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In 1992, Peggy Soucy started the Kids R Special Child Care Center
in rural Maine, and it initially served just a handful of children.
In time, because of the great services she provides and her strong
business sense, the center grew and needed a new building. Peggy
turned to Coastal Enterprises Inc. (CEI), a local nonprofit community-investing
institution, to secure a loan for $40,000. She also received assistance
from CEI's Women Business Center, which is helping her develop a
Web site to advertise her services to new families and communicate
with parents. Kids R Special is now serving 37 children, half of
them low-income, and is ready for further growth. This is just one
example of how community-investing institutions are making a real
difference in the lives of people and their communities across the
country and around the world.
Are your investments working to build housing, create jobs and
otherwise help low-income communities worldwide? Most investors,
professional and individual alike, have no idea where their money
ultimately goes and what it's supporting, but more and more investors
are seeking high-impact community investing so they can be sure
their money is creating positive change. These investors are putting
money into community-development banks, credit unions, loan funds
and venture capital funds that in turn are investing in people like
Peggy Soucy.
"Community investing is unique in providing investors with the
means to improve people's lives worldwide while earning a fair return
on their investments," says Jean Pogge, senior vice president of
Mission-Based Deposits for ShoreBank, and chairperson of the Community
Investing Program of the Social Investment Forum Foundation and
Co-op America. "It's not charity, but a powerful means to create
long-term improvements in the lives of low-income people in a way
that complements the work of charities. As each borrower pays back
his or her loan, it enables the lender to provide much-needed financing
to another borrower."
Community investing has been actively improving people's lives
for almost 40 years, but remained a small industry for most of that
time because the field needed more investors to grow. In 2000, the
Community Investing Program of the Social Investment Forum Foundation
and Co-op America created the "1% in Community" campaign to involve
more investors with a goal of tripling the assets directed to community
investing from $5 billion to $15 billion by 2005.
The "1% in Community" campaign has the simple goal of encouraging
all investors—individual, professional and institutional—to
direct at least one percent of their investments to community investing.
One percent of invested assets may not seem significant, but even
if just one percent of the assets currently invested in socially
responsible portfolios were directed to community investing, it
would mean more than $20 billion in community investing.
Since 2000, the campaign and the community-investing field have
experienced great success. The campaign reached thousands of individual
investors and hundreds of professional and institutional investors.
Socially responsible investors alone increased their investments
in community investing by $1 billion. As of 2003, the field overall
grew to more than $14 billion in assets, and with an ever-increasing
range of products and a growing pool of interested investors, community
investing is poised for continued rapid growth.
What makes community investing an exciting option for all investors
is the impact that the field has on people's lives. In the United
States, community investors are helping families buy their first
homes; allowing women and minorities to open businesses; providing
farmers with the capital to make their family farms profitable;
building daycare, healthcare and educational facilities; and financing
clean energy and other environmental companies. Internationally,
microloans and other products have an incredible impact on the lives
of borrowers. For example, in South Africa, loans for as little
as $16 can enable entrepreneurs to launch their own businesses.
Many of these borrowers tried to secure loans first through traditional
financial institutions, but were turned down—they may have
been requesting loans that were too small or lacked the necessary
credit history. Community-investing institutions are experts in
understanding the communities in which they lend and their potential
borrowers, and are able to make successful loans. This expertise,
along with financial innovations, makes these loans safe. For example,
recent data from the National Community Capital Association shows
that loans made by more than 100 U.S. community investing institutions
were as safe as loans from conventional banks.
There is a growing range of community-investing options available
to all investors—from market rate CDs, money markets and savings
accounts, to innovative loan funds and venture capital products.
In March, the "1% in Community" campaign launched a new Web site,
www.CommunityInvestingCenter.org,
with an extensive database of more than 400 community-investing
institutions and information to help investors get started. "The
Web site (serves) as a one-stop resource for any investor interested
in placing money into community-investing institutions," says Justin
Conway, Coordinator of the Community Investing Program of the Social
Investment Forum Foundation and Co-op America. "Investors (are)
able to find institutions that invest where their interests lie—from
financing entrepreneurs, to creating social services, to developing
affordable housing—and find products that meet their financial
objectives."
There are literally millions of hard-working people like Peggy
Soucy who simply need a loan to enable them to make major improvements
in their lives. While community investing is growing, it is only
meeting a fraction of this need. With the new Community Investing
Center Web site and the increasing number of community-investing
products available, it's never been easier for investors to put
money to work in low-income communities worldwide. Over the next
year, the campaign will be working to reach new investors and interest
them in the field. As more and more investors meet or exceed the
"1% in Community" goal, a growing number of borrowers around the
world will be able to finance better lives for themselves, their
families and their communities.
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