At StakeHolders Capital we are proud to offer clients the opportunity to invest capital in an asset class known as “community investments.” Often not traded publicly and sometimes small, these debt vehicles can be overlooked by the broker-dealers with whom many advisors affiliate.
Community investing channels capital into banks and funds that serve, among other things:
- low-income homeowners
- sustainable agriculture cooperatives and
- microfinance enterprises
Because the relationship of lenders with borrowers forms the crux of community investing, the repayment rate on such notes is remarkably high. People who know potential borrowers as neighbors and as friends aptly identify who is trustworthy among those with unimpressive credit scores. Both the spirit and the effects of community investing form a refreshing contrast to the sub-prime mortgages doled out to low-income applicants regardless of ability to repay.
Terry Mollner, one of our founders and chair of the board, became a pioneer in community investing in the early 1970s, before he co-created the Calvert Social Investment Funds. Under his leadership, that body then formed the Calvert Social Investment Foundation, which established “community investment” as new territory in professional asset management. Today the Calvert Foundation has over $550 million under management in community investments on every continent around the planet, and community investing is the fastest-growing asset class among investors. StakeHolders Capital clients can support mission driven organizations through the Calvert Foundation. In turn, The Calvert Foundation lends money to:
- community banks
- credit unions
- loan funds, and
- nonprofit organizations
It thereby provides clients choices within an innovative range of high-impact community investments. We are pleased to be part of the Social Investment Forum’s “1% in Community” campaign.
Many of our clients choose to allocate a portion of their portfolios – typically 1-10% – to community investing. In addition to their high social impact, community investments can provide diversification and risk control helpful in meeting clients’ financial goals.
In addition to the Calvert Foundation Notes, the most common choices in this area are:
- The RSF Social Finance Loan Fund, a national fund that serves non-profits and social ventures, and
- The Cooperative Fund of New England (a CDFI) which lends to cooperatives in New England
- Opportunity Finance Community Development Finance Corporation (CDFI) finder tool to find CDFIs to invest in in other locales in the United States
