Republic of the Philippines

WESTERN PHILIPPINE UNIVERSITY

COLLEGE OF EDUCATION
Brooke’s Point Palawan
1ST SEM 2019-2020
GRADUATE SCHOOL
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COURSE CODE: MEM 605

COURSE DESCRIPTION: FINANCIAL MANAGEMENT IN EDUCATION
TOPIC: DEVELOPMENT OF FINANCE
PRESENTER: NERISA B. BANDRIL
PROFESSOR: DR. JEFFREY JUN YANA

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OBJECTIVE: To discuss the Development of Finance

INTRODUCTION

The process of finance is learning how people and groups act in managing their money, and
most of all how they manage making money, and making a profit, with spending money, or making a
loss.

A. CONTENT

What is Finance?
Finance is defined as the management of money and includes activities such as investing,
borrowing, lending, budgeting, saving, and forecasting.

There are three main types of finance:

(1) personal, (2) corporate, and (3) public/government.

1.Personal Finance
Personal finance is the process of planning and managing personal financial activities such as
income generation, spending, saving, investing, and protection. The process of managing one’s
personal finances can be summarized in a budget or financial plan. This guide will analyze the most
common and important aspects of individual financial management. The main areas of personal
finance are income, spending, saving, investing, and protection.
2. Corporate Finance
Corporate finance deals with the capital structure of a corporation including its funding and
the actions that management takes to increase the value of the company. Corporate finance also
includes the tools and analysis utilized to prioritize and distribute financial resources.
3. Public Finance
Public finance is the management of a country’s revenue, expenditures, and debt load through
various government and quasi-government institutions. This guide provides an overview of how
public finances are managed, what the various components of public finance are, and how to easily
understand what all the numbers mean. A country’s financial position can be evaluated in much the
same way as a business’ financial statements.

Development finance is the efforts of local communities to support, encourage and catalyze
expansion through public and private investment in physical development, redevelopment and/or
business and industry. It is the act of contributing to a project or deal that causes that project or deal
to materialize in a manner that benefits the long-term health of the community.

It requires programs and solutions to challenges that the local business, industry, real estate
and environment creates. As examples, we need unique financing approaches to address
environmentally contaminated land and specific solutions to unlocking capital access in underserved
markets and industries. Each of the problems that we seek to solve in development require unique
and targeted solutions.

There are dozens of terms within the development finance industry including debt, equity,
loans, bonds, credits, liabilities, remediation, guarantees, collateral, credit enhancement,
venture/seed capital, angels, short-term, long-term, incentives, and gap financing.

Development finance aims to establish proactive approaches that leverage public resources to
solve the needs of business, industry, developers and investors.

Development Finance Spectrum

The easiest way to understand the depth and breadth of development finance is to compartmentalize
tools into basic categories. We call this the “development finance spectrum.” The development
finance spectrum is a simple way of understanding the roll that specific tools play in our marketplace
and is graphically depicted below:

Government projects are exactly what they sound like – roads, bridges, sewers, water facilities,
schools, airports, docks, parking garages, broadband, utilities, etc.

Established industry represents our industrial, office and retail sectors (depending on location).
Examples such as industrial parks, manufacturing, tech/research hubs and commercial retail centers
fall within this category.

Development and redevelopment consists of the projects that require major public resource
commitments to catalyze new private sector development. We see this throughout the country with
urban revitalization, rural rejuvenation, adaptive reuse, brownfield development and other
transformative projects that require significant public capital.

Small Business and Micro-Enterprises are pretty self-explanatory as well. These projects
represent our economic engine locally. Generally, a small business is defined as any company with
less than 500 employees and a micro-enterprise is any company with fewer than five employees.
There are approximately 30 million micro-enterprises in the U.S.

Entrepreneurs represents our future businesses. These are one-two person companies that are
working through the early stages of the business life cycle. Typically, entrepreneurs are not ready for
traditional financing and need a unique approach to help them find the working capital needed to
expand and grow.

The lighter bars that span the five project areas represent the general categories of the tools available.

Bedrock Tools
This is the large debt market generally known as bonds and makes up the foundation of all public
finance in the U.S. Over 10,000 bonds are issued nationwide annually representing infrastructure,
housing, education, development, non-profits, healthcare and manufacturing.

Targeted Tools

These tools target geographic areas through the use of tax increment finance, special assessment
districts, government assessment districts, project specific district tools and tax abatements.

Investment Tools

These tools encourage private sector investment in projects and businesses through tools such as tax
credits and the EB-5 investor program.

Access to Capital Lending Tools

These tools, such as revolving loan funds, mezzanine funds, loan guarantees and microenterprise,
seed & venture capital financing programs, etc. represent the resources for supporting small business
access to capital on a broad scale.

Support Tools

Finally, support tools represent our large federal funding resources provided by the federal
government. There are over 175 federal programs to support economic development.

The key to the development finance spectrum is that we have specific projects that require a specific
type of financing. Nothing complex about that. When we break development finance down into its
core components we can better articulate the best tool to use for each project.

In order for projects or businesses to use the tools outlined on the development finance spectrum,
they first must identify a qualified development finance agency to provide the financing.

There are many different types of development finance agencies depending on the parameters of the
project. Keep reading to learn about how development finance agencies work and how you can find
one

What is a Development Finance Agency (DFA)?

Development finance agencies (DFAs) can be either public or quasi-public/private authorities that
provide or otherwise support economic development through various direct and indirect financing
programs. DFAs may issue tax-exempt and taxable bonds, provide credit enhancement programs, and
offer direct lending, equity investments, or a broad range of access to capital financing mechanisms.
DFAs can be formed at the state, county, township, borough or municipal level and often times have
the authority to provide development finance programs across multi-jurisdictional boundaries.

Examples of development finance agencies include:

-Industrial development authorities, boards or corporations
-Economic development authorities, corporations or councils
-Special purpose authorities (port, transportation, parking, development, energy, air, water,
infrastructure, cultural, arts, tourism, special assessment, education, parks, healthcare, facility, etc.)
-Local and community development authorities, corporations or institutions
-Departments of development or commerce and finance authorities, divisions, or departments within
state and local government
-Business development corporations, centers or districts
-Development and redevelopment authorities, commissions or districts