Terzo Valore, the Italian way to
crowdfunding:
high social value, low interest rate,
no risk
Social Entrepreneur Have your say!
"Innovative financing for social enterprises: Crowdfunding,
Social stock exchanges and Social Impact Bonds”
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What Terzo Valore* is
www.terzovalore.com is a Web platform to attract social
involvement and to reduce the cost of funding with no risk
for the lender
Nonprofit organizations (NPOs) can post their projects and
turn to the «crowd» to raise the money needed to finance
them. The crowd may contribute with loans (or donations)
(*) Terzo Valore belongs to Banca Prossima and it is therefore regulated by the Bank of
Italy and Consob - Italian & Securities and Exchange Commission – for its operations
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How does Terzo Valore work
 Banca Prossima commits to finance up to 100% of the project at market rates.
 Terzo Valore makes two-thirds* of the total loan available to be taken up by
«social bankers», i.e. people or organizations that lend or donate to the NPO.
In case of default of the borrower, Banca Prossima guarantees through the
NPO the full repayment to the “social bankers” (i.e. loans are fully protected)
 The NPO has an opportunity to showcase its initiatives widely and to let its
supporters choose the amount and the interest rate on the funds they lend
(actually the NPO states a maximum rate which it is willing to pay to the lending
«crowd»). «Social bankers» can choose also a lower or «zero» interest rate,
with no risk
 The average interest rate (banks +«crowd») paid by the NPO dramatically
reduces
* Maximum limit recommended by the Bank of Italy
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Terzo Valore – roles & rules
Banca Prossima:
 Checks the NPO’s project’s creditworthiness and sets up credit lines
 Posts the project on www.terzovalore.com
 Defines the amount that it finances directly, depending on the amount raised via Terzo
Valore
 Takes care of all legal and tax aspects connected to the loan in the name and on behalf
of the NPO
The client (NPO):




Presents the project to the bank
Provides publishable documents
Promotes fundraising amongst its supporters
Reports the progress of the financed project
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Terzo Valore – Main advantages
Terzo Valore’s main advantage is the opportunity to raise money from two sources :
loans with smaller cost than standard bank rates (and/or donations)
 Sustainable cost: the lender may opt for lending at any interest rate (including zero),
not greater than the maximum rate set by the NPO
 Opportunity to reduce debt: donations can cover part of the total financing needs
 Simplicity: Terzo Valore portal (www.terzovalore.com) automates payments
 Transparency: the updated situation of the project and the funding is always on the
website
 Support: Banca Prossima provides consultancy, general support toward project setup
and publication, and management of loans from «crowd» lenders
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Terzo Valore – Main achievements since June 2012
 35 completed projects and 22 in pipeline
 Main area:
Main source of funding:
Average amount funded:
social and health care (50%),
loan (in 40% of cases, maturity is 10 years)
over 350,000 €
 Value of completed projects:
€5,980,000
 Total social lending amount:
Total donations value:
€2,651,000
€537,000
 520 lenders and 84 donors
 More than €500,000 interest charges will be saved by clients over their loans’ maturity
 Average interest rate required by social bankers: 0,96% (range 0% - 3%)
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Social lending
1. Social lending is an effective financial instrument for social business. It is
less expensive than standard loans, it facilitates liquidity and complements
donations. It is important to minimise the financial risk borne by personal
lenders in order to generate an high interest about social lending.
2. In the countries where NPOs are not allowed to pay out dividends, a
«secured» crowdfunding is the only possible direct way to invest in the
social sector with a financial return
3. Social lending could be also enforced by a public/private system of
guarantees (i.e. whereby European financial instruments -under such
initiatives as EaSI’s Axis III or Creative Europe’s guarantee facility- fund a
pool of money to be used as collateral.)
4. Social lending needs a soft regulation without too many constraints. A tax
regulation with fiscal benefits for investors and social enterprises would
strongly enhance the development of the social business
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Social lending
5. «Secured» social lending with the participation of a financial institution
taking charge of the assessment process could increase public confidence,
which would translate in a rise of the number of investors and average value of
loans (and/or donations)
6. A second stage of development of social lending activity could also involve
using social lending alongside other types of financing (bonds, equities,
institutional donations, government transfers …). This is most easily
accomplished by, for instance, supplying funds for guarantee schemes on
condition that the project is co-financed by some of the above sources. The
same objective can also be pursued in reverse, for instance by conditioning
European social funds use to the simultaneous fundraising through CF
platforms
7. Social lending empowers social enterprises but it is also an instrument of
community building and involvement for the common good
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Fostering of youths
in order to cover
their educational
needs and develop
in them an
appreciation of the
beauty of life
06/01/2012
Euro
Project total amount
900,000
social lenders at 1.57% interest rate
600,000
bank at 5.78% interest rate
300,000
Maturity
year
10
Mixed interest rate
Interest cost saving
2.9%
estimated yearly average
Total interest saving
16,000
160,000
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Serving local
community (from
young to aged
people)
02/20/2013
Euro
Project total amount
900,000
social lenders at 0.594% interest rate
bank at 3.63% interest rate
Donation
Maturity
300,000
359,500
year
10
2.27%
Mixed interest rate
Interest cost saving
240,500
estimated yearly average
Total interest saving
11,000
110,000
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Education (from
nursery to high
school)
05/14/2013
Euro
Project total amount
750,000
social lenders at 0.23% interest rate
450,000
bank at 7.12% interest rate
148,450
Donation
Maturity
33,050
year
10
Mixed interest rate
Interest cost saving
2.65%
estimated yearly average
Total interest saving
11,500
115,000
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Assistance for
local
disadvantaged
people
12/19/2013
Euro
Project total amount
350,000
social lenders
bank
at 0% interest rate
182,000
at 6.8% interest rate
151,630
Donation
Maturity
16,370
year
10
Mixed interest rate
Interest cost saving
3.09%
estimated yearly average
Total interest saving
7,500
75,000
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New school in
Uganda
07/11/2013
Euro
Project total amount
social lenders
300,000
at 0.329% interest rate
bank at 5.125% interest rate
Donation
Maturity
99,000
12,000
year
10
Mixed interest rate
Interest cost saving
189,000
1.97%
estimated yearly average
Total interest saving
5,000
50,000
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