The Northwest affiliate of Local Initiatives Support Corporation

20

08

Rep

ort

to

In

ves

tors

A Letter from the Chair

2007 was a building year for Impact Capital in the Northwest. I am pleased to report that the organization is strong and getting stronger.

Some highlights from the year:

• ImpactCapitalBoardapproveditsnewthree-yearBusinessPlan,whichgrewoutofconversationsheldwithgroupsofstakeholdersandpartnersacrossWashingtonStateaboutwaystobecomemoreinnovativein lending,creatingleveragepartnershipsandengagingincommunity developmentpolicydiscussions.

• ImpactCapitalexceededourImpactWashingtonCapitalCampaigngoalof$17.5 million with a commitment for a $5 million low interest loan from BankofAmerica.

• ImpactCapitalrevampeditslendingandunderwritingguidelinesinordertoprovidemoreflexibleandcompetitiveloanproductstoitspartners.

Thisyear,ImpactCapitalembarkedonanewdirectionwhichistheembodimentofboth“community”and“development”.Comprehensivecommunitydevelopmentwillcreatevibrantcommunitieswhichfosterthedevelopmentofneighborhoodswherepeopleareabletolive,workandplayinasustainablefashion.

CommunityDevelopmentoverthepastfewyearshaschangedbecauseof significantshiftsinlocalrealestatemarketsandinthecommunitydevelopmentpolicyenvironment.Thesechangeshavecreatednewopportunitiesand challengesforourpartners.ImpactCapitallookstocontinueitseffortsinvestinginCommunityDevelopmentthroughourpartners,resultinginthetransformationof these communities and their ability to create sustainability for the future.

OnbehalfoftheentireBoardofDirectorsandstaffofImpactCapital,Iwouldliketopersonallythankthemanyinvestorsandpartnerswithoutwhosesupportoursuccess would not be possible.

Sincerely,

MichaelBrown,Chair,BoardofDirectors

2008 Report to Investors 1

Private investors

TheAnnieE.CaseyFoundation

BankofAmerica

BannerBank

BoeingEmployees’CreditUnion(BECU)

ColumbiaStateBank

TheErichandHannahSachsFoundation

FannieMae

KeyBankNA

NorthernTrustBank

USBancorp

Washington Mutual

WellsFargo

Public investors

CityofSeattle, OfficeofEconomicDevelopment

CityofSeattle, OfficeofHousing

CityofSpokane

City of Tacoma

King County

Snohomish County

USDepartmentofHousing andUrbanDevelopment

Washington State Department ofCommunity,Trade& EconomicDevelopment

WashingtonStateHousing FinanceCommission

Donors

AnnMelone

BankofAmerica

BannerBank

TheBoeingCompany

BoeingEmployees’CreditUnion(BECU)

FannieMaeFoundation

HSBCBankUSA

LivingCities

LocalInitiativesSupportCorporation

NationalEquityFund

OlympiaFederalSavingsandLoanAssociation

ThePaulG.AllenFamilyFoundation

TheSeattleFoundation

SterlingSavingsBank

SummitLeasing,Inc.

SundquistFoundation

USBank

VerityCreditUnion

WashingtonCommunityReinvestment Association(WCRA)

Washington Mutual

WhiteCenterCommunityDevelopmentAssociation

YakimaValleyMemorialHospital

2007 Investors and Donors

2 Impact Capital

2007 Loan Commitments as of 12/31/07

Total loans committed: 33

Total loan amount: $11,477,971

Leveraged development cost: $176,958,592

Affordable housing units produced: 1,012

Commercial & community facilities financed: 51,968 square feet

ImpactCapitalprovidesaccesstofinancingtononprofitdevelopersacrosstheStateofWashington.Since2000,ImpactCapitalhasinvestedmorethan$71milliontoprovideWashingtonfamilies,elders,veterans,childrenandtheverypoorwithsafe,decentandaffordablehousing,communitycenters,communityclinics,childcare,culturalandretailspaceinneighborhoodsandruralcommunities.

TOTAL: $11,477,971

LendIng by RegIon

78%$8,931,813

King & Pierce Counties

3%$391,962

Eastern Washington

19%$2,154,196

Western Washington

“I personally believe the predevelopment funding and the associated vote of

confidence we have received from Impact Capital has triggered and promoted our

growth as the largest provider of special needs housing in Eastern Washington…

I really mean it when I say we could not have done it without you.”

—JohnMifsud,ExecutiveDirectorNextStepHousinginYakima,WA

2008 Report to Investors 3

2007 Projects Financed as of 12/31/07

PRedeveLoPmenT LoAns - $1,068,199

Zero interest financing of up to $75,000 for early project feasibility costs associated with the development of affordable housing and community development projects.

AlesekInstitute

AffordableCommunityEnvironments(ACE)

ColumbiaNon-ProfitHousing

Lopez Community Land Trust

MetropolitanDevelopmentCouncil(MDC)

Casa Latina

YWCAofSeattle-KingCounty-Snohomish County

SouthEastEffectiveDevelopment(SEED)

VisionHouse

NorthwestAssociationforHousingAffordability(NAHA)

GreaterLakesMentalHealthCare

ArchdiocesanHousingAuthority

Opal Community Land Trust

NorthwestAssociationforHousingAffordability

CatholicCharitiesHousingServices DioceseofYakima

HousingAuthorityofChelanCounty/ City of Wenatchee

SpokaneBaptistAssociationHomes(SBAH)

CommunityFrameworks

HousingAuthorityofSnohomishCounty(HASCO)

CommunITy InvesTmenT LoAns - $10,409,772

Interim financing for project costs, including predevelopment, acquisition, and construction costs associated with the development of affordable housing and community development projects.

TheVeraProject

WhiteRiverHousingAssociation

CapitolHillHousing

CommunityFrameworks

WashingtonAgriculturalFamiliesAssistance(WAFA)

SeniorServicesofSnohomishCounty

LowerColumbiaCommunityActionCouncil

ArtspaceProjectsInc.

NorthwestAssociationforHousingAffordability

St.Andrew’sHousingGroup

SeaMarCommunityHeathCenters

VisionHouse

Tacoma/PierceCountyHabitat forHumanity

4 Impact Capital

gRAnTs AWARdedoPeRATIng InvesTmenT gRAnTs$904,800

Impact Capital made possible more than$900,000unrestrictedgrantsto assist nine nonprofit community developmentorganizationstoachieveinternalorganizationalimprovementgoals.Thesegrantsensurethelong-termsustainabilityoftheirrecipients’assets,andbuildtheircapacityto develop,constructandsustainaffordable housing and community developmentprojects.

CapitolHillHousing

CentralAreaDevelopmentAssociation(CADA)

DelridgeNeighborhoodsDevelopmentAssociation(DNDA)

DioceseofYakimaHousingServices

InterimCommunityDevelopmentAssociation(ICDA)

HomeSight

HousingHope

Seattle Chinatown International District PublicDevelopmentAuthority(SCIDPDA)

southeast effective development (seed)

ImpactCapital’sCapacityProgramprovidesdirectoperatinggrants,tailoredconsulting,andtargetedgrants to nonprofit community developmentorganizationsthroughoutWashington State. These tools help maintainandimprovethehealthoftheregion’scommunitydevelopmentsystem by:

• Addressingissuesoforganizationaleffectiveness and efficiency.

• Supportingeffortstocreateand implement strategies for comprehensivecommunityrevitalization,and

• Preservingaffordablehousingportfoliosthrougheffectiveassetmanagement.

ImpactCapital’scapacityprogram is made possible through the supportofgovernmentgrantsandprivatecontributions.

Capacity Building

2008 Report to Investors 5

LIsC CommunITy sAfeTy gRAnTs$66,500

In2007,LISCprovided$66,500infunding to support the Community SafetyInitiative,anationalcommunity-basedmodelthatmakesgrantstocommunity-basednonprofitsto promote safety by organizing the community,supportingcommunityleadership,andfosteringpartnershipwith local law enforcement.

HomeSight

Seattle Chinatown International DistrictPublicDevelopmentAuthority(SCIDPDA)

WhiteCenterCommunityDevelopmentAssociation

TeChnICAL AssIsTAnCe gRAnTs$17,200

Ourtargetedinvestmentsaddressorganizationaldevelopmentandsystemsimprovementstobuildandmaintainhighly functioning organizations.

TRAInIng PRogRAm $130,789

Impact Capital believes training is essential to building organizational and programmatic capacity. Each year a range of courses designed to augment the technical skills of housing and community development practitioners in Washington State to increase the ability of nonprofit organizations to efficiently deliver services to people and communities in need. For 2007, Impact Capital offered nine courses over 28 days for 214 attendees. Six of those courses were a partnership with the Consortium for Housing and Asset Management.

The Consortium for Housing and Asset Management (CHAM) provides a professional certification in Affordable Housing Asset Management. CHAM is a collaboration between LISC, Enterprise, and NeighborWorks to better enable community-based organizations and others in the nonprofit housing industry to responsibly own and professionally manage affordable rental housing. Impact Capital contracted with CHAM to offer all six Professional Certification courses in one location in one year 2007 — a first for CHAM since it’s inception.

6 Impact Capital

Financial Highlights

Revenue

TOTAL: $2,146,054

$594,105Loan Fees & Interest

$263,152Contributed

Income

$485,232Program

Contracts

$803,565Interest & Other Gains

exPenses

TOTAL: $2,379,603

$1,993,723Lending & Capacity

$252,386Management

& General

$133,494Fundraising

2008 Report to Investors 7

sTATemenT of fInAnCIAL PosITIon

AssetsCash&Investments $16,516,763

Loansreceivable $9,983,789

Accountsreceivable&otherassets $674,064

TotalAssets $27,174,616

Liabilities & Net Assets

Accounts&otherpayables $414,390

Loanspayable $22,450,000

TotalLiabilities $22,864,390

NetAssets $4,310,226

Total Liabilities & Net Assets $27,174,616

Copies of the audited financial statements are available upon request.

sTATemenT of ACTIvITIes

Unrestricted Temporarily Restricted Total

Revenues $2,027,678 $118,376 $2,146,054

Net assets released fromrestriction 504,295 (504,295) 0

$2,531,973 (385,919) $2,146,054

Expenses $2,379,603 0 $2,379,603 Changeinnetassets $152,370 (385,919) (233,549)

Net assets beginningoftheyear $1,165,709 3,378,066 $4,543,775

Netassets12/31/07 $1,318,079 $2,992,147 $4,310,226

8 Impact Capital

Board of Directors

Kim Herman Executive Director, WA State Housing Finance Commission

Ann Melone Vice President, Commercial Real Estate, U.S. Bank

John Poling (Past President) Executive Director, Housing Authority of Grant County

Sue Taoka (Board Secretary) Executive Director, Seattle Chinatown International District Preservation and Development Authority (SCIDPDA)

Mario Villanueva Executive Director, Catholic Charities Housing Services Diocese of Yakima

Mike Tierney Executive Vice President & COO Local Initiative Support Corporation

Jayne Auld Executive Director, Spokane Housing Ventures

Michael Brown (Board President)Director, Community Projects, The Seattle Foundation

Susan Duren President, WA Community Reinvestment Association

Jan Laskey Senior Vice President, Community Development Lending, Bank of America

Judith Olsen (Board Treasurer) Vice President & CDO, Wells Fargo Bank

Susan Shannon Director, Office of Economic Development, City of Seattle

Lisa Vatske Managing Director Housing Trust Fund State of Washington CTED/Housing

Margaret Yung First Vice President & National Manager Community Investment, Washington Mutual Bank

Joe Brancucci Executive Vice President Boeing Employees Credit Union (BECU) Loren Dixon Senior Vice President/ CRA Officer, Banner Bank

2008 Report to Investors 9

Staff

heyward WatsonCeo

Julie Alexanderbookkeeper

Jon ClarkeProgram officer

Tess ColbyChief Program officer

yolande hargravesProgram Assistant, Contracts

Andrea John-smithfund development & Communications officer

Chris JowellProgram officer

Jennifer LabrecqueProgram officer

Ingrid martinsenior financial officer

elsa natalAssociate Program officer

Tracy ReichProgram officer

Terri symbolProgram officer

Katie yeoexecutive Assistant

Offices in Seattle:401SecondAvenueSouth

Suite301SeattleWA98104

Phone: (206)587-3200Toll Free: (800)336-0679

Fax: (206)587-3230

Offices in Spokane:421W.RiversideAvenue

Suite661Spokane,WA99201

Lending: (800)257-7345(509)456-8088

Capacity: (800)709-8088(509)624-5936

Fax: (509)456-8350

The Northwest affiliate of Local Initiatives Support Corporation

Impact Capital’s mission is

to make strategic capital

investments in community-

based nonprofit development

organizations in ways that

enhance and sustain their

ability to positively impact the

quality of life in communities

in Washington State and the

Pacific Northwest Region.

www.impactcapital.org