Introduction
to Community Investment
Community Investment describes investing that supports development initiatives
in low-income communities both in the United States and in developing countries.
Community Investment provides affordable housing, creates jobs, and helps
responsible businesses get started.
Community Investing is achieved mainly through four types of institutions:
Community Banks, Community Credit Unions, Community
Loan Funds and Microenterprise Lenders.
Community Development Banks operate similarly to regular banks, but their business is the permanent, long-term economic development of low-and moderate-income communities. They target loan resources to residents of their primary service area - the people living, working, and doing business in their marketplace. Deposits are FDIC insured like conventional banks. There are many Community Development Banks across the country where you can open a variety of accounts just as you would at a conventional bank.
Community Development Credit Unions operate just like commercial credit unions, but focus on economic development in specific areas. Similar to banks, credit unions provide a range of savings and investment options. The difference is that credit unions are membership-owned and controlled and they are nonprofit financial institutions. There are over 100 Community Credit Unions in America, serving people and communities with limited access to traditional financial institutions. Like commercial credit unions, Community Credit Unions are federally insured and regulated. Both Community Development Banks and Community Development Credit Unions offers a wide variety of savings and investment products.
Community Development Loan Funds and Microenterprise Lenders. Community loan funds are direct unsecured loans targeted toward high-impact community development. Loan funds use grant money and pre-funded loss reserve to help protect individual investors. Loan funds typically accept investments at rates of 0-5 % for 1-10 years. Community loan funds generally operate in specific geographic areas. A subset of Loan Funds is the Microenterprise Loan Fund. Microenterprise lenders have lent more than $25 million to low-income individuals for home purchases and small business start-ups. These funds help people who may not be able to obtain financing through traditional lenders, which tend to favor more established enterprises. Community loan funds and microenterprise development loan funds are not federally insured.
Resources
for More Information
1.
Calvert Social
Investment Foundation and Social
Investment Forum
The Calvert Social Investment Foundation, a community investment facility
offering options for individuals and institutions to invest in community lenders
globally, has developed the Community
Investment Profiles database. This tool helps you explore housing, microcredit
and community development loan funds, banks and credit unions in the United
States and around the world. The Community Investment Profiles is a registered
trademark of Calvert Foundation but the database is also available on both
the SocialFunds.com
and Social Investment Forum websites where the database can be queried by
lending sectors, geographic area or organization. The profiles were developed
in cooperation with each respective group and the information in the financial
sections is based on audited financial statements from each of the profiled
organizations. The
SocialFunds.com website also includes current community investment news, a
community organization directory, and more information.
2.
The
Social Investment Forum Guide
SIF has created this Guide as a component of its "One Percent in Community"
Initiative, designed to help move a total of one percent of actively managed
social investment dollars into community investing by the year 2005. Such
a shift will effectively triple the real dollars available to finance work
in under-invested communities and with lower-income families. It will create
a permanent tier of capital to serve underserved communities and hasten the
day when every individual and institutional investor's asset allocation chart
shows one percent of total investments in community investing. The measure
of this guide's success, however, will not be in dollars, but in the number
of new jobs, new units of affordable housing, new childcare centers and new
businesses created for the families in those communities. This Guide will
help financial professionals: Gain a working knowledge of the scope of community
investment; quickly prioritize appropriate community investment products and
services; find answers to commonly asked questions about community investing;
review the best practices of experienced community investment practitioners
and investors; and easily find community investment contacts by geographic
and interest areas. The Community Investment Guide, Resources by Type and
Resources by State are currently available in hardcopy and pdf format.
3.
Social Investment
Organization Canada
The Social Investment Organization, Canada's only national non-profit organization
dedicated to the advancement of socially responsible investment, provides
information on and useful links for Community Investment in Canada.
4. FPCR Links page: Community Investment
