Please analyze the following option analysis:

Decision Criteria	Option 2: Status Quo with New Partner and Facebook Advertising?
Cost
Profit
Maintain at least 97% loan repayment rate from 2018 to 2023.
Grant 200% increase in the total number of microloans starting in 2018 till 2023.
Increase non government funding sources to be at least 30% of revenue by 2023.
Increase total funding by 187% to reach more professional immigrants starting in 2018 till 2023.
Impact of failure
Probability of failure

A grassroots organization, IAF Canada, was established in 2004 by a group of community activists who saw the need to help Canadian newcomers restart their careers by offering microloans to pay the costs associated with reaccreditation and training. In the beginning, the organization lacked access to the capital required to extend loans to clients, so a small group of Calgary-based business leaders, entrepreneurs, and philanthropists stepped up and became line-of-credit guarantors, thereby providing access to the capital required to provide IAF Canada's first microloans. While IAF Canada's initial focus was on women, it quickly became apparent that immigrant men also required support. IAF Canada first opened its doors in 2005 in Calgary, then expanded to Edmonton in 2007; as demand grew in 2012, an office was established in Saskatoon, followed by a location in Toronto in 2016. Providing microloans was an important first step to helping newcomers, and at the same time, it contributed to Canada's economic and social success by addressing skilled worker shortages in various provinces. As a registered charity considered by many to be a social enterprise, IAF Canada provided low-interest microloans of up to $10,000 to internationally trained immigrants and refugees so they could resume their careers in their chosen fields. Once approved, a microloan paid for exams, training, qualification assessments, accreditation, professional association fees, books, living allowances, and other expenses related to obtaining the required credentials or training. Hepburn was hired in 2017 as the organization's first CEO; however, several issues had arisen that jeopardized the organization's future. While the demand for loans was steady, the organization had repeatedly failed to hit its growth targets in new loans over the past few years. At the same time, IAF Canada had little experience in fundraising charitable donations and grants from the private sector, a common activity among registered charities in Canada. Working in concert with key staff, by September 2017, Hepburn was ready to set a plan in motion to assess demand and opportunities for growth, along with brand positioning. While demand for services continued to grow, it had become clear the IAF Canada brand was dated and no longer represented what the organization had become. With the support of LIFT Philanthropy Partners, a brand review was undertaken which assessed where the organization had been, where it was headed, and how it should be positioned going forward. Building on research and results from focus groups, interviews, and concept tests, Hepburn, her team, and the board unveiled IAF Canada's new name, brand, and vision to thought leaders and influencers from Canada's private, public, and non-profit sectors. Its new name, Windmill Microlending, and tag line, Converting Potential into Prosperity," supported the organization's new vision: Our vision is for every newcomer to reach their economic potential. We believe the economic integration of new Canadians is key to Canada's success and prosperity. Consistent with the organization's new name and brand, Hepburn and her board had laid out an aggressive growth strategy for the next five years. The plan was ambitious in forecasting an almost three-fold increase in the loan portfolio by 2022. Moreover, it was recognized that this was an interim step toward achieving a 10-fold increase in the longer term (see Exhibit 1). CURRENT SITUATION From its inception to March 31, 2017, WM approved close to $20 million in loans to almost 3,000 clients originating from countries around the world. In spite of low brand awareness over the years, WM continued to build its reputation and was recognized as Canada's largest microlending charity serving immigrants, refugees, and asylum seekers. With funding from the government, foundations, and, to a lesser extent, private donors, the charity played an important role in helping Canada's skilled immigrant and refugee talent pools to be employed in their fields of expertise. The loan program was a Canadian success story that improved employment outcomes for clients, who reported a two- to three-fold increase in income by the time a loan was repaid. With a loan repayment rate of 97 per cent, close to 75 per cent of loan recipients were employed in their chosen field by the time their loans were repaid. To be eligible for a WM loan, successful applicants needed to demonstrate that they were internationally trained professionals, skilled workers, or certified tradespeople living in Canada (except Quebec) and that they were recognized as a permanent resident or a convention refugee. Furthermore, it was expected that prospective clients would seek employment in the same or a similar field in which they had practised prior to their arrival in Canada. Hepburn reflected, The simplicity of our model has such a beauty to it, and is so compelling at the same time! It resonates with people with different values, whether you are interested in social justice, immigration issues, Canada's economy, decreasing national debt, creating prosperity, or education. There really is something in it for almost everyone LOAN ADMINISTRATION The application process began with a prospective client completing an eligibility assessment. If the assessment indicated a potential client was ineligible, the applicant could follow up with a staff member to determine why the application was disqualified. If eligible, a prospective client contacted WM to set up an account, complete an application, and provide copies of supporting documentation. Upon receipt, staff reviewed the application and related records, and, if required, prospective clients were contacted for more information. If the application review process was successful, prospects received an email to book a coaching meeting that was conducted over Skype or in person if the applicant lived in Calgary, Edmonton, or Toronto. Led by one of WM's success coaches, the coaching meeting took close to an hour, during which time, clients provided background information, a draft learning plan, and a summary of their financial situation. At this time, the coach provided an explanation of the loan payment terms and conditions. Following the meeting, the success coach prepared a summary report of the application and recommended approval or denial. Subsequently, a loan committee representative contacted the prospect and advised whether the application was approved or declined. Upon signing the loan documents, the success coach arranged for the disbursement of funds to the client. Each client was required to provide references, demonstrate initiative, have in place a strong licensing and learning plan, and be prepared to repay the loan. A signed promissory note was required, and funds were provided as individuals progressed in their learning plan. A repayment schedule was established, and payments were drawn automatically from the client's bank account monthly. While clients were eligible to borrow up to $10,000, the typical loan was approximately $7,000, and the loan repayment was based on a fixed rate of interest. The loan repayment schedule was dependent on the time frame stipulated in the learning plan. Once a loan was approved, payments were scheduled in two phases. Phase one included the payment of interest only, which occurred as the client completed the licensing/learning plan, with a maximum of two years before repayment was required to begin. Phase two included the payment of principal and interest for the subsequent two years. Payment of interest started only in the month after the client received the first installment of loan funds and was calculated according to the amount borrowed at that time. Approved clients could start making principal payments within 90 days of approval if they had found employment in their field, had completed the licensing/learning plan, or had chosen not to complete the licensing/learning plan. At any time and without penalty, loans could be paid in full, meaning that all principal, interest, and any additional charges incurred against the loan were received. While neither processing nor administration fees were charged on approved loans, all loans were registered with a credit bureau so clients could start to build a personal credit rating. AN EVOLVING ORGANIZATION Since her arrival in February, Hepburn had spent time examining WM's performance, including what had worked and what could be improved on. At the same time, she had also considered how WM's organizational structure could be optimized to ensure that limited resources, both human and financial, were fully utilized. Recognizing that many of her staffing decisions over the past few months required personnel changes, Hepburn was mindful of the new skills and talent the organization required to move forward and be successful in the future. Hepburn recognized how well regarded the organization was among community partners and clients, both past and present. She also appreciated the importance of sharing client success stories to growing the client base and celebrating the achievements of Canada's newcomers. As a result, in June 2017, WM hired a manager of alumni relations, whose mandate was to nurture and continue to build relationships with WM's growing list of clients who had completed their loan repayment plan. At the same time, Hepburn also recognized the importance of marketing and sharing WM's story with current and prospective stakeholders. In July 2017, she hired a national director of marketing and communications based in Toronto. Another area of growing concern for Hepburn was WM's financial exposure and the realization that WM needed to streamline its lending and oversight processes sooner rather than later. As a result, and following a Canada-wide search, in August 2017, Hepburn was in a position to hire a national director of finance and risk, to be based in Calgary. The director she hired was not only a chartered financial analyst but, prior to joining WM, had also worked in the technology field as an entrepreneur. As a result, it was no surprise when the new director identified several improvement opportunities, including bringing loan administration in-house on a new technology platform to save money and improve management oversight and access to client information. With her recent hires and a new structure in place to meet the growing demand for services and to increase access to clients and funders, Hepburn felt sure WM was ready to move ahead (see Exhibit 2). At the same time, a focal point for Hepburn, her team, and her board was reducing the costs associated with loan administration. For example, rather than continuing to subcontract loan management and administration duties to another charity, WM chose to invest in loan management software and assumed the administration role at an estimated annual savings of $300,000. While loan administration costs had decreased since 2015, Hepburn and her new director believed WM had an opportunity to use technology to become even more efficient, while also mitigating risks related to security, privacy, and potential cyberattacks. While face-to-face prospect meetings had already been replaced with Skype interviews to screen potential clients, discussions were underway to test software packages to enhance customer relationship management and to identify accounting packages that were more responsive to governments and funders' reporting requirements. Another key challenge facing Hepburn and her team concerned the diversification of funding sources. Historically, WM had relied on a small number of funders, including the provincial and federal governments, which provided the majority of the organization's operating funds. Similar to many Canadian charities, WM's business model was highly reliant on government and foundation grants and, to a lesser extent, the interest charged on loans extended to clients. While grants covered most of the operating costs, interest charges on loans covered the fees associated with loan defaults and the cost of borrowing money that was lent to clients (see Exhibit 3). Because these revenue sources were pivotal in supporting WM's current operating structure, Hepburn and her team were also keen to identify innovative pathways to generate additional revenue sources to support WM's long-term vision. Hepburn had spent considerable time evaluating staff and recruiting the right people, while at the same time ensuring the appropriate systems and processes were in place to support them. Because staff were located in various cities across Canada, training and support were important to ensuring open communication and a positive work environment. Indeed, throughout each step of the lending process, whether clients interacted with a loan administrator, a relationship advisor, or a learning plan specialist, each member of the WM team was committed to doing whatever was needed to ensure clients were successful in reaching their career goals, increasing their income, and repaying their loans. Hepburn's team understood the challenges that clients faced because several of her staff were newcomers themselves or had family members or parents who had immigrated to Canada. In fact, two employees had themselves been clients of the organization. Hepburn held the view that WM's competitive advantage was unique when compared with for-profit organizations operating in the newcomer lending space; the fact that the staff cared deeply for each client's long-term success and spent the time required to nurture relationships set WM apart from its competitors. With the right staff in place to deliver and administer loans, the next challenge that Hepburn faced was growing both the number of clients served and the number of loans approved each year. With the launch of WM's new brand, signature, and messaging to build awareness, the next issue WM faced was where and how to access the capital required for lending to new clients. It could choose from among several options, including approaching more individuals to become guarantors, establishing a social impact bond on the Social Venture Exchange (SVX), and issuing a community bond. A social impact bond was an outcome-driven investment instrument that enabled non-profit organizations to raise money from accredited investors based on achieving specified targets. Alternatively, a community bond was an interest-bearing loan that was available to unaccredited investors, often priced so that it was more accessible to community members who supported a non-profit or community organization. The foundational idea behind community bonds was that the people who were stakeholders in the organization or members of the community the organization served could invest in the assets that benefitted the community. Investors purchased a community bond at a fixed amount, a set interest rate, and for a predetermined term." Social finance and impact investing were relatively new phenomena in Canada. Impact investments created innovative pathways for investors to support and fund social enterprises, charities, and social purpose businesses by providing access to much-needed capital. Social finance instruments were usually structured to provide investors with a means to provide capital to non-traditional clients, while at the same time generating both a financial and social return, sometimes realizing a triple bottom line. The Government of Canada described social finance as a tool that mobilized private capital for the public good by creating opportunities for investors to finance projects that benefited society and supported organizations requiring new funding sources. One of the main advantages of community or social impact bonds was that they not only reduced the cost of borrowing by providing much-needed capital but also, in many cases, increased the visibility, reputation, and legitimacy of the organization that issued them." WM'S ROLE According to the Conference Board of Canada, learning recognition challenges had resulted in the unemployment and underemployment of Canadians (including newcomers), costing the country $13.4 billion$17 billion in lost earnings. In an effort to address this issue and as a partial solution, WM provided clients with loan advice to help them make informed decisions about taking out a loan, using the funds appropriately, repaying the loan, and securing employment in their chosen field. Clients received assistance in achieving their professional goals, navigating the Canadian finance and banking system, securing credit, and establishing a credit rating in Canada. Hepburn observed, Windmill [Microlending) is a mission-based charitable organization. We are not here to make money; we are here to see our clients be successful, and that is what drives us. We combine the financial services of a bank and the warmth and trusted advice of a community service organization. Our loan repayment rate has always been high and everyone around the table has always been deeply committed to the success of our clients. This consistency is the bedrock of our organizational values. Unfortunately, for some clients, the costs associated with training and accreditation were not covered by a $10,000 loan. Some professional designations, such as dentists and doctors, retraining and reaccreditation required more time and money, sometimes costing more than $50,000. As a result, WM was considering customizing its loan program ceiling and payback schedule for certain professions. For other clients, financial literacy and establishing a credit rating in Canada was problematic, and as a result, WM needed to consider collaborating with organizations that delivered complimentary services, such as teaching clients how to manage finances and schedule repayments. While WM was interested in expanding its loan portfolio, a risk-mitigation strategy was also very important to the organization's long-term success. Hepburn noted, Our goal is to diversify and have more geographic spread so our risk is limited, so we are not putting all our eggs in one or two economic baskets. Rather, if we have a basket that covers more regions across Canada, then that should reduce our overall risk. WM's mix of clients reflected a wide range of skillsets and training, and more than 50 per cent of clients identified themselves as healthcare professionals, including nurses, doctors, dentists, and physiotherapists (see Exhibit 4). In terms of country of origin, the majority of clients originated from India, the Philippines, and Nigeria (see Exhibit 5). One factor that contributed to a newcomer's decision to apply for a loan NEWCOMERS TO CANADA By 2011, one out of five people in Canada was foreign-born, due to federal government initiatives that addressed Canada's anticipated workforce shortages and aging population. In 2011, Canada reported a foreign-born population of approximately 6,775,800 people or 20.6 per cent of its total population, representing the highest percentage of foreign-born citizens among Group of Eight (G8) countries (see Exhibit 6). Between 2006 and 2011, approximately 1,162,000 foreign-born people immigrated to Canada, representing 17.2 per cent of the foreign-born population and 3.5 per cent of Canada's total population. 14 Refer to Exhibit 7 for 2016 census data by metropolitan area. In 2018, Canada's population approximated 37,100,000, with 4 provinces accounting for more than 32 million Canadians, or 86.4 per cent of the population: Ontario (38.6 per cent), Quebec (22.6 per cent), British Columbia (13.5 per cent), and Alberta (11.6 per cent). 15 In fact, Statistics Canada indicated that Canada's population growth was largely due to international migration, defined as the difference between the number of exits and entries (i.e., immigration, emigration, and the movement of non-permanent residents). For the period 20172018, international migration to Canada was the highest ever recorded in the country, accounting for 79.6 per cent of Canada's population growth. During this period, Canada welcomed 323,192 immigrants, including nearly 30,000 Syrian refugees and 165,728 non-permanent residents. Moreover, Statistics Canada forecasted that by 2036, Canada's immigrant population would reach between 24.5 per cent and 30 per cent of the country's total populationthe highest since 1871.17 MOVING FORWARD Hepburn and her team had numerous key decisions to make, recognizing that expansion was required in order to reach the growth targets. Hepburn knew that maintaining the status quo was not an option, but where should WM expand next, and what would be the best way to do it? Further, what might the priority area(s) be, and what should be their sequencing? At the same time, expansion would require increasing WM's lending capacity. What would be the best way to address the increased demand for additional loans due to WM's projected growth plan? Should WM increase the number of guarantors, or issue a social impact bond or a community bond? Were there other options that should be considered? How could WM diversify and expand its funding sources and revenue streams? In concert with the recommended action plan, how should WM articulate its Theory of Change, and how might it support its future direction? Whatever path Hepburn chose, she needed to decide quickly because implementation would take time. EXHIBIT 1: WINDMILL MICROLENDING'S FIVE-YEAR TARGETS, 2018/19-2022/23 New client targets Active loan portfolio Additional loan capital (in CA$) Total loan capital (in CA$) 2018-19 800 2,300 4,500,000 2019-20 1,000 3,000 5,900,000 2020-21 1,400 4,000 7,700,000 2021-22 1,900 6,000 10,000,000 2022-23 2,400 8,000 13,000,000 9,000,000 11,700,000 15,200,00 19,800,000 25,800,000 Source: Created by the authors using information from Windmill Microlending. EXHIBIT 2: WINDMILL MICROLENDING'S ORGANIZATION CHART, SEPTEMBER 23, 2017 CEO Toronto Executive Assistant Calgary Executive Assistant/Intake Toronto National Director Finance & Risk Calgary VP Stakeholder Relations Calgary National Director Marketing & Communications Toronto National Director Operations Saskatoon manager Alumuni Relations Manager Program Development Toronto Financial Administrator Calgary Manager Loan Delivery Edmonton Manager Loan Portfolio Calgary Outreach Toronto(1) Calgary (1) Loan Administrator Calgary (2) Loan Management Calgary (2) Digital Design Toronto(1) Loan Facilitator Toronto (1) Edmionton (1) Calgary (1) Loan Intake Calgary (2) Learning Plan Advisor Toror (1) Note: CEO = chief executive officer; VP = vice president. Source: Created by the authors using information from Windmill Microlending. EXHIBIT 3: WINDMILL MICROLENDING'S STATEMENT OF OPERATIONS, 2015-18 2015 Actual 2016 Actual 2017 Actual 2018 Plan 3,141,089 179,593 10,195 96,223 3,427,100 2,275,912 2,186,496 2,090,000 596,667 508,333 216,642 222,817 292,251 111,023 55,798 250,000 114,208 24,967 2,717,785 3,086,745 3,140,584 Revenue Government funding Foundation grants Interest Donations Other Total revenue Expenses Salaries and benefits Loan delivery & portfolio administration Office Bad debt Rent Advertising & promotion Professional fees Project costs Amortization Insurance Bank charges & interest Fund repayment Total expenses Excess (deficiency) of revenue over expenses 1,204,184 1,019,240 133,764 41,855 180,908 210,315 173,118 155,209 22,382 8,162 25,077 1,435,538 1,591,720 2,004,331 304,101 360,473 412,142 150,792 243,331 265,000 85,772 136,592 108,393 144,928 209,037 159,724 120,163 131,610 140,247 104,596 76,966 34,000 95,766 62,177 238,166 22,370 20,418 20,489 7,208 7,092 9,000 4,193 1,786 2,100 28,625 2,504,052 2,841,202 3,393,592 213,733 245,543 (253,008) 3,174,214 252,886 Source: Created by the authors using information from Windmill Microlending's audited financials as of March 31,2017. EXHIBIT 4: WINDMILL MICROLENDING'S CLIENT OCCUPATIONAL GOALS, MARCH 31, 2017 Profession Portfolio Mix Estimate (%) Dentists Nurses Physicians Pharmacists Physiotherapists Engineers Accountants Lawyers Software developers All other 16.3 11.2 10.4 9.6 5.6 5.2 3.7 3.0 2.0 33.0 New Loans Approved Actual (%) 15.6 12.8 10.5 7.1 6.0 4.5 4.5 2.9 1.2 34.9 Note: "All other" includes people working in education, finance, management, administration, transportation, and trades, as well as medical lab technicians. Source: Created by the authors using information from Windmill Microlending. The portfolio mix of active clients is an estimate, and the new loans approved numbers were based on cumulative data as of March 31, 2017. EXHIBIT 5: PORTFOLIO MIX AND NEW LOANS BY COUNTRY OF ORIGIN, MARCH 31, 2017 Country of Portfolio Mix New Loans Origin Estimate (%) Approved Actual (%) India 29.6 26.7 Philippines 14.1 17.1 Nigeria 14.6 13.8 Iran 7.7 6.9 Pakistan 1.1 6.0 Iraq 2.2 2.6 Egypt 2.5 2.4 Sudan 1.9 2.0 Bangladesh 2.0 1.7 1.9 1.7 All other 19.4 19.1 Syria Source: Created by the authors using information from Windmill Microlending. The portfolio mix of active clients is an estimate, and the new loans approved numbers were based on cumulative data as of March 31, 2017. EXHIBIT 6: FOREIGN-BORN POPULATION IN G8 COUNTRIES AND AUSTRALIA Country of Residence (Year) % of Foreign-Born Population in G8 Countries and Australia Japan (2000) 1.0 Italy (2009) 8.0 Russian Federation (2002) 8.2 France (2008) 8.6 United Kingdom (2010) 11.5 United States (2010) 12.9 Canada (2011) 20.6 Australia (2010) 26.8 Note: G8 = Group of Eight. Source: Created by the authors using information from Statistics Canada, Immigration and Ethnocultural Diversity in Canada: National Household Survey 2011, 7, 2013, accessed April 12, 2019, www12.statcan.gc.cahs-enm/2011/as-sa/99-010-x/99- 010-2011001-eng.pdf. A grassroots organization, IAF Canada, was established in 2004 by a group of community activists who saw the need to help Canadian newcomers restart their careers by offering microloans to pay the costs associated with reaccreditation and training. In the beginning, the organization lacked access to the capital required to extend loans to clients, so a small group of Calgary-based business leaders, entrepreneurs, and philanthropists stepped up and became line-of-credit guarantors, thereby providing access to the capital required to provide IAF Canada's first microloans. While IAF Canada's initial focus was on women, it quickly became apparent that immigrant men also required support. IAF Canada first opened its doors in 2005 in Calgary, then expanded to Edmonton in 2007; as demand grew in 2012, an office was established in Saskatoon, followed by a location in Toronto in 2016. Providing microloans was an important first step to helping newcomers, and at the same time, it contributed to Canada's economic and social success by addressing skilled worker shortages in various provinces. As a registered charity considered by many to be a social enterprise, IAF Canada provided low-interest microloans of up to $10,000 to internationally trained immigrants and refugees so they could resume their careers in their chosen fields. Once approved, a microloan paid for exams, training, qualification assessments, accreditation, professional association fees, books, living allowances, and other expenses related to obtaining the required credentials or training. Hepburn was hired in 2017 as the organization's first CEO; however, several issues had arisen that jeopardized the organization's future. While the demand for loans was steady, the organization had repeatedly failed to hit its growth targets in new loans over the past few years. At the same time, IAF Canada had little experience in fundraising charitable donations and grants from the private sector, a common activity among registered charities in Canada. Working in concert with key staff, by September 2017, Hepburn was ready to set a plan in motion to assess demand and opportunities for growth, along with brand positioning. While demand for services continued to grow, it had become clear the IAF Canada brand was dated and no longer represented what the organization had become. With the support of LIFT Philanthropy Partners, a brand review was undertaken which assessed where the organization had been, where it was headed, and how it should be positioned going forward. Building on research and results from focus groups, interviews, and concept tests, Hepburn, her team, and the board unveiled IAF Canada's new name, brand, and vision to thought leaders and influencers from Canada's private, public, and non-profit sectors. Its new name, Windmill Microlending, and tag line, Converting Potential into Prosperity," supported the organization's new vision: Our vision is for every newcomer to reach their economic potential. We believe the economic integration of new Canadians is key to Canada's success and prosperity. Consistent with the organization's new name and brand, Hepburn and her board had laid out an aggressive growth strategy for the next five years. The plan was ambitious in forecasting an almost three-fold increase in the loan portfolio by 2022. Moreover, it was recognized that this was an interim step toward achieving a 10-fold increase in the longer term (see Exhibit 1). CURRENT SITUATION From its inception to March 31, 2017, WM approved close to $20 million in loans to almost 3,000 clients originating from countries around the world. In spite of low brand awareness over the years, WM continued to build its reputation and was recognized as Canada's largest microlending charity serving immigrants, refugees, and asylum seekers. With funding from the government, foundations, and, to a lesser extent, private donors, the charity played an important role in helping Canada's skilled immigrant and refugee talent pools to be employed in their fields of expertise. The loan program was a Canadian success story that improved employment outcomes for clients, who reported a two- to three-fold increase in income by the time a loan was repaid. With a loan repayment rate of 97 per cent, close to 75 per cent of loan recipients were employed in their chosen field by the time their loans were repaid. To be eligible for a WM loan, successful applicants needed to demonstrate that they were internationally trained professionals, skilled workers, or certified tradespeople living in Canada (except Quebec) and that they were recognized as a permanent resident or a convention refugee. Furthermore, it was expected that prospective clients would seek employment in the same or a similar field in which they had practised prior to their arrival in Canada. Hepburn reflected, The simplicity of our model has such a beauty to it, and is so compelling at the same time! It resonates with people with different values, whether you are interested in social justice, immigration issues, Canada's economy, decreasing national debt, creating prosperity, or education. There really is something in it for almost everyone LOAN ADMINISTRATION The application process began with a prospective client completing an eligibility assessment. If the assessment indicated a potential client was ineligible, the applicant could follow up with a staff member to determine why the application was disqualified. If eligible, a prospective client contacted WM to set up an account, complete an application, and provide copies of supporting documentation. Upon receipt, staff reviewed the application and related records, and, if required, prospective clients were contacted for more information. If the application review process was successful, prospects received an email to book a coaching meeting that was conducted over Skype or in person if the applicant lived in Calgary, Edmonton, or Toronto. Led by one of WM's success coaches, the coaching meeting took close to an hour, during which time, clients provided background information, a draft learning plan, and a summary of their financial situation. At this time, the coach provided an explanation of the loan payment terms and conditions. Following the meeting, the success coach prepared a summary report of the application and recommended approval or denial. Subsequently, a loan committee representative contacted the prospect and advised whether the application was approved or declined. Upon signing the loan documents, the success coach arranged for the disbursement of funds to the client. Each client was required to provide references, demonstrate initiative, have in place a strong licensing and learning plan, and be prepared to repay the loan. A signed promissory note was required, and funds were provided as individuals progressed in their learning plan. A repayment schedule was established, and payments were drawn automatically from the client's bank account monthly. While clients were eligible to borrow up to $10,000, the typical loan was approximately $7,000, and the loan repayment was based on a fixed rate of interest. The loan repayment schedule was dependent on the time frame stipulated in the learning plan. Once a loan was approved, payments were scheduled in two phases. Phase one included the payment of interest only, which occurred as the client completed the licensing/learning plan, with a maximum of two years before repayment was required to begin. Phase two included the payment of principal and interest for the subsequent two years. Payment of interest started only in the month after the client received the first installment of loan funds and was calculated according to the amount borrowed at that time. Approved clients could start making principal payments within 90 days of approval if they had found employment in their field, had completed the licensing/learning plan, or had chosen not to complete the licensing/learning plan. At any time and without penalty, loans could be paid in full, meaning that all principal, interest, and any additional charges incurred against the loan were received. While neither processing nor administration fees were charged on approved loans, all loans were registered with a credit bureau so clients could start to build a personal credit rating. AN EVOLVING ORGANIZATION Since her arrival in February, Hepburn had spent time examining WM's performance, including what had worked and what could be improved on. At the same time, she had also considered how WM's organizational structure could be optimized to ensure that limited resources, both human and financial, were fully utilized. Recognizing that many of her staffing decisions over the past few months required personnel changes, Hepburn was mindful of the new skills and talent the organization required to move forward and be successful in the future. Hepburn recognized how well regarded the organization was among community partners and clients, both past and present. She also appreciated the importance of sharing client success stories to growing the client base and celebrating the achievements of Canada's newcomers. As a result, in June 2017, WM hired a manager of alumni relations, whose mandate was to nurture and continue to build relationships with WM's growing list of clients who had completed their loan repayment plan. At the same time, Hepburn also recognized the importance of marketing and sharing WM's story with current and prospective stakeholders. In July 2017, she hired a national director of marketing and communications based in Toronto. Another area of growing concern for Hepburn was WM's financial exposure and the realization that WM needed to streamline its lending and oversight processes sooner rather than later. As a result, and following a Canada-wide search, in August 2017, Hepburn was in a position to hire a national director of finance and risk, to be based in Calgary. The director she hired was not only a chartered financial analyst but, prior to joining WM, had also worked in the technology field as an entrepreneur. As a result, it was no surprise when the new director identified several improvement opportunities, including bringing loan administration in-house on a new technology platform to save money and improve management oversight and access to client information. With her recent hires and a new structure in place to meet the growing demand for services and to increase access to clients and funders, Hepburn felt sure WM was ready to move ahead (see Exhibit 2). At the same time, a focal point for Hepburn, her team, and her board was reducing the costs associated with loan administration. For example, rather than continuing to subcontract loan management and administration duties to another charity, WM chose to invest in loan management software and assumed the administration role at an estimated annual savings of $300,000. While loan administration costs had decreased since 2015, Hepburn and her new director believed WM had an opportunity to use technology to become even more efficient, while also mitigating risks related to security, privacy, and potential cyberattacks. While face-to-face prospect meetings had already been replaced with Skype interviews to screen potential clients, discussions were underway to test software packages to enhance customer relationship management and to identify accounting packages that were more responsive to governments and funders' reporting requirements. Another key challenge facing Hepburn and her team concerned the diversification of funding sources. Historically, WM had relied on a small number of funders, including the provincial and federal governments, which provided the majority of the organization's operating funds. Similar to many Canadian charities, WM's business model was highly reliant on government and foundation grants and, to a lesser extent, the interest charged on loans extended to clients. While grants covered most of the operating costs, interest charges on loans covered the fees associated with loan defaults and the cost of borrowing money that was lent to clients (see Exhibit 3). Because these revenue sources were pivotal in supporting WM's current operating structure, Hepburn and her team were also keen to identify innovative pathways to generate additional revenue sources to support WM's long-term vision. Hepburn had spent considerable time evaluating staff and recruiting the right people, while at the same time ensuring the appropriate systems and processes were in place to support them. Because staff were located in various cities across Canada, training and support were important to ensuring open communication and a positive work environment. Indeed, throughout each step of the lending process, whether clients interacted with a loan administrator, a relationship advisor, or a learning plan specialist, each member of the WM team was committed to doing whatever was needed to ensure clients were successful in reaching their career goals, increasing their income, and repaying their loans. Hepburn's team understood the challenges that clients faced because several of her staff were newcomers themselves or had family members or parents who had immigrated to Canada. In fact, two employees had themselves been clients of the organization. Hepburn held the view that WM's competitive advantage was unique when compared with for-profit organizations operating in the newcomer lending space; the fact that the staff cared deeply for each client's long-term success and spent the time required to nurture relationships set WM apart from its competitors. With the right staff in place to deliver and administer loans, the next challenge that Hepburn faced was growing both the number of clients served and the number of loans approved each year. With the launch of WM's new brand, signature, and messaging to build awareness, the next issue WM faced was where and how to access the capital required for lending to new clients. It could choose from among several options, including approaching more individuals to become guarantors, establishing a social impact bond on the Social Venture Exchange (SVX), and issuing a community bond. A social impact bond was an outcome-driven investment instrument that enabled non-profit organizations to raise money from accredited investors based on achieving specified targets. Alternatively, a community bond was an interest-bearing loan that was available to unaccredited investors, often priced so that it was more accessible to community members who supported a non-profit or community organization. The foundational idea behind community bonds was that the people who were stakeholders in the organization or members of the community the organization served could invest in the assets that benefitted the community. Investors purchased a community bond at a fixed amount, a set interest rate, and for a predetermined term." Social finance and impact investing were relatively new phenomena in Canada. Impact investments created innovative pathways for investors to support and fund social enterprises, charities, and social purpose businesses by providing access to much-needed capital. Social finance instruments were usually structured to provide investors with a means to provide capital to non-traditional clients, while at the same time generating both a financial and social return, sometimes realizing a triple bottom line. The Government of Canada described social finance as a tool that mobilized private capital for the public good by creating opportunities for investors to finance projects that benefited society and supported organizations requiring new funding sources. One of the main advantages of community or social impact bonds was that they not only reduced the cost of borrowing by providing much-needed capital but also, in many cases, increased the visibility, reputation, and legitimacy of the organization that issued them." WM'S ROLE According to the Conference Board of Canada, learning recognition challenges had resulted in the unemployment and underemployment of Canadians (including newcomers), costing the country $13.4 billion$17 billion in lost earnings. In an effort to address this issue and as a partial solution, WM provided clients with loan advice to help them make informed decisions about taking out a loan, using the funds appropriately, repaying the loan, and securing employment in their chosen field. Clients received assistance in achieving their professional goals, navigating the Canadian finance and banking system, securing credit, and establishing a credit rating in Canada. Hepburn observed, Windmill [Microlending) is a mission-based charitable organization. We are not here to make money; we are here to see our clients be successful, and that is what drives us. We combine the financial services of a bank and the warmth and trusted advice of a community service organization. Our loan repayment rate has always been high and everyone around the table has always been deeply committed to the success of our clients. This consistency is the bedrock of our organizational values. Unfortunately, for some clients, the costs associated with training and accreditation were not covered by a $10,000 loan. Some professional designations, such as dentists and doctors, retraining and reaccreditation required more time and money, sometimes costing more than $50,000. As a result, WM was considering customizing its loan program ceiling and payback schedule for certain professions. For other clients, financial literacy and establishing a credit rating in Canada was problematic, and as a result, WM needed to consider collaborating with organizations that delivered complimentary services, such as teaching clients how to manage finances and schedule repayments. While WM was interested in expanding its loan portfolio, a risk-mitigation strategy was also very important to the organization's long-term success. Hepburn noted, Our goal is to diversify and have more geographic spread so our risk is limited, so we are not putting all our eggs in one or two economic baskets. Rather, if we have a basket that covers more regions across Canada, then that should reduce our overall risk. WM's mix of clients reflected a wide range of skillsets and training, and more than 50 per cent of clients identified themselves as healthcare professionals, including nurses, doctors, dentists, and physiotherapists (see Exhibit 4). In terms of country of origin, the majority of clients originated from India, the Philippines, and Nigeria (see Exhibit 5). One factor that contributed to a newcomer's decision to apply for a loan NEWCOMERS TO CANADA By 2011, one out of five people in Canada was foreign-born, due to federal government initiatives that addressed Canada's anticipated workforce shortages and aging population. In 2011, Canada reported a foreign-born population of approximately 6,775,800 people or 20.6 per cent of its total population, representing the highest percentage of foreign-born citizens among Group of Eight (G8) countries (see Exhibit 6). Between 2006 and 2011, approximately 1,162,000 foreign-born people immigrated to Canada, representing 17.2 per cent of the foreign-born population and 3.5 per cent of Canada's total population. 14 Refer to Exhibit 7 for 2016 census data by metropolitan area. In 2018, Canada's population approximated 37,100,000, with 4 provinces accounting for more than 32 million Canadians, or 86.4 per cent of the population: Ontario (38.6 per cent), Quebec (22.6 per cent), British Columbia (13.5 per cent), and Alberta (11.6 per cent). 15 In fact, Statistics Canada indicated that Canada's population growth was largely due to international migration, defined as the difference between the number of exits and entries (i.e., immigration, emigration, and the movement of non-permanent residents). For the period 20172018, international migration to Canada was the highest ever recorded in the country, accounting for 79.6 per cent of Canada's population growth. During this period, Canada welcomed 323,192 immigrants, including nearly 30,000 Syrian refugees and 165,728 non-permanent residents. Moreover, Statistics Canada forecasted that by 2036, Canada's immigrant population would reach between 24.5 per cent and 30 per cent of the country's total populationthe highest since 1871.17 MOVING FORWARD Hepburn and her team had numerous key decisions to make, recognizing that expansion was required in order to reach the growth targets. Hepburn knew that maintaining the status quo was not an option, but where should WM expand next, and what would be the best way to do it? Further, what might the priority area(s) be, and what should be their sequencing? At the same time, expansion would require increasing WM's lending capacity. What would be the best way to address the increased demand for additional loans due to WM's projected growth plan? Should WM increase the number of guarantors, or issue a social impact bond or a community bond? Were there other options that should be considered? How could WM diversify and expand its funding sources and revenue streams? In concert with the recommended action plan, how should WM articulate its Theory of Change, and how might it support its future direction? Whatever path Hepburn chose, she needed to decide quickly because implementation would take time. EXHIBIT 1: WINDMILL MICROLENDING'S FIVE-YEAR TARGETS, 2018/19-2022/23 New client targets Active loan portfolio Additional loan capital (in CA$) Total loan capital (in CA$) 2018-19 800 2,300 4,500,000 2019-20 1,000 3,000 5,900,000 2020-21 1,400 4,000 7,700,000 2021-22 1,900 6,000 10,000,000 2022-23 2,400 8,000 13,000,000 9,000,000 11,700,000 15,200,00 19,800,000 25,800,000 Source: Created by the authors using information from Windmill Microlending. EXHIBIT 2: WINDMILL MICROLENDING'S ORGANIZATION CHART, SEPTEMBER 23, 2017 CEO Toronto Executive Assistant Calgary Executive Assistant/Intake Toronto National Director Finance & Risk Calgary VP Stakeholder Relations Calgary National Director Marketing & Communications Toronto National Director Operations Saskatoon manager Alumuni Relations Manager Program Development Toronto Financial Administrator Calgary Manager Loan Delivery Edmonton Manager Loan Portfolio Calgary Outreach Toronto(1) Calgary (1) Loan Administrator Calgary (2) Loan Management Calgary (2) Digital Design Toronto(1) Loan Facilitator Toronto (1) Edmionton (1) Calgary (1) Loan Intake Calgary (2) Learning Plan Advisor Toror (1) Note: CEO = chief executive officer; VP = vice president. Source: Created by the authors using information from Windmill Microlending. EXHIBIT 3: WINDMILL MICROLENDING'S STATEMENT OF OPERATIONS, 2015-18 2015 Actual 2016 Actual 2017 Actual 2018 Plan 3,141,089 179,593 10,195 96,223 3,427,100 2,275,912 2,186,496 2,090,000 596,667 508,333 216,642 222,817 292,251 111,023 55,798 250,000 114,208 24,967 2,717,785 3,086,745 3,140,584 Revenue Government funding Foundation grants Interest Donations Other Total revenue Expenses Salaries and benefits Loan delivery & portfolio administration Office Bad debt Rent Advertising & promotion Professional fees Project costs Amortization Insurance Bank charges & interest Fund repayment Total expenses Excess (deficiency) of revenue over expenses 1,204,184 1,019,240 133,764 41,855 180,908 210,315 173,118 155,209 22,382 8,162 25,077 1,435,538 1,591,720 2,004,331 304,101 360,473 412,142 150,792 243,331 265,000 85,772 136,592 108,393 144,928 209,037 159,724 120,163 131,610 140,247 104,596 76,966 34,000 95,766 62,177 238,166 22,370 20,418 20,489 7,208 7,092 9,000 4,193 1,786 2,100 28,625 2,504,052 2,841,202 3,393,592 213,733 245,543 (253,008) 3,174,214 252,886 Source: Created by the authors using information from Windmill Microlending's audited financials as of March 31,2017. EXHIBIT 4: WINDMILL MICROLENDING'S CLIENT OCCUPATIONAL GOALS, MARCH 31, 2017 Profession Portfolio Mix Estimate (%) Dentists Nurses Physicians Pharmacists Physiotherapists Engineers Accountants Lawyers Software developers All other 16.3 11.2 10.4 9.6 5.6 5.2 3.7 3.0 2.0 33.0 New Loans Approved Actual (%) 15.6 12.8 10.5 7.1 6.0 4.5 4.5 2.9 1.2 34.9 Note: "All other" includes people working in education, finance, management, administration, transportation, and trades, as well as medical lab technicians. Source: Created by the authors using information from Windmill Microlending. The portfolio mix of active clients is an estimate, and the new loans approved numbers were based on cumulative data as of March 31, 2017. EXHIBIT 5: PORTFOLIO MIX AND NEW LOANS BY COUNTRY OF ORIGIN, MARCH 31, 2017 Country of Portfolio Mix New Loans Origin Estimate (%) Approved Actual (%) India 29.6 26.7 Philippines 14.1 17.1 Nigeria 14.6 13.8 Iran 7.7 6.9 Pakistan 1.1 6.0 Iraq 2.2 2.6 Egypt 2.5 2.4 Sudan 1.9 2.0 Bangladesh 2.0 1.7 1.9 1.7 All other 19.4 19.1 Syria Source: Created by the authors using information from Windmill Microlending. The portfolio mix of active clients is an estimate, and the new loans approved numbers were based on cumulative data as of March 31, 2017. EXHIBIT 6: FOREIGN-BORN POPULATION IN G8 COUNTRIES AND AUSTRALIA Country of Residence (Year) % of Foreign-Born Population in G8 Countries and Australia Japan (2000) 1.0 Italy (2009) 8.0 Russian Federation (2002) 8.2 France (2008) 8.6 United Kingdom (2010) 11.5 United States (2010) 12.9 Canada (2011) 20.6 Australia (2010) 26.8 Note: G8 = Group of Eight. Source: Created by the authors using information from Statistics Canada, Immigration and Ethnocultural Diversity in Canada: National Household Survey 2011, 7, 2013, accessed April 12, 2019, www12.statcan.gc.cahs-enm/2011/as-sa/99-010-x/99- 010-2011001-eng.pdf