A new Island-focused ­investment fund has been launched to fill the funding gap for social enterprises and ­non-profit organizations that want to expand their reach and enact innovative programs that help the community.

The Thrive Impact Fund, launched by the Victoria-based Scale Collaborative, which provides non-profit organizations with coaching and consulting services, will offer a variety of funding options for social enterprises and non-profit organizations that have had to look beyond traditional financing options.

Thrive’s ultimate goal is to establish a $10-million purse that will fund 10 to 15 projects each year with loans of between $50,000 and $400,000. About $1 million has been secured and Thrive is courting investors.

Kristi Fairholm Mader, a director at Scale and lead for the Thrive Impact Fund, said they are looking for institutional investors, foundations, family organizations and high-net-worth individuals looking to make a greater impact with their investments. The fund will pay an annual dividend.

Fairholm Mader said the ­venture is designed to help social-enterprise and non-profit groups clear barriers such as collateral requirements that keep them from ­accessing ­capital through traditional ­lenders.

She said the fund will provide early-stage capital that will allow organizations to grow, establish programs and revenue streams and eventually start paying back loans and access larger deals.

“Social-impact organizations don’t have access to equity, which for a lot of businesses gives them space and time for them to grow and build revenues to pay back investors.”

Instead, Thrive may offer a loan that is paid back through a share of revenue, or through a flexible program that does not expect payments until a few years into the deal, at which point the payment amounts are higher and more frequent, and pay down the outstanding ­principal.

Fairholm Mader said it’s about the right capital in the right place at the right time, adding the company has learned already it will need to be ­flexible in how it applies its funding models and terms to each client.

The idea for the fund came to Scale Collaborative after years of seeing groups with great ideas requiring a long time to raise money to get started.

Fairholm Mader said because they are a fund rather than a financial institution, they have flexibility in the way they lend money. “It allows us to co-invest with more traditional financers and take some of the risk.” The risk is actually very low, she said. “The barrier to capital is a perception of risk rather than real risk.”

Fairholm Mader said the track record of non-profits ­paying back loans is excellent.

“They are very risk-averse, very steady and thoughtful when they take financing,” she said, adding that because they work in the community, their work relies on their reputation and relationships.

To qualify for this kind of financing, social enterprises or non-profits must demonstrate that they create positive social, environmental or cultural benefits on Vancouver Island, though Thrive will also take into account positive ­economic impact and job creation.

Thrive is an evergreen fund, meant to continue long-term, and when funds are paid back, they are recirculated to other organizations in new loans.

“We reinvest those dollars continually, so a dollar may be invested three times in the first term,” she said.