NEW YORK, June 3, 2021 /PRNewswire/ -- Today, the U.S. Impact Investing Alliance ("Alliance"), an organization dedicated to building the impact investing ecosystem, published a report on community investing titled "Impact in Place: Emerging Sources of Community Investment Capital and Strategies to Direct it at Scale." The full report, which was commissioned by the community development team at the Federal Reserve Bank of New York ("New York Fed"), is available at https://www.newyorkfed.org/outreach-and-education/community-development/emerging-sources-of-community-investment.
This report explores the current landscape of capital flowing to local economic development, including how emerging sources and strategies could help shape the future of the community investing field. The report provides recommendations to investors and others who seek to increase the flow and efficiency of investment capital to underserved communities.
Fran Seegull, President of the U.S. Impact Investing Alliance: "Community investing is a powerful tool with the potential to transform underserved communities that for too long have been denied adequate access to economic development opportunities. The crises of the past year have brought into sharper focus the importance of flowing capital into these communities at scale, efficiently and with deep impact."
Darren Walker, President of the Ford Foundation and Chair of the U.S. Impact Investing Alliance: "As is too often the case, the COVID-19 pandemic and economic crisis have disproportionately impacted Black, Brown, Indigenous and rural communities first and worst. As we transition to a new normal, leaders at all levels and across sectors must act swiftly to invest in communities that have been historically under-resourced to ensure real, equitable impact."
David Erickson, Senior Vice President and Head of Outreach & Education at the New York Fed: "This report seeks to spark discussion—and ultimately—direct capital to powerful projects and approaches that help advance economic resilience and mobility. The Alliance is a vital voice in this space, and we are proud to partner with their team to launch this report."
The year 2020 saw a diverse and growing number of institutions, especially corporate actors, engage in community investing. In the report, the Alliance explores some of these initiatives, as well as notable innovators who leverage capital and community participation in particularly groundbreaking ways. Details and links to the individual case studies are included below.
- "Leveraging Community Investing Ecosystems for Small Business Relief: Local Collaborations to Support Main Streets in Chicago, California, New York and Beyond" [link]
- "Corporate Support for Local Economic Development in Response to the Racial Justice Crisis: New Commitments by PayPal, Netflix, Twitter and Others" [link]
- "A Multi-Faceted Approach to Community Investing Engagement: Opportunity Finance Network's Grow with Google Small Business Fund and the Google Sustainability Bond" [link]
- "Flowing Donor Advised Fund Capital to Communities: Innovative Strategies from ImpactAssets and CapShift" [link]
- "A Participatory Model for Restorative Community Wealth Building: A Look Into the Ujima Fund" [link]
In writing the report, the Alliance identified a number of structural barriers and challenges preventing more capital from flowing to underserved communities. These include a lack of investor education and awareness, poorly defined market segmentation, misperceptions or concerns about fiduciary duty, difficulty of integrating community investments into traditional portfolios and the need for more qualified investment professionals that understand the sector.
To address these challenges, the report offers specific recommendations on how private and public actors can work together, alongside community leaders, to better leverage capital to generate positive and measurable outcomes for the members of these communities. These recommendations include the following:
- Investors should do more to meet the immense need for risk-taking capital: There is significant demand for investors to take bold and early bets to send a positive signal to the rest of the market, and for investors to take increasingly riskier positions in the capital structures of community development financial institutions.
- Investors should help streamline the capital raising process for community intermediaries: Investors should develop more streamlined and predictable investment approval processes that are fully transparent to the intermediary borrower and aim to supply capital in a more rapid fashion.
- Client-facing channels, including registered investment advisors and private wealth platforms, should increase their awareness of community investing strategies: Both impact-oriented and traditional platforms should have a baseline level of knowledge on community investing and its potential to deliver on client objectives. As demand for values-aligned investing grows, establishing this foundational knowledge can help these platforms differentiate themselves and support future business development goals.
Read the full report here to learn more about how community investing can be leveraged in building an equitable recovery.
About the U.S. Impact Investing Alliance
The U.S. Impact Investing Alliance ("Alliance") is an organization dedicated to building the impact investing ecosystem by bridging market gaps and addressing shared challenges. The Alliance's long-term vision is to place measurable social, economic and environmental impact alongside financial return and risk at the center of every investment decision. For more information, please visit www.impinvalliance.org.
SOURCE U.S. Impact Investing Alliance