GOAL: Move $1 billion in net new capital to community development banks, loan funds and credit unions serving low-income communities.
- Status: Completed
- Focus Area: Responsible Finance
- Start Date: 1999
- Contact: Fran Teplitz
In 1999, a group of Community Development Financial Institutions (CDFIs) that invest in low-income communities approached Green America and USSIF with a problem. They were facing a severe lack of capital to meet the lending needs of their communities for key investments in areas such as small business, affordable housing, and childcare.
We engaged a diverse group of investment professionals to find ways to move more private money into high-impact community investments. With $1 million in funding from the Ford, MacArthur, Heron, and Packard Foundations, from 2000- 2006, this group moved three key initiatives forward:
Getting the CDFI products listed in the Schwab trading platform so that fund managers could more easily invest in them;
Developing a model portfolio to demonstrate that investing in these products would not significantly affect fund performance;
Creating and launching the 1% or More for Community Campaign to urge investors to commit to investing at least 1% of their portfolios in CDFIs and a national media campaign to highlight the widespread, positive impacts of community investing.
In a relatively short time frame, the 1% for Communities program moved $3.2 billion of private portfolios into community investments (we stopped measuring the capital flow in 2002). It is estimated that funders would have normally spent several million dollars to achieve the same impact individually.
Timeline of Success
- 1998 High demand for assets in community investments; Low capital inflows; No apparent sources of new capital
- 1999 Convened Community Capital Innovation Network; Identified possible pools of capital
- 1999 Developed portfolio analysis to see performance impact of allocating 1% to community investments
- 2000 Successfully got community investment products listed on major brokerage platforms, making it far easier for managers to invest in these options.
- By 2003, moved $3.2 billion into community investments from private and mutual fund portfolios. Original target was $1 billion.