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Family of Funds to provide flexible finance
Until now, all MDLF loans have been financed from a single
pool of funds. While we approached every project as a unique case, we used a single framework to deal with every
aspect of every loan, from assessing risk to pricing.
MDLF 2.0 explodes the single loan pool logic with a new “Family
of Funds”.
Under the Family of Funds, each fund is designed to meet a distinct
objective, with its own risk profile, definition of qualified borrower,
eligible countries, pricing, financing conditions and fundraising
framework.
To start, the Family of Funds will consist of:
-
General
Loan Fund: Incorporating our current standard loan
requirements, this Fund will continue serving the financing needs of the kinds
of clients and projects MDLF has serviced since its inception.
- High-Risk
Country Fund: This Fund explicitly assumes a higher level of
country risk than we have generally accepted to date. It opens the door to
providing loans in countries with weak rule of law, recent or ongoing conflict,
fragile media economies or similar high “external” risks.
- High-Risk
Project Fund: This Fund explicitly assumes a higher level of
project risk than we have previously accepted.
It will allow financing of more speculative ventures, such as new
business models, start-ups, projects facing difficult competitive environments,
or similar high “internal” risks.
- Affiliates
Fund: A
cornerstone of the new business model is our plan to nurture the start-up
of small, locally-based media loan funds that can service projects too
small or simple to justify MDLF’s direct involvement. With the Affiliates
Fund, we will provide financing for these Affiliate Loan Funds, alongside
oversight, training and technical assistance, following the model of our pilot
efforts in Indonesia
and Russia.
- Equity
Fund: With this Fund we will continue our
program-related equity investments.
- Cash-Flow
Fund: The Cash Flow Fund enables select clients to
cover their immediate cash needs, with a highly expedited “fast track”
application process.
Most of these funds have already been piloted with real
projects as we experimented at the limits of our existing model. With the
Family of Funds, we have taken these “exceptional cases” and evolved our model
so that it can comfortably meet the wider needs of independent news outlets
that these cases exemplify.
We can fund projects of a size and scope – both bigger and smaller
– that we previously could not assist. We can also responsibly taking on more
risky projects and work in more risky countries without exposing regular
funders and investors to greater risk: the High-Risk Project and High-Risk Country
funds will be funded exclusively by grants and recoverable grants from funders
who wish to support projects with riskier profiles.
We will be able to innovate new financial products to
meet many more needs of independent news organizations and help funders better
meet their funding priorities. And as we will launch new Funds each year and
close redundant ones, we will be able to respond quickly to the changing
financing needs of independent media.
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