an array of social and environmental problems. Examples of the types of organizations that the Foundation invests funds in are:
 Financial Intermediaries: These organizations are community development loan funds and other types of non-bank financial intermediaries
that extend credit and often technical assistance to organizations or individuals. Some specialize in a specific geography or sector, such as
small business, microfinance, or affordable housing; while others lend across a diversity of geographies and sectors.
 Structured Financing Funds: The Foundation finances structured funds formed to address particular financing gaps across the spectrum of
impact sectors noted above. Current areas of activity in this sector include microfinance, renewable energy, healthcare, real estate-focused
community development, and small business finance.
 Affordable Housing Developers and Other Direct Projects: The Foundation finances real estate developers to support their work to
preserve and/or expand the supply of affordable housing. The Foundation, in conjunction with local partners, also finances real estate
developers to support other projects, such as mixed-use developments, public charter schools, and other community spaces.
 Community Development Banks and Credit Unions: These community development financial institutions provide banking services to
targeted disadvantaged communities. Investments mostly are in the form of certificates of deposit.
9
INVESTMENT POLICY
Investment and Impact Criteria
Calvert Foundation’s portfolio is crafted to serve sectors and regions that are often overlooked or underserved by the traditional capital markets.
The Foundation invests debt capital through and alongside intermediary organizations and structures as described in “Use of Proceeds.” The
Foundation works with investment partners to understand their specific needs and risks. Investment opportunities are evaluated according to
the criteria established by the investment committees.
The social and environmental mission of the portfolio is guided by the Foundation’s impact sectors. Each sector has a unique impact thesis and
strategy that outlines what impact the Foundation seeks to affect in that sector, how the Foundation plans to measure impact, and what role the
Foundation’s investments play in strengthening the intermediation landscape in that impact area.
The three main categories of the Foundation’s investment activity include:
1.
2.
3.
Access to critical services in developing communities, including investments in affordable housing, health, education, and community
development;
Expanding access to capital, including investments in microfinance, small business finance, and sustainable agriculture; and
Investment in efforts to reduce the impact and effects of climate change, including investments in the environment, renewable energy,
and climate resiliency.
Calvert Foundation invests in organizations that align with the impact criteria above, serve low-income communities and organizations with
limited access to traditional capital sources, and have measurable social and/or environmental performance outcomes.
Due Diligence
Staff analysts produce due diligence reports prior to the investment committees’ review of prospective investments. Applicants are typically
expected to provide three years of financial information. Due diligence also includes analysis of the organization’s operational and management
track record, financial and social performance, capital structure, asset quality, and alignment with the Foundation’s investment thesis and sector
theories of change.
Investment Risk Levels
Risk levels are assessed on each of the Foundation’s investments. Investment partners are required to submit quarterly financial statements
and reports to the Foundation. The Foundation monitors exposures at the portfolio and investment levels. The investment risk ratings are
updated annually. Portfolio reports are distributed and reviewed by the Investment Committee on a quarterly basis. (See “Risk Factors” for a
discussion of the actual risks to investors.)
Loan Loss Reserve
Calvert Foundation maintains a reserve against loan losses in the portfolio. The standard Loan Loss Reserve factors are established by
management and overseen by investment committees. The standard Loan Loss Reserve is driven by an investment’s risk rating, applied to
each loan at time of origination, and reviewed at least annually. Additional Loan Loss Reserve for a particular investment may be established
based on management’s assessment of the potential for loss. Specific Loan Loss Reserve factors for new markets and products are approved
by the Investment Committee.
Information on Investment Partners
Information regarding portfolio sectors and specific organizations, including a description of the mission of each organization, may be found on
the Foundation’s website or by calling the Foundation directly. The inclusion of our website address in this prospectus does not include or
incorporate by reference the information on or accessible through our website into this prospectus.
10
CAPITALIZATION
The Foundation's impact investment program is funded by individual and institutional investors, as well as by several program-related
investments, guarantees, and grants that are subordinate to the Notes.
The Foundation’s capitalization as of December 31, 2016 is shown in order of seniority below:
Community Investment Notes
Lender
Amount
3,941 Individual and institutional investors
$321.87 million*
Total
Average Time to
Maturity (months)
35.97
$321.87 million
Subordinated Investments
Lender
Amount
Wells Fargo
$1.50 million
The Piton Foundation
Calvert Investment Administrative Services, Inc.
The Columbia Bank
PNC
$1.25
$1.00
$1.00
$1.00
million
million
million
million
Apr 30, 2021
Apr 30, 2019
Aug 11, 2021
Jun 1, 2019
The Colorado Health Trust
$0.80 million
Oct 31, 2024
The Colorado Health Foundation
Private individual
$0.75 million
$0.75 million
Apr 30, 2021
Jan 28, 2017
Deutsche Bank
San Francisco Foundation
$0.50 million
$0.35 million
May 16, 2017
Jul 1, 2021
Page Hill Foundation
$0.30 million
Feb 26, 2017
Private Individual
The Denver Foundation
$0.20 million
$0.20 million
April 1, 2021
Apr 30, 2021
Meredith Lorraine Meyercord Trust
Fidelity Charitable Trust
$0.20 million
$0.15 million
Nov 11, 2023
Jan 31, 2017
Women's Foundation of Minnesota
$0.10 million
Jan 31, 2018
Bank of America
$0.01 million
Jun 28, 2017
Total
Final Maturity Date
June 28, 2025
$10.06 million
Guarantees and Cash Collateral
Amount
Total
$17.22million**
Net Assets
Source
Amount
Net Assets
$37.58 million
Total
$37.58 million
*Note: Community Investment Notes at 12/31/2016 include $15.15 million in Notes held by ImpactAssets Funded
Guarantee L.P., which are not included in this total.
**Note: Guarantees and cash collateral are sourced from a variety of guarantors to provide protection to Calvert Foundation
against potential losses on specific investments or portfolios of investments. Additional third party guarantees of $2.93
million, not included in this total, are held that in the event of being called are required to be used to repay specific
subordinated investments owing to the guarantor. Additional related party guarantees of $27.52 million, not included in this
total, are provided by parties closely related to the investment partner in specific investments or portfolios of investments.
For more information, see Note D in the enclosed Audited Financial Statements.
11
Note: Calvert Foundation also maintains $5.74 million in Loan Loss Reserves; see Note D in the enclosed Audited Financial
Statements for a more detailed description.
Note: Calvert Foundation received a recoverable grant from Capital Impact Partners in the amount of $250,000 on February
2, 2015. This grant is not included in the table above. This grant was issued to provide support in the event that principal
and/or interest were not paid when due under a $5,000,000 loan commitment to the Woodward Corridor Investment Fund,
LLC. See Note G in the enclosed Audited Financial Statements for a more detailed description.
Institutional Grants
During the last three years, the Foundation received a total of $9,006,802 in grants from institutions including, but not limited to, the W.K.
Kellogg Foundation, F.B. Heron Foundation, John D. and Catherine T. MacArthur Foundation, the Ford Foundation, Kresge Foundation, CDFI
Fund, CITI Foundation, and Woodcock Foundation.
Other Activities
Calvert Foundation has created two new structures to support its charitable mission by providing Net Assets (as consolidated) to facilitate
growth of the program, while helping to insulate investors in the Notes against any potential losses that could arise.
∂
Calvert Foundation has created Equity for Impact, L.P. (“E4I”), a new limited partnership with the Ford Foundation, a New York notfor-profit corporation ("Ford Foundation"), and the John D. and Catherine T. MacArthur Foundation, an Illinois not-for-profit corporation
("MacArthur Foundation"). Ford Foundation and MacArthur Foundation are the Limited Partners of E4I, which is controlled by a wholly
owned subsidiary of Calvert Foundation as the partnership’s General Partner. Ford Foundation and MacArthur Foundation collectively
committed seven million, five hundred thousand dollars ($7,500,000) to the limited partnership.
∂
Calvert Foundation has created a new limited partnership with ImpactAssets, Inc. (“ImpactAssets”), a 501(c)(3) and Maryland
corporation, called ImpactAssets Funded Guarantee L.P. (“IAFGLP”). ImpactAssets is the primary Limited Partner of IAFGLP, which
is controlled by a wholly owned subsidiary of Calvert Foundation as the partnership’s General Partner and minority Limited Partner.
ImpactAssets contributed assets of fifteen million dollars ($15,000,000) to the limited partnership.
Towards the end of 2016, Calvert Foundation began the process of transferring to ImpactAssets the remaining accounts held under Calvert
Foundation’s legacy donor advised fund business (“the Calvert Giving Fund”). The value of these accounts is expected to be approximately
fourteen million, five hundred thousand dollars ($14,500,000) once the transfers are completed. This represents a decrease in Net Assets (as
consolidated) for Calvert Foundation. See Note B in the enclosed Audited Financial Statements for a more detailed description.
Notes are the obligation of the Foundation only. Neither the assets of E4I nor the assets of IAFGLP are a guarantee against the Notes.
Investing Activities
The Foundation’s short-term investment policy is to invest its liquidity in cash and cash equivalents. These investments are by definition and by
policy only highly-rated, short-term debt instruments, or suitable mission-related investments. The short-term investment policy is adopted and
approved by the Audit & Finance Committee of the Foundation’s Board of Directors, and only they may modify this policy. As of December 31,
2016, the Foundation’s cash and cash equivalents totaled $52,915,552.
Foundation Inve stm e nts as of
12/31/16
Certificates of Deposit
Notes Receivable, net
Mutual Funds/ETFs
Common Stock
Debt Securities
Alternative Investments
Total
Am ount
$
$
$
$
$
$
$
8,450,000
281,280,254
1,113,225
33,000
751,167
24,716,405
316,344,051
Percentage of
Total
2.67%
88.92%
0.35%
0.01%
0.24%
7.81%
100.00%
Change in Market Value of Investments
Years ended December 31
2016
($259,636)
2015
($603,528)
2014
$338,239
2013
$1,179,669
12
Financial Highlights
The following table discloses the maturities of the Notes by year as of December 31, 2016*:
CI Note Maturity Sche dule
Year Ending December 31
2017
2018
2019
2020
2021
Thereaf ter
Total
$
$
$
$
$
$
$
Amount
90,547,629
62,949,520
90,468,380
14,282,703
29,402,201
34,221,075
321,871,508
*Note: Community Investment Notes at 12/31/2016 include $15.15 million in Notes held by ImpactAssets Funded Guarantee L.P., which are not
included in this maturity schedule.
The following tables provide selected financial information on the Foundation for the last five fiscal years:
Incom e Statem ent Highlights
Support and Revenue
Expenses
Change in Unrestricted Net Assets
Change in Temporarily Restricted Net
Assets
Change in Permanently Restricted
Net Assets
Change in Net Assets
Cash Flow Highlights
Notes issued
Notes redeemed
$
$
$
2016
18,709,006 $
18,192,220 $
5,858,122 $
2015
16,564,498 $
16,175,305 $
1,428,522 $
2014
18,146,046 $
15,373,762 $
3,020,021 $
2013
13,783,058 $
13,530,397 $
589,567 $
2012
16,969,775
13,890,484
3,759,624
$
1,339,970
$
(120,200)
$
(385,560)
$
334,573 $
(525,000)
$
$
7,198,092
$
$
1,308,322
$
$
2,634,461
$
$
924,140
3,234,624
$
$
2016
181,560,485 $
(114,060,108) $
2015
56,346,183 $
(38,299,976) $
2014
49,955,829 $
(37,257,309) $
$
$
2013
49,819,146 $
(44,412,601) $
2012
51,711,268
(32,577,976)
Balance Sheet Highlights
2016
2015
2014
2013
2012
Cash, Cash Equivalents
$
52,915,552 $
40,669,177 $
53,436,439 $
48,107,241 $
47,034,498
Program related investments
$
289,730,254 $
228,020,789 $
208,612,626 $
195,925,875 $
197,701,183
Delinquencies – 30 Days
$
$
$
$
- $
6,365,000
30-Day Delinquency Rate
0.00%
0.00%
0.00%
0.00%
3.22%
Delinquencies – 90+ Days
$
- $
1,204,942 $
- $
- $
90+-Day Delinquency Rate
0.00%
0.51%
0.00%
0.00%
0.00%
Investments
$
26,613,797 $
38,301,189 $
26,101,024 $
22,586,764 $
22,735,766
Allow ance f or Loan Losses
$
5,738,504 $
5,850,748 $
5,297,966 $
5,007,569 $
5,349,342
Total Assets
$
374,036,116 $
315,669,823 $
292,887,822 $
272,220,434 $
267,372,491
Total Notes Payable
$
321,871,508 $
269,373,468 $
247,866,639 $
235,168,119 $
229,761,574
Senior Subordinated Debt
$
$
$
$
- $
750,000
Junior Subordinated Debt
$
10,060,000 $
12,360,000 $
12,785,000 $
7,542,285 $
8,073,500
Refundable and recoverable grants
$
250,000 $
750,000 $
500,000 $
500,000 $
500,000
Total Liabilities
$
336,451,840 $
285,283,639 $
263,809,960 $
245,777,033 $
241,853,230
Net Assets
$
37,584,276 $
30,386,184 $
29,077,862 $
26,443,401 $
25,519,261
Delinquency is defined as the principal amount on accounts where payments of principal or interest are delinquent thirty days or more, or
ninety days or more, as marked, as of December 31, whether in default or not. Each delinquency rate is calculated as a percentage of
program related investments. For a more extensive discussion of financial information, please refer to the Audited Financial Statements
appended to this prospectus.
13
BOARD OF DIRECTORS
The Foundation’s Board of Directors is responsible for its overall
policy and direction. Bylaws allow between seven and fifteen
members, and a majority of the Board constitutes a quorum for the
transaction of business. The Board of Directors has established an
Investment Committee that reviews due diligence and makes
investment recommendations to the Board. Board members are
reimbursed for out-of-pocket expenses related to Board activities.
Directors do not receive directors' fees or compensation for their
service, except as may be appropriate for the Investment
Committee.
Board Me m be r
Year
Joined
Curre nt
Current
Note
Te rm
Term
holdings at
Start Year Expiration 12/31/2016
Frederick Barton Harvey III
2010
2017
2019
Aron Betru
2016
2016
2018
$0
John G. Guffey, Jr.
1995
2016
2018
$15,163
Kimberly H. Johnson
2016
2017
2019
$0
Philip Kirshman
2016
2017
2019
$0
Directors may serve two consecutive three-year terms, unless they
are chair of the Board or of a committee, in which case they may
serve a third term. Should a vacancy occur, the Governance
Committee recommends candidates and considers the merit of
nominations based on the candidate’s expertise. A majority vote
confirms nominations.
Terrence J. Mollner
1995
2015
2017
$1,510
No director or officer has been convicted of any criminal activity, is
the subject of any pending criminal proceedings, or has been the
subject of any order, judgment or decree of any court enjoining
such person from any activities associated with the offer or sale of
securities.
Frederick “Bart” Harvey III
Chair
Director
Aron Betru
Director
John G. Guffey, Jr.
Director
Kimberly H. Johnson
Director
Philip Kirshman
Director
Former Chair and CEO, Enterprise
3 Midvale Road
Baltimore, MD 21210
MBA, Harvard Business School
BA, Harvard University
Managing Director, Center for Financial
Markets
Milken Institute
1101 New York Avenue, NW
Washington, DC 20005
MBA, Columbia University
MA, Johns Hopkins
BA, Northwestern University
President, Aurora Press, Inc.
388 Calle Colina
Santa Fe, NM 87501
Post-graduate courses at Pennsylvania
State University
BS, University of Pennsylvania
Senior Vice President, Chief Risk Officer,
Fannie Mae
1007 Crest Lane
McLean, VA 22101
MBA, Columbia University
BA, Princeton University
Chief Investment Officer
Cornerstone Capital Investment
Management
Alliance Center -- 1536 W ynkoop Street,
Suite 521
Denver, CO 90202
BA, University of California Santa Cruz
$20
Decker Rolph
2015
2016
2018
$0
D. Wayne Silby
1995
2017
2019
$5,000
Katherine Stearns
2001
2016
2018
$26,124
John Streur
2014
2015
2017
$0
Jaime Yordan
2016
2017
2019
$0
*YearjoinedistheyearinwhichaDirectorwasinitiallyelectedtotheBoard.Ifany
DirectoriselectedafterJuly1st,hisorhertermshallbedeemedtocommenceon
January1stofthefollowingcalendaryear.
Terrence J. Mollner
Director
Founder and Chair
StakeHolders Capital, Inc. and
Trusteeship Institute, Inc.
61 Baker Road
Shutesbury, MA 01072
EdD, University of Massachusetts
at Amherst
BA, Creighton University
Decker Rolph
Director
Owner/Manager
WOULG Holdings, LLC
609 Ranch Road
Boise, ID 83702
MBA, University of Michigan
BA, Brown University
D. Wayne Silby
Director
Founding Chair, Calvert Funds
1715 18th Street NW
Washington, DC 20009
JD, Georgetown Law Center
BSE, University of Pennsylvania
Katherine Stearns
Director
Arc Advisers, LLC
P.O. Box 488
Boise, ID 83701
MPS, Cornell University
BA, Duke University
John Streur
Director
President and CEO
Calvert Research and Management
4550 Montgomery Avenue 1000N
Bethesda, MD 20814
BS, University of Wisconsin
Jaime Yordan
Director
3208 Locke Lane
Houston, TX 77019
MBA, Harvard University
MA, Cornell University
BA, Hamilton College
Biographies of Directors can be found at
http://www.calvertfoundation.org/about/board
14
KEY PERSONNEL
LEGAL MATTERS
Calvert Social Investment Foundation is located at 7315 Wisconsin
Ave, Suite 1000W, Bethesda, MD 20814. The phone number is
800.248.0337. Key personnel include:
There are no pending legal proceedings involving the Foundation
or, with respect to the Foundation, any of its directors, officers or
employees acting in their capacity representing the Foundation.
Jennifer Pryce, President and Chief Executive Officer
Jennifer Pryce was appointed to President and CEO in September
2013. She joined the Foundation in 2009, and previously served as
U.S. Portfolio Manager, Vice President of Strategic Initiatives, and
Chief Strategy Officer. In her role as Chief Strategy Officer, she led
the organization’s Strategic Initiatives team and its work on raising
capital, developing new products and initiatives, and marketing
and communications. Prior to Calvert Foundation, Jennifer worked
with the Nonprofit Finance Fund (“NFF”), a national CDFI, as the
Director of the Washington Metro Area office. Before NFF, Jennifer
also held positions at Wall Street firms, working at Neuberger &
Berman as an equity research analyst and Morgan Stanley’s
London office in the Investment Banking division. She was a
Peace Corps Volunteer in Gabon, Africa and also worked at the
Public Theater in New York City. Jennifer received a Bachelor of
Science degree in Mechanical Engineering from Union College
and an MBA from Columbia University.
Derek Strocher, Chief Financial Officer
Derek Strocher joined the Foundation as Chief Financial Officer in
June 2014. He has held leadership positions in Innovative Finance
with The World Bank Group; Investment Banking with The Royal
Bank of Scotland; and Treasury and Accounting with large
corporations on both sides of the Atlantic. Derek is a licensed
professional accountant, received his Bachelor of Commerce
degree from the University of Calgary and his Master in Finance
degree from London Business School. He has substantial
experience working with and being a member of boards of
directors in both the non-profit and for-profit sectors.
Operating Committee
Calvert Foundation’s management team, aka the Operating
Committee, consists of Corporate Officers, Vice Presidents and
Directors in the following positions: Executive, Finance, Legal and
Compliance, Investments, Investor Relations, Portfolio
Administration, and Risk Management.
Additional Staff
Remaining staff is responsible for maintaining day-to-day
operations; investor, lending and donor relations; and
administrative duties.
Biographies of staff can be found at:
http://www.calvertfoundation.org/about/team
RELATED PARTIES
The following table lists total compensation and Community
Investment Note holdings of members of Calvert Foundation’s
highest paid employees. Remuneration is expected to be generally
the same for the next 12 months. Please note that no staff member
receives sales-related commissions above their salary.
HighestPaidStaff
Title
Jennifer Pryce
President & CEO
Derek Strocher
CFO
VP, Investment
Partnerships
Justin Conw ay
Lauri Michel
Noteholdings
at
12/31/2016
$ 252,223
$0.00
FY2016
W2Box5
$ 232,048
$250.00
$ 171,449
$800.00
VP, Risk Management $ 154,625
$250.00
Catherine Godschalk VP, Investments
$ 146,677
$750.00
All ongoing and future affiliated transactions or potential conflicts of
interest will be managed on terms that are no less favorable to the
issuer than those that can be obtained from unaffiliated third
parties. All ongoing and future affiliated transactions and any
forgiveness of loans must be approved by a majority of the
independent, disinterested members of the Foundation’s Board of
Directors.
15
INVESTOR GUIDE
Community Investment Notes and Interest / How to Invest
Direct Notes: Purchase online or by filling out the Community
Investment Note Application available at
http://www.calvertfoundation.org/storage/documents/ci-noteapplication.pdf and mailing it to Calvert Foundation, 7315
Wisconsin Avenue, Suite 1000W, Bethesda, MD 20814.
Confirmation of your investment will be sent to you upon receipt
and processing by the Foundation of complete materials and
payment. Inquiries about your investment can be made by calling
the Foundation at 800.248.0337 or emailing
[email protected].
All purchases must be made in U.S. dollars and checks must be
drawn on U.S. banks. The Foundation reserves the right to
suspend the sale of the Notes for a period of time or to reject any
specific purchase order. When purchasing by check, the
Foundation may hold payment redemptions for 10 business days
from purchase date.
Online Notes: Purchase at the Foundation’s website
http://www.invest.calvertfoundation.org.
Brokerage Notes: Purchase by contacting your financial advisor or
brokerage firm. Current offerings and CUSIPs can be found at
http://www.calvertfoundation.org/invest#Brokerage or by calling the
Foundation at 800.248.0337.
Individual Retirement Accounts
A self-directed IRA may invest in a Direct or Brokerage Note. To
do so, the IRA must be held by a custodian that permits such
investments. A self-directed IRA is an individual retirement account
created to allow the IRA holder the option of selecting, either
directly or through an investment advisor or other permissible
representative, investments for the IRA. The following retirement
accounts have the option to be self-directed: a traditional IRA,
Roth IRA, Rollover IRA, Educational IRA, and SEP IRA. The Notes
are intended to be an acceptable investment for IRAs under
Internal Revenue Code section 408(a). Please consult with a tax
professional before choosing to invest in the Note in an IRA.
Manner of Transactions
Direct Notes: Except in the case of a designated transfer, all
instructions for transactions and changes of address must be
transmitted to the Foundation in writing. Address changes may
require a signature guarantee from a bank or other eligible
institutions. Individuals may verify a transaction or change of
address by calling the Foundation at 800.248.0337.
Online Notes: All transactions and changes of personal information
must be completed online at
http://www.invest.calvertfoundation.org or by calling 855-678-6004.
Brokerage Notes: All transactions and changes of personal
information must be conducted through the investor’s broker.
Taxpayer ID
If the Foundation lacks the correct Social Security or Taxpayer
Identification Number (“TIN”) and is unable to verify that the
prospective investor is not subject to backup withholding by the
IRS, federal law requires the Foundation to withhold 28% of
interest and the investor may be subject to a fine. Investors may
also be prohibited from purchasing another Note. If the TIN
information is not received within 60 days after an account is
established, the account may be closed with an interest penalty.
The Foundation reserves the right to reject any new account or
any purchase order for failure to supply a certified TIN. The
Foundation is unable to accept purchases of Online Notes if the
purchaser is subject to backup withholding.
16
unremedied for ten (10) or more calendar days after such
Payment Date;
CERTAIN KEY INDENTURE PROVISIONS
Indenture Covenants
The Indenture contains the following covenants:
Existence. The Foundation will keep in full effect its existence,
rights and franchises as a corporation under the laws of the State
of Maryland (unless it becomes, or any successor issuer
hereunder is or becomes, organized under the laws of any other
state, in which case such successor issuer will keep in full effect its
existence, rights and franchises under the laws of such other
jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this
Indenture and the Notes. The Foundation is and at all times until
the termination of this Indenture will be organized and operated
exclusively for religious, educational, benevolent, charitable, or
reformatory purposes exempt from federal income taxes under
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended now or hereafter, and not for pecuniary profit, and no
part of the net earnings of the Foundation inures or shall inure to
the benefit of any person, private stockholder, or individual. The
Foundation is and shall at all times be excluded from the definition
of an investment company under Section 3(c)(10)(B) of the
Investment Company Act of 1940.
No successor issuer is contemplated at this time. An event of
default in the Notes would occur if any successor issuer were not
qualified as a charitable entity under Section 501(c) of the IRC, or
were deemed to be an investment company.
Balance Sheet Ratio. The Foundation shall not issue any further
Notes ("Proposed Notes") on any date (the "Proposed Issuance
Date") if, as of the last day of each of the last two full fiscal
quarters ended at least thirty (30) days prior to the Proposed
Issuance Date (each a "Capitalization Measurement Date"), the
sum of the Foundation's average net assets plus its average loan
loss reserve as of the last days of the four full fiscal quarters ended
on such Capitalization Measurement Date was less than 5% of the
average principal amount of Notes outstanding as of the last days
of the four full fiscal quarters ended on such Capitalization
Measurement Date; provided, that the foregoing shall not prohibit
the issuance of Proposed Notes to the extent that the principal
amount of the Proposed Notes, plus the principal amount of any
other Notes issued after the later of the two Capitalization
Measurement Dates, does not exceed the principal amount of
Notes repaid or redeemed after such date. Notwithstanding any
other provision of this Indenture, the Indenture Trustee shall not
have any responsibility to enforce or monitor the covenant
described in this sub-section.
Example: If the Foundation were to fall out of compliance with the
Balance Sheet ratio, it could not increase the amount of Notes
outstanding until the ratio was back in compliance.
Liquidity Ratio. The Foundation shall not, as of the last day of
each of any two consecutive fiscal quarters (each a "Liquidity
Measurement Date"), have average cash, cash equivalents,
marketable securities, certificates of deposit and other short-term
investments as of the last days of the four full fiscal quarters ended
on such Liquidity Measurement Date available for operations in
amounts that are less than 5% of the average principal amount of
Notes outstanding as of the last days of the four full fiscal quarters
ended on such Liquidity Measurement Date. Notwithstanding any
other provision of this Indenture, the Indenture Trustee shall not
have any responsibility to enforce or monitor the covenant
described in this sub-section.
Indenture Events of Default
“Events of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) Failure to pay on any Payment Date the full amount of
accrued interest on any Note, which failure continues
(b) Failure to pay the principal of or premium (if any) on, any
Note, on its related Maturity Date, which failure continues
unremedied for ten (10) or more calendar days after such
Maturity Date;
(c) Failure on the part of the Foundation to observe or
perform any covenants or agreements set forth in the
Indenture (other than a covenant or agreement of the
Foundation a breach of which is elsewhere in this
Section specifically dealt with or which has expressly
been included in this Indenture solely for the benefit of
one or more Series of Notes other than such Series),
which failure has a material adverse effect on the
Noteholders and which continues unremedied for a
period of sixty (60) calendar days after there has been
given after written notice to the Foundation by the
Indenture Trustee, or to the Foundation by the Holders of
at least a majority in outstanding principal amount of the
Notes of such Series, a written notice specifying such
Default or breach and requiring it to be remedied and
stating that such notice is a “Notice of Default”
hereunder;
(d) Any representation or warranty made by the Foundation
in the Indenture proves to have been incorrect in any
material respect and continues to be incorrect in any
material respect for sixty (60) days after written notice
and as a result of which the interests of the Noteholders
are materially and adversely affected;
(e) The occurrence of an Insolvency Event relating to the
Foundation;
(f)
The Foundation becomes an "investment company"
within the meaning of the Investment Company Act of
1940, as amended;
(g) This Indenture is required to become qualified under the
Trust Indenture Act; or
(h) The Foundation fails to provide to the Indenture Trustee
the Issuer Payment Confirmation in accordance with
section 3.01(b)(ii) of the Indenture, which failure
continues unremedied for ten (10) or more days.
Upon the occurrence of an Event of Default, holders of twenty-five
percent (25%) of the outstanding principal amount of the Notes, by
written notice to the Indenture Trustee, may require the Indenture
Trustee to, and the Indenture Trustee may without such notice,
declare by written notice to the Foundation that the unpaid
principal of the Notes together with interest accrued but unpaid
thereon, and all other amounts due to the Noteholders under the
Indenture shall immediately and without further act become due
and payable.
Information Concerning the Indenture Trustee
If the Indenture Trustee becomes a creditor of the Foundation, the
Indenture limits its right to obtain payment of claims in certain
cases or to realize on certain property received in respect of any
such claim as security or otherwise. The Indenture Trustee will be
permitted to engage in other transactions; however, if it acquires
any conflicting interest it must eliminate such conflict within 90
days or resign.
The Holders of specified percentage amounts of the then
outstanding Notes will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy
available to the Indenture Trustee, subject to certain exceptions.
The Indenture provides that in case an Event of Default shall occur
and be continuing, the Indenture Trustee will be liable for its gross
negligence in acting or not acting. Subject to such provisions, the
Indenture Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder
of Notes, unless such Holder shall have offered to the Indenture
Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
17
APPENDIX I
ADDITIONAL INFORMATION
Information About Brokerage Notes and DTC
The Foundation will issue the Brokerage Notes in the form of one or more permanent global Brokerage Notes fully
registered and deposited with or on behalf of DTC and registered in the name of Cede & Co., as nominee of DTC.
DTC has advised the Foundation as follows:
∂
DTC is a limited-purpose trust company under the New York Banking Law, a “banking organization” within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within
the meaning of the New York Uniform Commercial Code and a “clearing agency” registered under Section 17A of
the Securities Exchange Act of 1934.
∂
DTC holds securities that its participants deposit and facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities, through electronic computerized Brokerage
changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates.
∂
Direct participants include securities brokers and dealers, trust companies, clearing corporations and other
organizations.
∂
DTC is owned by a number of its direct participants and by the New York Stock Exchange, Inc., the American
Stock Exchange LLC and the Financial Industry Regulatory Authority.
∂
Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct participant, either directly or
indirectly.
∂
The rules applicable to DTC and its participants are on file with the SEC.
The Foundation has provided the following descriptions of the operations and procedures of DTC solely as a matter of
convenience. These operations and procedures are solely within the control of DTC and may be subject to change. Neither
the Foundation nor the Indenture Trustee takes any responsibility for these operations or procedures, and you are urged to
contact DTC or its participants directly to discuss these matters.
The Foundation expects that under procedures established by DTC:
∂
Upon deposit of the global Brokerage Notes with DTC or its custodian, DTC will credit through its internal system
the accounts of its direct participants with portions of the principal amounts of the global Brokerage Notes.
∂
Ownership of the Brokerage Notes will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC or its nominee, with respect to interests of direct participants, and the records
of direct and indirect participants, with respect to interests of persons other than participants.
The laws of some jurisdictions require purchasers of securities to take physical delivery in Definitive form. Accordingly, the
ability to transfer interests in the Brokerage Notes represented by a global Brokerage Note to those persons may be limited.
In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests
through participants, the ability of a person having an interest in Brokerage Notes represented by a global Brokerage Note to
pledge or transfer those interests to persons or entities that do not participate in DTC’s system, or otherwise to take actions
in respect of such interest, may be affected by the lack of a physical Definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of a global Brokerage Note, DTC or that nominee will be considered
the sole owner or holder of the Brokerage Notes represented by that global Brokerage Note for all purposes under the
Indenture and under the Brokerage Notes. Except as provided below, owners of beneficial interests in a global Brokerage
Note will not be entitled to have Brokerage Notes represented by that global Brokerage Note registered in their names, will
not receive or be entitled to receive physical delivery of a certificated Note and will not be considered the owners or holders
thereof under the Indenture or under the Brokerage Notes for any purpose, including with respect to the giving of any
direction, instruction or approval to the Indenture Trustee. Accordingly, each beneficial holder owning a beneficial interest in
a global Brokerage Note must rely on the procedures of DTC and, if that beneficial holder is not a direct or indirect
participant, on the procedures of the participant through which that beneficial holder owns its interest, to exercise any rights
of a holder of Brokerage Notes under the Indenture or the global Brokerage Notes.
Direct Notes and positions in global Brokerage Notes are generally not exchangeable for one another, although the
Foundation will customarily waive redemption fees and charges in conjunction with a redemption the proceeds of which are
used to purchase new Direct Notes or Brokerage Notes, as the case may be. Brokerage Notes represented by a global
Brokerage Note will be exchangeable in their entirety for registered certificated Direct Notes with the same terms only if: (1)
DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under the
Exchange Act and a successor depositary is not appointed by us within 90 days; (2) the Foundation decides to discontinue
use of the system of Brokerage transfer through DTC (or any successor depositary); or (3) a default under the Indenture
occurs and is continuing.
Neither the Foundation nor the Indenture Trustee will have any responsibility or liability for any aspect of the records relating
to or payments made on account of Brokerage Notes by DTC, or for maintaining, supervising or reviewing any records of
DTC relating to the Brokerage Notes.
Payments on the Brokerage Notes represented by the global Brokerage Notes will be made to DTC or its nominee, as the
case may be, as the registered owner thereof. The Foundation expects that DTC or its nominee, upon receipt of any
payment on the Brokerage Notes represented by a global Brokerage Note, will credit participants’ accounts with payments in
amounts proportionate to their respective beneficial interests in the global Brokerage Note as shown in the records of DTC
or its nominee. The Foundation also expects that payments by participants to owners of beneficial interests in the global
Brokerage Note held through such participants will be governed by standing instructions and customary practice as is now
the case with Brokerage Notes held for the accounts of customers registered in the names of nominees for such customers.
The participants will be responsible for those payments.
Payments on the Brokerage Notes represented by the global Brokerage Notes will be made in immediately available funds.
Transfers between participants in DTC will be effected in accordance with DTC rules and will be settled in immediately
available funds.
18
APPENDIX II
PURCHASE METHODS
Administrative
Feature
Direct Notes
Online Notes
Brokerage Notes
Purchase Method
Submit a completed
Community Investment Note
Application with a check,
ACH, or wire transfer.
Online at
http://www.invest.calvertfoun
dation.org.
Via a brokerage account.
Settlement Method
Direct
Custodial
DTC
Minimum Investment
$20, subject to availability
$20, subject to availability
$1,000
Maximum Investment
No limit
No limit
No limit
Ability of Investor to
Select Interest Rate
Investors may select their
interest rate from available
options.
Investors may select their
interest rate from available
online listings.
Investors may select their
interest rate from available
options in the pricing
supplement.
Interest Payment
Frequency
Annual. Interest is
automatically reinvested
unless investor specifies
otherwise.*
Annual. Interest is paid out;
no ability to reinvest interest.
Annual. Interest is paid out;
no ability to reinvest interest.
Ability to Select Term
Length
Investors may select their
Note term length from
available options.
Investors may select their
Note term length from
available online listings.
Investors may select their
Note term length from
available options in the
pricing supplement.
Options at Maturity
Automatic reinvestment for
another term is permitted.*
Investors may reinvest their
principal by purchasing a
new Note (no funds
transferred back to investor
for reinvestments).
Investors must purchase a
new Note (funds must be
returned to the investor, then
reinvested).
Early Redemption
Allowed
Yes, at the issuer’s
discretion, and a penalty may
be charged.
Yes, at the issuer’s
discretion, and a penalty may
be charged.
Yes, at the issuer’s
discretion, and a penalty may
be charged.
Partial Withdrawal
Allowed
Yes, at the issuer’s
discretion, and a penalty may
be charged.
No.
Yes, at the issuer’s
discretion, and a penalty may
be charged.
Ability to Increase Note
Size
Yes, at issuer’s discretion.
No. Investors must purchase
a new Note.
No. Investors must purchase
a new Note.
* Automatic reinvestment of interest on anniversary and principal at maturity will not be available to investors residing in the
states of Georgia, Ohio, or Oregon unless the Foundation has received positive affirmation in writing to renew the
investment. (Please see page 7 for full disclosure of options at maturity.)
19
Community Investment Note® Application
Minimum $1,000)
I have read the Community Investment Note prospectus and wish to invest the following amount: $
Targeting (Optional)
Select Note term and rate:
Investors may express their preference for a Calvert Foundation portfolio sector or initiative.
Current sectors can be found at www.calvertfoundation.org/our-portfolio/sectors, and current
initiatives can be found at www.calvertfoundation.org/initiatives. A targeted investment in the
Note does not provide direct or sole exposure to the targeted sector or initiative. All investments
in the Notes are subject to the same risk and supported by the Foundation’s overall portfolio and
capitalization. Please refer to the prospectus for a full explanation of this option.
1 year, 1.0%
3 years, 1.5%
5 years, 2.0%
10 years, 3.0%
Targeting preference:
15 years, 4.0%
Invest at 0%, indicate term: 15 years
INDIVIDUAL OR INSTITUTION
First name, middle initial, and last name; or institution
Social Security or Taxpayer ID #
Date of birth
Mailing Address
City
State
Primary phone (required)
Secondary phone
Zip
E-mail (required)
JOINT INVESTOR OR INSTITUTIONAL OFFICER
For Trusts, please include a copy of the trust documents. For Institutions, please include documentation of authorized signers.
Social Security Number for Joint
Investor or Institutional Officer
First name, middle initial, last name, and role
Date of birth for Joint Investor
or Institutional Officer
COMMUNICATION PREFERENCES
I would like to receive statements and reports related to my investment via email when possible
I would like to receive monthly email updates from Calvert Foundation
I acknowledge receipt of information regarding the policy binding my investment in Community Investment Notes. I agree to be bound by these terms. As required by law and
under penalties of perjury, I certify that (1) the Social Security or other taxpayer identification number (TIN) provided on this form is my correct TIN, and (2) currently I am not
under IRS notification that I am subject to back-up withholding. (Please strike out clause (2) if you are currently under notification). If the correct TIN is not supplied, the
Foundation is required to withhold 28% of dividends an d/or redemption, and your account may be closed. The IRS does not require your consent to any provision of this
document other than certifications to avoid back-up.
Individual, Trustee or Officer Signature
Joint Signature (required for joint accounts)
Date
Date
Community Investment Note® Application (cont'd)
FINANCIAL ADVISOR INFORMATION (OPTIONAL)
First name, middle initial, and last name
Firm name
CRD #
Firm mailing address
City
State
Primary phone (required)
Secondary phone
Zip
E-mail (required)
I authorize Calvert Foundation to grant discretion to my financial advisor on my account
Please be sure to read the following disclaimers and the Community Investment Note Prospectus prior to investing.
THESE SECURITIES ARE EXEMPT FROM FEDERAL REGISTRATION AND HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE FEDERAL OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
COMMUNITY INVESTMENT NOTES ARE UNSECURED OBLIGATIONS AND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT
INSURED BY THE FDIC, SIPC OR ANY OTHER AGENCY.
CALVERT SOCIAL INVESTMENT FOUNDATION, INC. (“Calvert Foundation” or “the Foundation”), Community Investment Notes are issued by Calvert Social Investment Foundation,
Inc., a Maryland corporation established September 20, 1988. The Foundation is a 501(c)(3) nonprofit organization dedicated to the mission of promoting the consideration of social
factors in the investment process and encouraging the flow of investment resources to disadvantaged communities.
The COMMUNITY INVESTMENT NOTE PROGRAM was designed in 1995 to address the social and economic needs of the disadvantaged. Through the Foundation, the program is
designed to work with the organizations that can make a tremendous difference through economic and social empowerment in the lives of people in various communities, both in the
United States and abroad. The Foundation’s investments are largely loans, but can also take the form of equity investments (including limited or general partnership interests) or other
investments. A significant portion of the Foundation’s investments are made to organizations outside of the United States.
The program achieves its goal by making investments in domestic and international community development organizations, projects, funds, and other social enterprises, that we refer
to collectively as our “investment partners". These investment partners, in turn, work in underserved communities to support the development of affordable housing, small business
development, job creation, environmental sustainability, energy access and efficiency, and economic and social development of disadvantaged communities. The Note program is
funded by individual investors, as well as program-related investments, grants and loans from, among others, W.K. Kellogg Foundation, F.B. Heron Foundation, John D. and Catherine
T. MacArthur Foundation, the Ford Foundation, Kresge Foundation, CDFI Fund, CITI Foundation, and Woodcock Foundation.
COMMUNITY INVESTMENT NOTES (Notes) are issued to investors who invest for specific terms with the expectation of a fixed rate of return. CI Notes are subject to certain risks as
disclosed in the prospectus, which should be read before investing. There are added risks associated with making investments abroad, such as limited availability of information,
currency fluctuation and risks relating to political and economic conditions. While Calvert Foundation has established criteria in order to determine which organizations are most likely
to benefit from investments and still maintain their repayment obligations, and procedures have been put in place to monitor repayment progress, there can be no guarantee that the
organizations will be able to make payments as scheduled. Community Investment Notes are senior to subordinated investments, guarantees, and net assets. However, there remains
some risk that defaults or untimely re-payments of investments, after allowing for loss reserves, may result in Calvert Foundation having insufficient subordinated debt or net assets to
satisfy all outstanding notes.
ADDITIONAL INFORMATION containing more detail about the program may be obtained free of charge by calling 800.248.0337. To purchase a Community Investment Note or
service existing accounts, call 800.248.0337. Upon request, the Foundation will send you documentation containing information about its structure, including directors, officers and
financial information.
IMPORTANT NOTICE: The USA Patriot Act Federal Law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.
When you purchase a Note we will verify at minimum the following information: name, address, date of birth, social security number.
Please mail completed application and check payable to Calvert Foundation to:
Calvert Foundation, 7315 Wisconsin Avenue, Suite 1000W, Bethesda, MD 20814
Additional information may be obtained by contacting Calvert Foundation at (800) 248-0337 or [email protected].
Calvert Social Investment Foundation, Inc.
Consolidated Financial Statements
and Other Financial Information
Years ended December 31, 2016, 2015 and 2014
with Report of Independent Auditors
22
Calvert Social Investment Foundation, Inc.
Consolidated Financial Statements
and Other Financial Information
Years ended December 31, 2016, 2015 and 2014
Contents
Report of Independent Auditors............................................................................................. 24 - 25
Consolidated Financial Statements
Consolidated Statements of Financial Position ............................................................................26
Consolidated Statements of Activities ...........................................................................................27
Consolidated Statements of Cash Flows ........................................................................................28
Notes to Consolidated Financial Statements.......................................................................... 29 - 47
Other Financial Information
Consolidated Statement of Functional Expenses ...........................................................................48
23
Report of Independent Auditors
Board of Directors
Calvert Social Investment Foundation, Inc.
We have audited the accompanying consolidated financial statements of Calvert Social Investment
Foundation, Inc. (the Foundation), which comprise the consolidated statements of financial position as of
December 31, 2016, 2015 and 2014, the related consolidated statements of activities and cash flows for the
years then ended, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Calvert Social Investment Foundation, Inc. as of December 31, 2016, 2015, and
2014 and the changes in its net assets and its cash flows for the years then ended in accordance with
accounting principles generally accepted in the United States of America.
24
Other Matters
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as
a whole. The accompanying consolidated statement of functional expenses for the year ended December
31, 2016 with summary totals for 2015 and 2014 is presented for purposes of additional analysis and is not
a required part of the consolidated financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records used
to prepare the consolidated financial statements. The information has been subjected to the auditing
procedures applied in the audit of the consolidated financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the consolidated financial statements or to the consolidated financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the information is fairly stated in all material respects in
relation to the consolidated financial statements as a whole.
Vienna, Virginia
March 29, 2017
25
Calvert Social Investment Foundation, Inc.
Consolidated Statements of Financial Position
2016
Assets
Cash and cash equivalents
Program related investments:
Certificates of deposit
Loans receivable, net
Investments, at fair value
Interest and fees receivable
Other receivables
Other assets
Furniture, equipment and software, net of
accumulated depreciation of $1,316,923,
$1,584,738,and $1,295,454, respectively
Total assets
Liabilities and net assets
Liabilities:
Accrued interest payable
Accounts payable and accrued expenses
Calvert Foundation Community Investment
Notes payable (the Notes)
Subordinated loans payable
Refundable and recoverable grants
Fair value of foreign currency exchange contracts
and cross-currency interest rate swaps, net
Total liabilities
$ 52,915,552
2014
$ 40,669,177 $ 53,436,439
8,450,000
281,280,254
26,613,797
2,316,807
1,083,695
780,839
9,450,813
218,569,976
38,301,189
1,631,488
5,252,068
936,014
7,900,000
200,712,626
26,101,024
1,760,812
901,477
851,377
595,172
859,098
1,224,067
$ 374,036,116
$ 315,669,823 $ 292,887,822
$
$
2,041,762
1,114,867
2,140,605 $
659,566
2,071,895
586,426
321,871,508
10,060,000
250,000
269,373,468
12,360,000
750,000
247,866,639
12,785,000
500,000
1,113,703
336,451,840
285,283,639
263,809,960
14,309,013
21,093,909
35,402,922
1,993,783
187,571
37,584,276
12,627,786
15,444,129
1,472,885
29,544,800
653,813
187,571
30,386,184
11,973,908
16,142,370
28,116,278
774,013
187,571
29,077,862
$ 374,036,116 $ 315,669,823
$ 292,887,822
Unrestricted net assets
Undesignated
Board Designated - Giving Fund
Non-controlling interests
Total unrestricted net assets
Temporarily restricted net assets
Total permanently restricted net assets
Total net assets
Total liabilities and net assets
December 31,
2015
See accompanying notes to the consolidated financial statements.
26
Calvert Social Investment Foundation, Inc.
Consolidated Statements of Activities
2016
Change in unrestricted net assets
Support:
Contributions
Grants
Total support
$
Years ended December 31,
2015
4,092,365
1,333,176
5,425,541
$
2,554,975
1,595,967
4,150,942
$
2014
3,915,844
1,909,982
5,825,826
Revenue:
Program revenue
Investment income
Fee and other income
Total revenue
10,761,011
184,947
1,614,120
12,560,079
9,170,300
839,059
990,955
11,000,314
8,855,425
708,747
1,559,211
11,123,383
Net assets released from restriction:
Satisfaction of program restrictions
Total support and revenue
723,388
18,709,006
1,413,242
16,564,498
1,196,837
18,146,046
16,182,102
14,323,847
13,637,120
1,623,410
386,708
18,192,220
1,515,670
335,788
16,175,305
1,422,196
314,446
15,373,762
Expenses:
Program services
Support services
Management and general
Fundraising
Total expenses
Change in unrestricted net assets before
non-operating items
Net change in fair value of investments and derivatives
Sale of non-controlling interest in FPIF
Sale of non-controlling interest in IAOF
Sale of non-controlling interest in E4I
Sale of non-controlling interest in IAFG
Transfer to ImpactAssets, Inc.
Change in unrestricted net assets
516,787
(259,636)
1,000,000
123,810
3,750,000
15,000,000
(14,272,839)
5,858,122
389,193
(603,528)
1,000,000
642,857
1,428,522
2,772,284
338,239
(90,502)
3,020,021
2,063,358
(723,388)
1,339,970
1,293,042
(1,413,242)
(120,200)
811,277
(1,196,837)
(385,560)
1,308,322
29,077,862
2,634,461
26,443,401
Changes in temporarily restricted net assets
Contributions and grants
Net assets released from restriction
Change in temporarily restricted net assets
Change in net assets
Net assets at beginning of period
Net assets at end of period
7,198,092
30,386,184
$
37,584,276
$
30,386,184
$
29,077,862
See accompanying notes to the consolidated financial statements.
27
Calvert Social Investment Foundation, Inc.
Consolidated Statements of Cash Flows
2016
Cash flows from operating activities
Change in net assets
Adjustments to reconcile change in net assets to net
cash (used in) provided by operating activities:
Depreciation
Net change in fair value of investments
Net change in fair value of derivatives
Net change in provision for loan losses
Non-cash capital contribution to IAFG
Transfer of investments and Notes to ImpactAssets,
Inc.
Donated stock and non-cash contributions
Loss on disposal of assets
Changes in operating assets and liabilities:
Other receivables
Interest and fees receivable
Other assets
Accounts payable and accrued expenses
Accrued interest payable
Net cash provided by operating activities
$
Years ended December 31,
2015
7,198,092
$
1,308,322
$
2014
2,634,461
357,274
(854,068)
1,113,703
1,910,509
(15,000,000)
351,258
603,528
617,290
-
347,878
(338,239)
375,397
-
10,841,715
(3,000,000)
-
(287,787)
13,711
(193,930)
-
1,031,899
(685,319)
155,175
455,301
(98,843)
3,425,438
(889,969)
129,324
(84,637)
73,140
68,710
1,902,890
1,156,282
31,302
(161,803)
(49,744)
141,436
3,943,040
Cash flows from investing activities
Cost of investments acquired
Proceeds from sale or maturity of investments
Loans issued
Repayments of loans
Purchases of furniture, equipment and software
Net cash used in investing activities
(2,657,939)
8,492,632
(101,301,070)
36,680,283
(93,348)
(58,879,442)
(15,179,548)
3,012,829
(66,028,966)
45,654,326
(32,541,359)
(13,300,233)
15,418,196
(66,080,442)
47,918,239
(510,838)
(16,555,078)
Cash flows from financing activities
Increase in subordinated loans payable
Subordinate loan repayments
Proceeds from issuance of the Notes
Repayments of the Notes
Net cash provided by financing activities
200,000
181,560,485
(114,060,108)
67,700,377
1,382,500
(1,557,500)
56,346,183
(38,299,976)
17,871,207
6,422,349
(1,179,633)
49,955,829
(37,257,309)
17,941,236
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Net cash and cash equivalents, end of period
Supplemental disclosures of cash flow information
Interest paid
Non-cash activities
Transfer of investments and Notes to ImpactAssets,
Inc.
12,246,373
40,669,179
$ 52,915,552
(12,767,262)
53,436,439
40,669,177 $
$
$
4,809,540
$
3,700,171
$
$ 10,841,715
$
-
$
5,329,198
48,107,241
53,436,439
3,491,265
-
See accompanying notes to the consolidated financial statements.
28
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements
Years ended December 31, 2016, 2015 and 2014
Note A - Organization
Calvert Social Investment Foundation, Inc. (the Foundation) was formed in l988 with a mission to
enable people to invest for social good. To realize its mission, the Foundation administers products
and services designed to be a bridge between funding available in the capital markets and
organizations that can invest those funds to benefit under-served communities.
On April 23, 2010, Community Investment Partners, Inc. (CIP, Inc.), a wholly owned subsidiary
of the Foundation was formed as a Maryland non-stock corporation. The Foundation is the sole
member of the taxable corporation. CIP, Inc. is organized to promote community investment by,
among other things, providing funds management and investor services to social and community
development institutions in order to encourage the flow of investment resources to disadvantaged
communities.
The Foundation formed two special purpose vehicles in 2015 to further advance its mission in
partnership with like-minded organizations. The first, Age Strong, is an initiative of AARP
Foundation (AARP), Capital Impact Partners, and the Foundation, which is funded through the
FPIF Feeder Facility L.P. (FPIF). Age Strong’s goal is to lend to organizations that provide critical
services for people over the age of 50 in the United States of America. The second, Inter-American
Opportunity Facility (IOF), is a partnership between the Inter-American Development Bank (IDB)
and the Foundation to fuel socially responsible small business growth in Latin America and the
Caribbean.
The Foundation formed two additional special purpose vehicles in 2016 to continue the mission
with additional like-minded organizations. The first, Equity for Impact, L. P. (E4I), is a new limited
partnership with the Ford Foundation, a New York not-for-profit corporation (Ford Foundation)
and the John D and Catherine T. MacArthur Foundation, and Illinois not-for-profit corporation
(MacArthur Foundation). Ford Foundation and MacArthur Foundation are the Limited Partners of
E4I, which is controlled by a wholly owned subsidiary of Calvert Foundation as the partnership’s
General Partner. Ford Foundation and MacArthur Foundation collectively committed $7,500,000
to the limited partnership, of which $3,750,000 was contributed in 2016. The investment in E4I by
Ford Foundation and MacArthur Foundation, as contractually agreed, forms a barrier to protect
Calvert Foundation’s Community Investment Noteholders and subordinated debt investors, should
Calvert Foundation suffer significant losses over the twelve year life of E4I.
29
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note A – Organization (Continued)
The second special purpose vehicle created in 2016 is the ImpactAssets Funded Guarantee, L.P.
(IAFG). ImpactAssets, Inc., (ImpactAssets) a Maryland not-for-profit corporation, is the primary
Limited Partner of IAFG, which is controlled by a wholly owned subsidiary of Calvert Foundation
as the partnership’s General Partner and minority Limited Partner. ImpactAssets contributed assets
of $15,000,000 in the form of Calvert Foundation Community Investment Notes to the limited
partnership, which as contractually agreed, forms a barrier to protect Calvert Foundation’s other
Community Investment Noteholders and subordinated debt investors, should Calvert Foundation
suffer significant losses over the twelve-year life of IAFG.
The Foundation serves as the general partner of FPIF, IOF, IAFG and E4I (collectively, the
Partnerships).
The Calvert Foundation Community Investment Notes (the Notes) are investments purchased by
individuals and institutions, serving as a source of funding for investments (primarily loans) to
investment partners working in underserved communities. The Calvert Foundation Giving Fund
(CGF) was a donor-advised program whereby donors made irrevocable donations to the
Foundation.
Note B – Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Calvert Social Investment
Foundation, Inc., CIP, Inc., and the Partnerships (collectively referred to as the Foundation). The
Foundation is the general partner and has substantive rights to manage and control the Partnerships.
Accordingly, the Foundation consolidates these Partnerships and reflects the non-controlling
interests separately in the Foundation's unrestricted net assets. All significant inter-entity balances
and transactions have been eliminated in consolidation.
Basis of Accounting and Use of Estimates
The accompanying consolidated financial statements have been prepared using the accrual basis
of accounting in conformity with accounting principles generally accepted in the United States of
America (GAAP). The preparation of the consolidated financial statements in accordance with
GAAP requires management to make estimates and assumptions that affect reported amounts of
assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of support, revenue and expenses during the
reporting period. Actual results could differ from those estimates.
30
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note B - Summary of Significant Accounting Policies (Continued)
Basis of Presentation
The accompanying consolidated financial statements were prepared using GAAP for not-for-profit
entities. These standards require foundations to report information regarding their financial
position and activities in three classes of net assets as follows:
Unrestricted net assets - represent resources which have met all applicable previous restrictions
and are considered to be available for unrestricted use. From time to time, the Board of Directors
may designate a portion of net assets for a specific purpose; however, board designated net assets
are classified as unrestricted net assets. For example, Board designated net assets were set aside
by the Board of Directors in the past for the Calvert Foundation Giving Fund. Non-controlling
interests in limited partnerships represent third-party limited partner ownership in the Partnerships
for which the foundation serves as the general partner.
Temporarily restricted net assets - represent resources restricted by donors until such time as either
purpose or time restrictions have been met. Temporarily restricted net assets are available for use
in programs specified by donors. The net assets released from donor restriction are attributable
to expenses incurred during the period related to these specific programs or the expiration of time
restrictions.
Permanently restricted net assets - represent resources that contain a stipulation that permanently
restricts the use of such funds, but allow earnings from the funds to be used for either temporarily
restricted or unrestricted purposes. Permanently restricted net assets are restricted for use in the
Foundation's permanent revolving loan fund. Loan loss allowances established for loans issued
from this fund are charged to loan loss expense.
Tax Status
The Calvert Social Investment Foundation, Inc. is exempt from federal income tax under Section
501(c)(3) of the Internal Revenue Code. In addition, the Foundation has been determined by the
Internal Revenue Service not to be a "private foundation" within the meaning of Section 509(a) of
the Internal Revenue Code. CIP, Inc. is subject to income tax on its net income, if any. The
Partnerships are not subject to federal income tax and any partnership income is taxable to the
individual partners. Management has concluded that the Foundation has properly maintained its
exempt status and that there are no uncertain tax positions as of December 31, 2016. There are
currently no examinations being conducted. CIP, Inc. has generated net operating losses (NOL)
through December 31, 2016, which are available to be carried forward and offset against future
taxable income. The Foundation performs an assessment of the future realization of deferred tax
assets and considers historical taxable income and projections for future taxable income over the
periods during which the deferred tax assets are recoverable and determines if it is more likely
than not that CIP, Inc. will realize the benefits of those differences. The Foundation has
established a valuation allowance against the NOL as it is more likely than not that CIP, Inc. will
be unable to utilize the NOL prior to their expiration.
31
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note B - Summary of Significant Accounting Policies (Continued)
Subsequent Events
The Foundation has evaluated subsequent events through March 29, 2017, which is the date the
consolidated financial statements were available to be issued and has considered all relevant
matters in the preparation of the consolidated financial statements and footnotes.
Cash and Cash Equivalents
The Foundation considers highly liquid investments, with maturity of three months or less when
purchased, to be cash equivalents. The Foundation maintains cash in bank deposit and money
market accounts, which at times may exceed federally insured limits. The Foundation has not
experienced any losses in such accounts. Management monitors these balances and believes they
do not represent a significant credit risk to the Foundation.
Investments
The Foundation generally carries its investments at fair value and reports gains and losses in the
consolidated statements of activities. Accounting standards have established a framework and
hierarchy for measuring fair value and disclosing fair value measurements.
The Foundation invests in various investment instruments. Investments are exposed to various
risks such as interest rate, market and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could materially affect the amounts
reported in the consolidated statements of financial position.
Fair Value of Financial Instruments
GAAP requires the disclosure of the fair value of financial instruments at the consolidated
statements of financial position date. For financial instruments for which there are no quoted
market prices, a reasonable estimate of fair value would require incurring excessive costs. Because
the mission of the Foundation is to raise and lend funds at interest rates that are generally below
market, these disclosures for the Foundation's Loans Receivables, subordinated loans payable and
refundable grants are not meaningful and are not presented in these consolidated financial
statements.
32
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note B - Summary of Significant Accounting Policies (Continued)
The Foundation's classifications for investments are based on the fair value framework established
by GAAP. The framework is based on the inputs used in the valuation and requires that observable
inputs be used in valuations when available. The disclosure of fair value estimates in the fair value
guidance includes a hierarchy based on whether significant valuation inputs are observable.
The three levels of the hierarchy are as follows:
Level 1:
Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities traded in active markets that the Foundation can access.
Level 2:
Inputs to the valuation methodology include quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar assets or liabilities in
markets that are not active, inputs other than quoted prices that are observable for the
assets or liabilities and market-corroborated inputs.
Level 3:
Inputs to valuation methodology are unobservable for the asset or liability and are
significant to the fair value measurement.
Certificates of deposit held do not meet the definition of securities under accounting standards and
thus are not subject to the fair value disclosure requirements of GAAP. The Foundation
recognizes transfers between levels of the fair value hierarchy at the end of the period in which
events impacting the availability of inputs to the fair value methodology occur.
The Foundation has elected to adopt Financial Accounting Standards Board (FASB) Accounting
Standard Update (ASU) 2015-07, Disclosures for Investments in Certain Entities that Calculate
Net Asset Value per Share, earlier than the required effective date for non-public entities.
Therefore, certain investments that are measured at fair value using the net asset value per share
(or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.
Certificates of Deposit/CDAR’S
Bank certificates of deposit (CDs) and Certificate of Deposit Account Registry Service (CDARS)
are placed with financial institutions providing sources of capital to under-served communities.
The CDs are shown at the original deposit amounts plus earned interest. CDs and CDARS as of
December 31, 2016 earn interest at rates ranging from 0.15% to 0.95% and have maturities ranging
from February 2, 2017 through January 11, 2018. Certain of these certificates of deposit are
subject to penalties for early withdrawal. Penalties for early withdrawal would not have a material
effect on the consolidated financial statements. The certificates are automatically renewable by
the depository financial institution unless the Foundation provides notification to the institution.
33
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note B - Summary of Significant Accounting Policies (Continued)
Allowance for Losses
The Foundation has established an allowance for losses to provide for estimates of uncollectible
loans. Although variability is inherent in such estimates, management believes that the allowance
for losses provided in the consolidated financial statements is adequate. However, because of the
small population of loans and limited historical experience, actual losses could be significantly
more or less than management's estimate. As adjustments to this estimate become necessary, such
adjustments are included in current operations. On a quarterly basis, the Foundation reviews the
current level of reserves against prior losses, and the state of the portfolio to determine the
adequacy of the reserve level to cover future losses. The Foundation implements a three-step
approach to determining the reserve:
(1) A reserve percentage is assigned based on the individual risk score of each loan. The percentage
applied for each risk category may be changed from time to time by the Foundation;
(2) The Foundation identifies loans that warrant special consideration and applies a specific loan
loss allowance for each of these loans independent of the other loans;
(3) In certain instances the Foundation receives credit enhancements, which may reduce the
necessary loan loss reserve for the loan. This support is evaluated on a case-by-case basis taking
into account the type and amount of credit enhancement as well as management's assessment of
the Foundation's ability to utilize the credit enhancement in the event of borrower default. These
credit enhancements are typically in the form of cash collateral and third party guarantees
supporting either a portion or the entire outstanding loan.
The Foundation has established a policy for loans placed on non-accrual status. The Foundation
ceases to accrue interest on loans when they become 180 days past due or when management
believes the receivable is not collectible. Interest accrued on these loans is reversed against interest
income. Loans are returned to accrual status when all the principal and interest amounts
contractually due are brought current and in the opinion of management, future payments are
reasonably assured.
Furniture, Equipment and Software
Furniture, equipment and software are stated at cost, net of accumulated depreciation, and are
depreciated on the straight-line basis over the estimated useful lives, which range from 1 to 8 years.
34
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note B - Summary of Significant Accounting Policies (Continued)
Accounting for Derivatives
Derivatives are recorded in the consolidated statements of financial position at fair value. Fair
value for the Foundation's derivative financial instruments are based on quoted prices. Changes in
fair value are recorded when they occur in the consolidated statements of activities. The
Foundation’s derivatives as of December 31, 2016 consist of foreign currency exchange contracts
and cross-currency interest rate swaps that hedge the Foundation’s currency risk on its foreigncurrency denominated loans receivable. The Foundation’s derivative liability as of December 31,
2016 is classified as a Level 2 fair value measurement based on observable foreign currency
exchange rates.
Accounting for Foreign Currency Denominated Transactions
The books and records of the Foundation are maintained in U.S. dollars. Transactions denominated
in foreign currencies are translated into U.S. dollars at the consolidated statements of financial
position date rate of exchange. Changes in foreign currency denominated transactions are recorded
in the consolidated statements of activities in the period the change occurs.
Contributions and Grants
All contributions and grants are considered to be available for unrestricted use unless specifically
restricted by the donor or grantor. Amounts received that are designated for future periods or
restricted by the donor or grantor for specific purposes are reported as temporarily restricted.
Amounts received that are restricted by the donor or grantor for specific purposes are reported as
unrestricted if expenses exceed contributions for the related purpose. When a temporary
restriction expires or has been satisfied, temporarily restricted net assets are reclassified to
unrestricted net assets and reported in the consolidated statements of activities as net assets
released from restriction. Contributed property and equipment is recorded at its estimated fair
value at the date of donation.
Expense Allocation
The costs of providing programs and other activities have been summarized on a functional basis
in the consolidated statements of activities. Accordingly, costs have been allocated to program,
management and general, and fundraising expenses.
35
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note B - Summary of Significant Accounting Policies (Continued)
Transfer to ImpactAssets
The Foundation conducted a multi-year process beginning in 2010 to transfer the Giving Fund
assets to ImpactAssets, a mission-aligned organization. These transfers are non-operating items
that reduce net assets. An agreement was made in 2016 to transfer the final Giving Fund assets to
ImpactAssets. As of December 31, 2016 all items were transferred except for $660,521 of private
investments, which are not yet transferred as of the financial statement date. The total amount
transferred to ImpactAssets in the consolidated statements of activities was comprised of the
following for the years ended December 31:
Cash and cash equivalents
Common stock and other equity securities, fair value
Calvert Foundation Community Investment Notes
2016
$ 3,431,124
7,707,578
3,134,137
$ 14,272,839
$
$
2014
90,502
90,502
No transfers were made during 2015.
Promissory Note
In exchange for the Giving Fund assets transferred, the Foundation entered into a promissory note
agreement with ImpactAssets, in which the Foundation would receive a fee as compensation for
incubating and raising the amount of Giving Fund assets transferred to ImpactAssets. The fee was
determined based upon the percentage of Giving Fund assets actually transferred to ImpactAssets
as a proportion of $30 million, with a maximum value of $360,000. The promissory note did not
accrue interest and the outstanding principal balance was recorded in other assets in the
consolidated statements of financial position. As part of the final Giving Fund transfer, this
promissory note was forgiven. As of December 31, 2016, 2015 and 2014 the outstanding
principal balance of the note is $ -, $277,898 and $277,898, respectively.
Reclassifications
Certain prior year balances have been reclassified to conform with current year presentation. These
reclassifications resulted in no changes in net assets.
36
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note C - Investments
The following table summarizes the Foundation's investments held at fair value in accordance with
GAAP as of December 31:
2016
Common stock
Mutual funds:
Fixed-income mutual funds
Fixed Income securities
Total investments in hierarchy
Alternative investment funds at net asset value
Total investments held at fair value
2015
Common stock
Mutual funds:
Equity mutual funds
Fixed-income mutual funds
Exchange traded funds
Equity funds
Fixed income funds
Fixed-income securities
Total investments in hierarchy
Alternative investment funds at net asset value
Total investments held at fair value
2014
Common stock
Mutual funds:
Equity mutual funds
Fixed-income mutual funds
Exchange traded funds
Equity funds
Fixed income funds
Fixed-income securities
Total investments in hierarchy
Alternative investment funds at net asset value
Total investments held at fair value
$
Level 1
Level 2
33,000 $
- $
1,113,225
$ 1,146,224 $
751,167
751,167
Total
33,000
1,113,225
751,167
1,897,392
24,716,405
$ 26,613,797
Level 1
Level 2
Total
$ 1,081,572 $
- $ 1,081,572
4,814,726
2,823,916
73,432
212,410
$ 9,006,056 $
$
-
4,814,726
2,823,916
859,566
859,566
73,432
212,410
859,566
9,865,622
28,435,567
$ 38,301,189
Level 1
Level 2
950,661 $
- $
5,319,088
3,121,157
449,542
259,308
$ 10,099,756 $
Total
950,661
-
5,319,088
3,121,157
895,956
895,956
449,542
259,308
895,956
10,995,712
15,105,312
$ 26,101,024
37
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note C - Investments (Continued)
The fair value of the fixed-income securities are based upon market quotations from pricing
services. The pricing service prepares estimates of fair value measurements for these securities
using proprietary pricing applications, which include available relevant market information,
benchmark curves, benchmarking of like securities, sector groupings and matrix pricing (Level 2).
The Foundation is a limited partner investor in various alternative investment funds. In accordance
with the partnership agreements, limited partners are not liable for any liabilities or for the payment
of any debts and obligations of the funds. Net profits and losses are allocated to each partner in
accordance with the ratio of their respective capital account balances. The Foundation may
withdraw any or part of their capital account upon providing written notice and other stipulations
as defined in the partnership agreements. There are no outstanding capital commitments as of
December 31, 2016 for the Foundation's investments in these alternative investment funds.
Investments in alternative investment funds are typically valued, as a practical expedient, utilizing
the net asset valuations provided by the underlying private investment companies and or their
administrators, without adjustment, when the net asset valuations of the investments are calculated
in a manner consistent with GAAP for investment companies. The Foundation applies the practical
expedient to its investments in private investment companies, unless it is probable that the
Foundation will sell a portion of an investment at an amount different from the net asset valuation.
If it is probable that the Foundation will sell an investment at an amount different from the net
asset valuation or in other situations where the practical expedient is not available, the Foundation
considers other factors in addition to the net asset valuation, such as features of the investment,
including subscription and redemption rights, expected discounted cash flows, transactions in the
secondary market, bids received from potential buyers, and overall market conditions in its
determination of fair value. As of December 31, 2016, 2015 and 2014, no adjustments were made
to the valuations provided by the underlying private investment companies.
During 2016, 2015 and 2014, the Foundation took positions in several alternative investment
funds. The objective of the funds is to provide an investment option delivering liquidity, security,
risk-adjusted return, administrative ease and developmental impact. The funds are designed to
provide capital appreciation and social impact by investing in low-income finance institutions
(LIFIs), which include microfinance institutions (MFIs), small and medium enterprise (SME)
banks and other regulated or unregulated financial institutions in emerging and developed markets,
including the United States of America.
38
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note C - Investments (Continued)
The majority of the alternative investment funds require the Foundation to provide at least a 90
days prior written notice to the General Partner before withdrawing all or any portion of its capital
account balance, subject to certain additional restrictions including but not limited to a two-year
waiting period for a particular contribution. The remaining alternative investment funds require
the Foundation to provide at least 30 days prior written notice to the administrator of the fund
before withdrawing their interest in the funds subject to certain restrictions including but not
limited to one-month waiting period for a particular contribution.
During 2016, 2015 and 2014, there were no transfers between the levels of the fair value hierarchy.
Total return on investments was comprised of the following for the years ended December 31:
Interest and dividend income
Change value of foreign currency
denominated loans
Total investment income
Change in fair value of derivatives
Change in fair value of investments
Total change in fair value of
investments and derivatives
Total return on investments
2016
$ 256,250
2015
$ 877,785
2014
$ 693,397
(71,303)
184,947
(38,726)
839,059
15,350
708,747
(1,113,703)
854,067
(603,528)
338,239
(259,636)
$ (74,689)
(603,528)
$ 235,531
338,239
$1,046,986
Note D - Loans Receivable
Loans receivable, net of an allowance for losses, consist of loans made in accordance with the
Foundation's stated purpose of providing financial assistance to investment partners operating in
and/or for the benefit of economically disadvantaged communities, which are under-served by
traditional capital sources. Pursuant to the terms of the note agreements, interest is typically due
quarterly or semi-annually.
39
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note D - Loans Receivable (Continued)
The following are the largest single borrowers representing 2.14% or more of loans outstanding as
of December 31, 2016:
% of Total
Total
Loans
Borrower
Outstanding
Outstanding
Clearinghouse CDFI
MicroVest + Plus, LP
MicroVest Short Duration Fund LP – Tranche A+B
Community Reinvestment Fund
Enterprise Community Loan Fund, Inc.
Boston Community Loan Fund
Urban Land Conservancy
Total
$14,500,000
12,508,199
12,425,770
10,000,000
10,000,000
8,300,000
6,155,000
$73,888,969
5.05%
4.36%
4.33%
3.48%
3.48%
2.89%
2.14%
25.73%
There are no other individual borrowers representing more than 2.14% of the total loans
outstanding as of December 31, 2016.
The Foundation makes loans in developing markets that may be subject to increased risks due to
political and regulatory environments, and overall market and economic factors in the countries in
which the borrower conducts business or invests. These risks are generally magnified in countries
with emerging markets, due to the limited availability of information, currency fluctuations, and
the volatility of political and economic conditions in some areas. Fluctuations in exchange rates
may adversely affect the repayment of investments. Political or social instability may prevent
borrowers from operating effectively and hinder repayment to the Foundation.
The following table summarizes the domestic and international loans outstanding as of December
31, 2016 based upon the geography in which the borrower conducts its operations:
Domestic
International
Total
Total
Outstanding
$200,032,970
86,985,787
$287,018,757
% of Total
Loans
Outstanding
69.69%
30.31%
100%
40
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note D - Loans Receivable (Continued)
The following table summarize the loans receivable balances as of December 31, based on whether
the Foundation has specifically allowed for loan losses due to credit quality of the loans or
considered the loans as part of the Foundation's general loan loss estimate:
Loans receivable
Classified loans with specific loan loss allowance
Loans included in general loan loss allowance
Loans with credit enhancements
Allowance for loan losses
Total loans receivable, net
$
$
2016
168,715 $
225,151,589
61,698,454
(5,738,504)
281,280,254 $
2015
1,796,031 $
194,792,503
27,832,190
(5,850,748)
218,569,976 $
2014
1,923,323
180,299,110
23,788,159
(5,297,966)
200,712,626
As of December 31, 2016, no loans receivable were placed on non-accrual status.
The Foundation has secured cash collateral and active guarantees through third and related parties
to protect against losses that may be incurred on specific loans or portfolios of loans outstanding.
These active guarantees and cash collateral are summarized below:
Cash collateral
Third party guarantees
Related party guarantees
Total
$
$
2016
648,098
19,495,963
27,516,875
47,660,936
$
$
2015
650,484
5,947,850
20,946,500
27,544,834
$
$
2014
873,583
5,125,000
15,102,750
21,101,333
The allowance for loan losses on loans receivable is adjusted throughout the year based upon the
Foundation's assessment of its adequacy compared to the current outstanding loans. The current
year's adjustment in the allowance is reflected in the provision for loan losses. The allowance for
loan losses on loans receivable is summarized in the following table:
Allowance for loan losses
Balance as of January 1, 2014
Loans written off during the year
Net change in provision for loan loss allowance
Balance as of December 31, 2014
Loans written off during the year
Net change in provision for loan loss allowance
Balance as of December 31, 2015
Loans written off during the year
Net change in provision for loan loss allowance
Balance as of December 31, 2016
Specific
General
Credit
Allowance
Allowance Enhancements
Total
$
173,462 $ 4,694,107 $
140,000 $ 5,007,569
(100,000)
(100,000)
297,704
112,693
(20,000)
390,397
371,166
4,806,800
120,000
5,297,966
(74,976)
(74,976)
896,605
(362,887)
94,040
627,758
1,192,795
4,443,913
214,040
5,850,748
(2,015,629)
(7,125)
(2,022,754)
831,269
280,717
798,523
1,910,509
$
8,436 $ 4,717,505 $ 1,012,563 $ 5,738,504
41
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note E - Calvert Foundation Community Investment Notes Payable
The Foundation created the Calvert Foundation Community Investment Note (the Notes) program
to raise funds and reinvest those funds directly in community development and similar
organizations with missions that include affordable housing, economic development and business
development in urban and rural communities. The Notes are sold through three channels: directly
by the Foundation in paper form, online notes sold directly by the Foundation through its website
platform vested.org and brokered notes sold through the Depository Trust Company (DTC). The
Notes pay investors a fixed rate of interest.
Funds from paper Notes sold directly by the Foundation are provided by individuals and
institutional investors through the sale of the Notes of $1,000 or greater. The Notes pay investors
a fixed rate of interest reflective of risk, return and the mission of the Foundation. In 2014, the
Foundation started issuing online Notes through its website platform vested.org, which are
purchased by investors in quantities of $20 or greater.
The Foundation is a party to a Trust Indenture Agreement (the indenture agreement) with the Bank
of New York (BONY). This agreement allows the Foundation to issue Notes in a form referred
to as brokered, or book entry notes, which are eligible for electronic settlement through the DTC.
The notes, once issued, are represented by permanent global certificates that are registered in the
name of Cede & Co., as nominee of the DTC. BONY has been designated as the indenture trustee
to the indenture agreement and in this capacity BONY serves as paying agent for the book-entry
notes.
The indenture agreement imposes certain financial and other covenants on the Foundation and
allows BONY to take specified actions on behalf of the holder of book-entry Notes under certain
circumstances. At December 31, 2016, 2015 and 2014 the Foundation was in compliance with
covenants relating to this agreement. For a more complete description of this agreement please
refer to the Foundation's Prospectus.
The Notes are offered under a self-executing exemption from federal registration. The Foundation
and the Notes comply with state registration requirements. The Notes are senior to the
subordinated loans (see Note F).
At December 31, 2016, the top 10 Note holders held Notes representing $104,953,689 or 32.61%
of the total Notes payable balance.
42
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note E - Calvert Foundation Community Investment Notes Payable (Continued)
Maturities by year are as follows:
2017
2018
2019
2020
2021
Thereafter
Total
$
90,547,629
62,949,520
90,468,380
14,282,703
29,402,201
34,221,075
321,871,508
$
Note F - Subordinated Loans Payable
Loans were provided by the following organizations to: 1) provide financial assistance to
community development organizations operating in economically disadvantaged communities,
which are under-served by traditional capital sources and 2) provide subordinate financing to assist
the Foundation in attracting investors for the Note program.
The principal amounts by lending organization as of December 31 are as follows:
2016
Principal
Amount
Organization
Junior Subordinated Loans
MacArthur Foundation
Wells Fargo
The Piton Foundation
Calvert Investment Administrative Services, Inc.
The Columbia Bank
PNC
The Colorado Health Trust
The Colorado Health Foundation
Private individual
Deutsche Bank
San Francisco Foundation
Page Hill Foundation
Private Individual
The Denver Foundation
Fidelity Charitable Trust
Women's Foundation of Minnesota
Bank of America
Meredith Lorraine Meyercord Trust
The Rockefeller Foundation
PNC Foundation
Community Foundation Land Trust
Total junior subordinated loans payable
$
$
2015
Principal
Amount
2014
Principal
Amount
1,500,000
1,250,000
1,000,000
1,000,000
1,000,000
800,000
750,000
750,000
500,000
350,000
300,000
200,000
200,000
150,000
100,000
10,000
200,000
-
$
2,500,000
1,500,000
1,250,000
1,000,000
1,000,000
1,000,000
800,000
750,000
750,000
500,000
350,000
300,000
200,000
200,000
150,000
100,000
10,000
-
$
3,000,000
1,500,000
1,250,000
1,000,000
1,000,000
1,000,000
675,000
500,000
500,000
350,000
300,000
200,000
200,000
150,000
100,000
10,000
450,000
100,000
500,000
10,060,000
$
12,360,000
$
12,785,000
43
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note F - Subordinated Loans Payable (Continued)
Maturities as of December 31, 2016 are:
2017
2018
2019
2020
2021
Thereafter
Total
$
$
1,210,000
100,000
2,000,000
500,000
1,550,000
4,700,000
10,060,000
In 2016, The MacArthur Foundation forgave their $2,500,000 subordinated loan to the Foundation.
This loan forgiveness was recognized as contribution income.
Under the terms of the loans detailed above, the Foundation is subject to certain debt covenants,
which require the Foundation to maintain minimum specific liquidity ratios and to provide timely
financial and progress reports to the lending organizations. As of December 31, 2016, 2015 and
2014 the Foundation was in compliance with all its debt covenants.
Note G - Refundable and Recoverable Grants
The Foundation occasionally receives recoverable grants to support the funding of specific loans
(or portfolios of loans). These recoverable grants are required to be repaid, in whole or in part, to
the grantor at their maturity, if the loans they are supporting do not directly cause the Foundation
to suffer any losses. To the extent the Foundation has suffered a loss on the relevant loans, an equal
portion of the recoverable grant would be forgiven at maturity and would be recorded by the
Foundation as an unrestricted contribution at that time. Because the amount of forgiveness will not
be determined until the time of maturity, the Foundation reflects refundable grants as liabilities in
the consolidated statements of financial position.
On June 1, 2009, the Foundation received a recoverable grant from the Ford Foundation in the
amount of $500,000. This grant was issued to provide support to capitalize a loan loss reserve fund
for the affordable housing portfolio in order to mitigate increased levels of risk associated with
affordable housing. The grant funds were available over a seven year period. In 2016, this grant
was forgiven and recognized as contribution income.
On February 2, 2015, the Foundation received a recoverable grant from Capital Impact Partners in
the amount of $250,000. This grant was issued to provide support in the event that principal
and/or interest were not paid when due under a $5,000,000 loan commitment to the Woodward
Corridor Investment Fund, LLC. The grant funds are available until January 2, 2035, or the earlier
repayment of the loan.
44
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note H – Program Revenue
The components of program revenue were as follows for the years ending December 31:
Interest on loans receivable
Interest on certificates of deposit
Total
2016
$ 10,719,923 $
41,088
$ 10,761,011 $
2015
9,138,913 $
31,387
9,170,300 $
2014
8,817,993
37,432
8,855,425
Note I - Special Purpose Vehicles
As described in Note A, the Foundation formed four Partnerships between 2015 and 2016. AARP
and IDB contributed capital of $1,000,000 and approximately $643,000, respectively, for
non-controlling, limited partner interests during the year ended December 31, 2015. In 2016,
AARP and IDB contributed additional capital of $1,000,000 and $123,810 respectively.
ImpactAssets contributed $15,000,000 to IAFG for non-controlling limited partner interests in
2016. The Ford Foundation and MacArthur Foundation contributed $3,750,000, in total, for noncontrolling, limited partner interests in E4I in 2016.The changes in consolidated unrestricted net
assets for the year ended December 31, 2016 are presented in the following table:
Unrestricted net assets, January 1, 2015
Change in net assets before non-operating items
Net change in fair value of investments
Sale of non-controlling interest in Partnerships
Change in unrestricted net assets
Unrestricted net assets, December 31, 2015
Change in net assets before non-operating items
Net change in fair value of investments
Sale of non-controlling interest in Partnerships
Transfer to ImpactAssets
Change in unrestricted net assets
Unrestricted net assets, December 31, 2016
Total
$28,116,278
389,193
(603,528)
1,642,857
1,428,522
Controlling
Interest
$ 28,116,278
559,165
(603,528)
(44,363)
29,544,800
28,071,915
1,472,885
516,787
(259,636)
19,873,810
(14,272,839)
5,858,122
769,573
(259,636)
(14,272,839)
(13,762,902)
(252,786)
19,873,810
19,621,024
$ 35,402,922
$ 14,309,013
Non-controlling
interest
$
(169,972)
1,642,857
1,472,885
$ 21,093,909
45
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note J – Retirement Plan
The Foundation sponsors a 401(k) Plan (the Plan) for its employees. Employees with three months
of service and having attained the age of twenty-one are eligible for participation in the Plan. The
Foundation double-matches up to the first 2% to employee deferrals (i.e. the Foundation
contributes up to 4%) and then matches employee deferrals up to a maximum of a further 4% of
the employee's compensation (i.e. maximum total of 8% contributed by the Foundation), which
vests immediately to the employee. Participants are eligible for employer matching contributions
after one year of service. The Foundation made contributions to the Plan of $220,906, $232,298,
and $173,120 for the periods ending December 31, 2016, 2015 and 2014, respectively.
Note K - Future Minimum Lease Payments and Rentals
In 2011, the Foundation entered into a lease agreement for office space commencing January 1,
2012 and terminating December 31, 2020. The lease prescribes price per square foot increases and
grants a rent abatement. In 2013, the Foundation entered into an agreement for additional office
space commencing February 1, 2013 and terminating December 31, 2020. The lease prescribes
per square foot increases. In addition, during 2013, the Foundation entered into a sublease
agreement to lease a portion of its office space. This sublease commenced December 1, 2013 and
terminates January 31, 2019. The lease prescribes price per square foot increases and grants a rent
abatement.
Future minimum rental payments under the operating leases and sublease as described above at
December 31, 2016, are as follows:
2017
2018
2019
2020
$
$
Leases
634,879 $
634,879
652,642
670,925
2,593,325 $
Sublease
(125,211) $
(130,845)
(11,352)
(267,408) $
Net
509,668
504,033
641,290
670,925
2,325,917
Note L- Related Party Transactions
In 2008, the Foundation incubated a new and independent 501(c)3 called ImpactAssets. In order
to segregate the Foundation’s Giving Fund activities from its other activities, the Foundation began
a multi-year process beginning in 2010 and mostly concluding in 2016 to transfer these Giving
Fund assets to ImpactAssets as described in Note B.
46
Calvert Social Investment Foundation, Inc.
Notes to Consolidated Financial Statements (Continued)
Note L – Related Party Transactions (Continued)
The Foundation and ImpactAssets also had a combined agreement to provide IT and Facilities
services, Giving Fund accounting and administration services, which terminated in 2016. The
Foundation paid ImpactAssets $104,384, $98,262 and $74,970 for the net amount of these services
in 2016, 2015 and 2014, respectively.
In addition to the $15,000,000 Community Investment Notes that ImpactAssets contributed to
IAFG as referenced in Note A, ImpactAssets also holds $23,414,987 in Community Investment
Notes as of December 31, 2016.
Micro FX Solutions (MFX) is an initiative to help manage currency risk in the microfinance sector.
Calvert Foundation funded $10,000 in pre-operational capital and made additional equity
investments of $75,000 in 2009. The Foundation also enters into agreements with MFX from time
to time to manage the fluctuation of foreign currency values related to loans denominated in
foreign currency to reduce its currency risk that the value of the loans repayments would be less
than the original loan amount. MFX acts as a counterparty to provide hedging services for these
loans. As of December 31, 2016 the Foundation had foreign currency loans valued at a USD
equivalent of $19,264,798. As of December 31, 2016 the equity investment held by the Foundation
is $79,463
Note M - Subsequent Events
The final contribution to E4I by Ford Foundation and MacArthur Foundation of $3,750,000, was
completed in January 2017. These payments bring the total contributions to E4I to $7,500,000.
47
Calvert Social Investment Foundation, Inc.
Consolidated Statement of Functional Expenses (with summary totals for 2015 and 2014)
Supporting Services
Program
Services
Management
and General
Fundraising
$
Expenses
Employee Compensation
Salaries
Employee benefits
Total employee compensation
$ 2,700,069
391,940
3,092,009
$
Other expenses
Interest expense
Grant expense
Consultants
Occupancy
Provision for loan losses
Depreciation
Professional fees
Equipment and software
Taxes - employee and other
Travel
Conferences
Telephone
Production expense
Supplies
Dues and subscriptions
Miscellaneous
Bank charges
Commissions
Printing and publications
Registration fees
Insurance
Marketing
Postage and delivery
Allocated overhead
Total other expenses
Total
4,710,697
2,275,081
777,192
88,899
1,910,509
401,775
343,827
251,352
530,140
19,444
99,242
23,843
71,170
22,980
14,456
24,981
34,034
17,273
22,922
1,450,276
13,090,093
$ 16,182,102
137,151
503,762
357,274
100,444
60,675
241,273
31,419
29,452
4,854
12,283
12,559
506,132
22,980
1,388
48,794
2,549
(1,553,867)
519,122
$ 1,623,410
964,310
139,978
1,104,288
$
Total Support
Services
2016
Total
2015
Total
2014
Total
192,862
27,996
220,858
$ 1,157,172
167,974
1,325,146
$ 3,857,241
559,914
4,417,155
$ 3,775,543
676,998
4,452,541
$ 3,437,299
601,875
4,039,174
31,419
29,452
1,388
103,591
165,850
386,708
137,151
503,762
357,274
100,444
60,675
241,273
62,838
58,904
4,854
12,283
12,559
506,132
22,980
2,776
48,794
2,549
(1,450,276)
684,972
$ 2,010,118
4,710,697
2,275,081
914,343
592,661
1,910,509
357,274
502,219
404,502
241,273
314,190
589,044
24,298
99,242
36,126
83,729
506,132
45,960
14,456
27,757
34,034
48,794
17,273
25,471
13,775,065
$ 18,192,220
4,195,072
3,052,091
1,146,496
676,577
617,290
351,258
330,830
282,121
257,031
238,115
149,535
69,614
56,868
39,595
37,182
35,592
35,067
28,686
27,313
27,260
25,748
25,301
18,122
11,722,764
$ 16,175,305
3,814,163
2,994,342
1,563,059
607,243
375,397
347,878
247,803
204,678
243,700
242,421
90,108
66,036
49,414
40,762
129,517
30,967
102,946
34,249
25,189
31,773
66,000
4,786
22,157
11,334,588
$ 15,373,762
48