CREATING NEW FINANCIAL MARKETS AND PRODUCTS FOR ASSISTIVE TECHNOLOGY LENDING
AT ACT ENTITIES ANNUAL CONFERENCE JULY 14-15, 2014
FUNDING INNOVATIONS
PRESENTERS
Michael Morris DirectorNational Disability Institute
John Nelson DirectorWall Street Without Walls
Joey Wallace DirectorRESNA Catalyst Project
OVERVIEW
I. Challenge
II. Build Solutions
III.Who We Are
IV.Next Steps
I. CHALLENGE
•Over 50 percent of assistive technology users need financial assistance to acquire the technology and training assistance to use it.• There are more than 21,000 assistive technology devices currently available• Funding remains the greatest barrier to AT acquisition
ASSISTIVE TECHNOLOGY DEVICES AND SERVICES
• An AT device is any item, piece of equipment or product system, whether acquired commercially off the shelf, modified, or customized, that is used to increase, maintain, or improve the functional capabilities of all persons with disabilities.
• An AT service is any service that directly assists an individual with a disability in the selection, acquisition, and use of an assistive technology device. The term includes evaluation of needs, purchasing, leasing or assisting in acquisition, selection, design, fitting customizing etc., coordination of therapies in program planning, training and technical assistance for the consumer, family or professionals.
CURRENT STATE OF AT LOAN FINANCING
• Currently 36 Programs across 32 states and 4 U.S. Territories
• Each program reflects variations in Lead Agencies, Loan Models, and Lender Relationships
• Types of Loan Models: Direct, Buy-Down, Guarantee, Non-guarantee
CURRENT STATE OF AT LOAN FINANCING
• Federal requirement that programs be sustainable and function in perpetuity • Many programs have expanded their capacity to
include asset development, individual retirement accounts, credit counseling and beyond• Opportunities for additional federal funds have
been limited while both the consumer need and AT advances grow • Annual reporting is provided on specific data
elements to federal government
CURRENT STATE OF AT LOAN FINANCING
Loan Activity Across All States and YearsPrevious Years FY 2012 FY 2013 Total ProgramLoans 2001-2010Value 2001 - 2011 Loans MadeValue of Loans Loans MadeValude of Loans Loans MadeValue of Loans
Total 12509 138,112,216$ 1252 12,821,420$ 953 8,813,998$ 16033 174,554,558$
CURRENT STATE OF AT LOAN FINANCING
Types of AT Purchased by Borrowers FY 2012 FY 2013
Type of DeviceNumber of Devices
% of Total Loans
Dollar Value of Loans
Number of Devices
% of Total Loans
Dollar Value of Loans
Vehicle Modifications 527 41% 10,051,661$ 373 38% 6,516,993$ Hearing 416 32% 1,445,549$ 341 35% 1,240,978$ Environment 89 7% 641,864$ 75 8% 523,827$ Mobility 87 7% 354,173$ 65 7% 264,717$ Computer 61 5% 82,327$ 38 4% 40,075$ Vision 36 3% 51,034$ 30 3% 37,580$ Daily Living 43 3% 111,691$ 27 3% 100,946$ Recreation 22 2% 71,640$ 17 2% 68,369$ Speech 7 1% 8,008$ 10 1% 10,611$ Learning 4 0% 3,473$ 6 1% 9,902$ Other 0 0% -$ 0 0% -$ Total 1292 1 12,821,420$ 982 8,813,998$
CURRENT STATE OF AT LOAN FINANCING
Type of Disability Addressed by AT Purchased by Borrowers FY 2012 FY 2013
Number of Loans
% of Total Loans
Number of Loans
% of Total Loans
Getting around/Mobility 881 45% 541 43%
Hearing 462 23% 338 27%
Interacting with Others, Socializing 302 15% 186 15%
Learning New Information 97 5% 46 4%
Seeing 48 2% 34 3%
Talking/Communicating 95 5% 49 4%
Handling Objects, Reaching 70 4% 61 5%
Remembering 22 1% 10 1%
Total 1977 1265
CHALLENGES FACING LOAN FINANCING PROGRAMS INCLUDE:
• Decreasing Principal and Sustainability
• Lender relationships
• Limited staffing and infrastructure
• Marketing and Outreach
NEW THINKING
• Can technology creatively launch a new online marketplace that connects those in financial need with loans that offer a lower cost of borrowing?• Can impact investors be enlisted to attract new
capital to make AT loans more available and affordable?• Can existing AT loan programs be made more
efficient by standardizing loan documents and underwriting procedures?• Can a secondary market be created that bundles
AT loans and attracts new investors that enhances the availability of capital?
II. BUILD SOLUTIONS
The Financial Innovation Project is anchored by:
•Wall Street Without Walls•National Disability Institute•RESNA Catalyst Project•Pennsylvania Assistive Technology Project•Washington Access Fund
II. BUILD SOLUTIONS
Financial Innovation Four Objectives:1.Identify barriers to meeting target audience needs for AT and home and vehicle modifications that makes financing more available and affordable.2.Improve understanding of current strengths and challenges of available financing options and public and private sector relationships.3.Brainstorm additional financing options including but not limited to expanded access to capital, new sources of impact investment, loan guarantees, securitization, and reframing relationships between manufacturers, lenders, and borrowers.4.Establish a working group(s) to continue the discussion and develop solutions.
II. BUILD SOLUTIONS
• Convened Think Tank session at Kaye Scholer in Washington, DC on November 14th
• Participants included representatives of:• White House Office of Social Innovation• Consumer Financial Protection Bureau (CFPB)• Rehabilitative Services Administration (RSA)• National Cooperative Bank (NCB)• National Federation of Community Development Credit
Unions• Community Reinvestment Fund• Ten Alternative Finance Programs (AFP)• Assistive Technology Industry Association (ATIA)• National Mobility Equipment Dealers Association (NMEDA)
III. MEETING FACILITATORS
•National Disability Institute
•Wall Street Without Walls
• RESNA Catalyst Project
NATIONAL DISABILITY INSTITUTE
• Established in 2005• Exclusive focus on building a better economic
future for individuals with disabilities• Leverages power of public-private sector
collaboration• Real Economic Impact Network• Assisted over 1.9 million low income taxpayers
with disabilities access over 1.5 billion dollars in tax refunds• Promotes asset building strategies through
training and technical assistance with the Disability Employment Initiative (DEI) in 25 states• Lead: Michael Morris
WALL STREET WITHOUT WALLS
Mission & Key Achievements•Founded in 2000, by Greg Stanton, a retired investment Banker•Connects Community Development non-profits and municipal agencies with investment bankers and structured finance experts•Creates versatile, well-structured financing options for catalytic development projects•Leverages large advisory board: leaders from investment banking, CDFIs, government, philanthropy, law, academia•Builds lasting change by mitigating market entry risk for both NGOs and Wall Street professionals, creating long-term partnerships
Accomplishments
Facilitated $1 Billionin CED Transactions
75-Member Board200 Volunteers
10,000 contacts in WSWW Database
Trained2000 professionals,
1000+ organizations
Partnerships with Nat’l Intermediaries, Federal Reserve Bank
$5mm raised in Foundation Support
CONSULTING & FINANCE TECHNICAL ASSISTANCE
• FTA Teams
• Teams of 5-10 investment bankers providing financial technical assistance ideas to structure solutions through conference calls, conferences, and site visits when necessary
• Constructive feedback on bond financing, securitization, and other debt or equity instruments
• Contacts to finance, foundation, and government professions
HISTORY OF WSWW FINANCIAL INNOVATION
• Advised Community Reinvestment Fund on first rated community development securitization. Completed $1B in rated securities.
• Designed products:– Community development financial insurance concept– Individual Tax ID Mortgage Securitization
• Identified opportunities to leverage underutilized municipal assets—REO, tax foreclosed properties, vacant lots
• Promotes Impact Investments by insurance companies, pension funds, foundations, endowments, and individual investors
• Assisting municipalities leverage infrastructure financing from impact investors for social and environmental innovations
• Promoting assisted technology lending at scale with National Disability Institute and national partnership
FUNDING PARTNERS & COLLABORATORS
RESNA CATALYST PROJECT
• Funded under a five year grant from the US Department of Education
• Provide technical assistance to state AT projects and the 36 Alternative Financing Programs
• Lead: Joey Wallace
NOVEMBER 14 MEETING HIGHLIGHTS
Greatest Challenges to Affordable AT Loans:•Cost of small loans•Access to capital•Credit scores and history of potential borrowers•Bank fears of negative publicity if borrower defaults and technology is repossessed•Limited marketing and outreach capacity•Sufficient loan volume to be bundled and securitized•Lack of standardized documentation across AFPs
NEXT STEPS
Created Three Working Groups:•Marketing and Outreach•Technology•Access to Capital
SECURITIZATION
• Financial assets with similar performance characteristics and predictable cash flows are pooled and packaged into securities for purchase by investors• Repayment relies on performance of
financial assets
SECURITIZING OR CREDIT ENHANCING ASSISTED TECHNOLOGY LENDING
• Promoting assisted technology lending at scale with National Disability Institute, RESNA and other partners
• Develop standardized loan documentation, credit levels, performance data to access impact investors
• Increase lending capacity by non-profits, public agencies, commercial banks, and any others for AT products
• Lower costs for borrowers and expand size of loans• Improve opportunities, productivity, quality of life for
disabled• Credit enhancements from manufacturers and
vendors• Appeal to impact investors: insurance companies,
pension funds, university/foundation endowments, individuals
• Create “flow model” of lending through at scale
EXAMPLES OF ASSETS THAT HAVE BEEN SECURITIZED
• Home mortgages• Auto loans• Student loans• Leases• Time shares• Death benefits• Commercial loans• Insurance premiums
HISTORIC ISSUER BENEFITS
• Efficient growth and leverage• Risk transfer• Reduce funding costs
HISTORIC CUSTOMER BENEFITS
• Expands access to credit• Lowers cost of credit• Increases the variety of credit available• Increases competitions among lenders
WHO BUYS SECURITIZATIONS?
• Banks• Insurance Companies• Pension Funds• Corporations• Impact Investors
INVESTMENT PRODUCT CONTINUUM
Charitable Funding Market Financing
Source: F.B Heron Foundation, Community Reinvestment Fund
Grants
Eq
uit
y
Sh
are
hold
ers
&
Loan
s
Loans
Cash
Below-Market Investments
Gua
rant
ees
Priv
ate
Equ
ity
Public E
quity
Fixed
Inco
me
Cash
Market-Rate Investments
PRIsCommunity Impact Note
LIHTC InvestmentsAsset-Backed Securities
LIHTC Investments
Equity EquivalentInvestment
Leveraging Underutilized
Assets for Collateral
“Unsecured”Financing
IV. NEXT STEPS
• Create a Financial Innovation Group of Advisors• Explore feasibility of securitization• Explore feasibility of a cooperative to
improve efficiencies• Meet and brief White House Office of
Social Innovation
IV. NEXT STEPS
You Can Become Involved:
•Join a Working Group•Help Define the Current Market•Offer Financial Innovation Ideas
IV. NEXT STEPS
The Next Twelve Months:
•Identification of impact investors•Establish Financial Volunteer Advisor Team•Pilot and test financial innovations
IV. NEXT STEPS
For more information, please contact:
•Michael Morris(202) [email protected]
•John Nelson(703) [email protected]
•Joey Wallace(703) 524-6686, ext. [email protected]
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