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July 26, 2011 > California FreshWorks Fund

California FreshWorks Fund

Public-private loan fund provides blueprint for access to healthy food for under-served communities

Submitted By Lauren Armstrong

In an announcement ceremony on July 21, 2011, at the White House, First Lady Michelle Obama announced an innovative healthy food financing initiative - the California FreshWorks Fund (CAFWF). A project of The California Endowment and an all-star team of partners, FreshWorks is a $200M public-private partnership loan fund created to increase access to healthy, affordable food in under-served communities, spur economic development and inspire innovation in healthy food retailing.

According to Social Compact, a non-profit organization breaking down barriers to investment in inner-city neighborhoods, California cities with the greatest market opportunity include Modesto, Stockton, San Bernardino, Huntington Beach, Rancho Cucamonga, Fremont, Santa Rosa, Sacramento, Pomona, Fresno, San Francisco, Garden Grove, San Jose, San Diego, Los Angeles, Ontario, Santa Ana, Oceanside and Irvine.

The First Lady celebrated the fund's launch by inviting partners involved in the initiative to the White House for a healthy foods summit with corporate and industry leaders. Mrs. Obama, a vocal advocate for healthy food access, highlighted the work of the CAFWF and of those involved in its development.

The CAFWF is modeled after the successful Pennsylvania Fresh Food Financing Initiative and developed to align with the National Healthy Food Financing Initiative. The fund will make communities across California healthier by working directly with grocers to develop new and improved places to buy nutritious food. According to CAFWF partners, the new stores are expected to create or retain around 6,000 jobs in California.

"Health happens in our neighborhoods. Families can't eat healthier food if they can't buy it where they live," said Robert K Ross, M.D., president and CEO of The California Endowment. "The sheer number of banks and other investors involved proves this is not only the right thing to do to improve the health of our communities but it's financially attractive. The more than a dozen partners who made it happen should be congratulated for their vision and collaboration."

"Independent grocers by nature are entrepreneurial and opportunistic and, as a group, have always been willing to open neighborhood-oriented grocery stores in under-served communities passed over by the large chains," said Al Plamann, Chief Executive Officer of Unified Grocers, a retailer-owned wholesale grocery distributor that supplies independent retailers throughout the western United States. "While everyone agrees it will take many years to provide all Californians with easy access to healthy, affordable foods, FreshWorks is positioned to make significant progress in the years ahead and, in partnership with strong independent grocers, I'm confident the program will be one of the most successful in the country."

Perhaps the most fascinating piece of the FreshWorks announcement is the groundbreaking coalition of grocers, major banks, health care entities, research experts and other partners that came together to solve a problem. The complete list includes: The California Endowment, NCB Capital Impact, NCB, Unified Grocers, California Grocers Association, Kaiser Permanente, Catholic Healthcare West, Calvert Foundation, Social Compact, Emerging Markets, PolicyLink, JP Morgan Chase, Morgan Stanley, Bank of America, U.S. Bank, Community Health Councils, The Reinvestment Fund and Community Redevelopment Agency of the City of Los Angeles.

"This partnership exemplifies an innovative, integrated approach among industry leaders in philanthropy, industry, and the community," commented Peter Barker, Chairman of California for JP Morgan Chase.

The fund will provide financing to grocery stores and other healthy food retailers and distributors who meet a subset of skillfully developed program guidelines designed to move healthy food retailing forward in an affordable and accessible way and prioritize healthy choices from top to bottom. CAFWF program guidelines are different from and go further than other previous efforts. For example, projects will get priority points if they do not sell cigarettes, have a higher proportion of healthy food retail, eliminate junk food aisles, etc.

Seed stage financing from The California Endowment included a $30M mission-related investment on the debt side and a $3M grant. In a matter of months the fund grew to $200M committed from prominent investors like NCB, Kaiser Permanente, JP Morgan Chase and others who feel strongly about the model and believe in its potential to transform under-served communities into communities of opportunity.

"It's ironic that some communities have an overwhelming need for access to healthy foods in a state that is one of the largest agricultural producers in the country", said Terry Simonette, President & CEO of NCB Capital Impact, the non-profit community development financial institution that serves as the program administrator of the CAFWF. "The California FreshWorks Fund brings together an exceptional combination of private and non-profit partners to deliver a market-based solution to this problem in the absence of public subsidy."

With trusted partners, encouragement from issue leaders like the First Lady, innovations in program guidelines and $200M, the CAFWF is poised to bring healthy, affordable food to the millions in California who live in critical food access areas.

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