If we want our communities to be healthy and vibrant, environmentally sustainable, and socially just, we need to close the wealth gap between rich and poor and create economic opportunity for all. This is where community investing comes in - it provides financing for economically disadvantaged people in the US and abroad that are traditionally underserved by financial institutions. Community investors make it possible for local organizations in urban and rural areas to create jobs; provide financial services to low-income individuals; and supply capital for small businesses, affordable housing, and vital community services.
If every socially responsible investor moved 1% of his or her savings and investments into community investing, it would put an additional $10 billion into rebuilding low-income areas across the U.S. and the world by 2005. You can achieve this goal by simply banking with a community development bank or credit union. For more advanced investors, there are community development loan and venture capital funds, pooled community investment portfolios, and mutual funds with community investment components.
A group of black farmers in South Africa. Low-income housing developers in Kentucky. Owners of a small food co-op in Oregon. Though they come from very different places, all of these people have one thing in common - they were deemed "unbankable."
Too poor, too inexperienced, too high-risk to receive a loan from a traditional financial institution, but with loans from four different community development institutions, they reached their goals.
1% In Community |
The Social Investment Forum Foundation and Co-op America have launched a campaign to encourage everyone to put their banking and investment dollars to work strengthening communities that have been left behind. The goal of the 1% in community campaign is to triple the $5 billion already involved in community investing as of 2000. This would move an additional $10 billion into disadvantaged areas across the country and around the world.
Over a three-year term, $15 billion can finance: over 15 million US microenterprises or over 2 million small businesses. Internationally, it could create 55 million microenterprises (calculations by Calvert Foundation).
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The number of institutions and professionals that have pledged to devote at least 1 percent of their assets to community investing jumped from 23 to 54 in the first year of the 1% In Community. This means more than $1 billion in assets are earmarked for community investing.
Investors include large institutions - General Board of Pensions of the United Methodist Church, Fannie Mae Foundation and Domini Social Investments - and over 20 professional advisers across the US.
According to the Social Investment Forum's 2001 Trends Report on Socially Responsible Investing, community investing grew by more than 40 percent between 1999 and 2001. As of mid-2001, assets in community investment vehicles stood at $7.6 billion.
Eco-Investing: Shorebank Pacific
When the People's Food Co-op in Portland, OR. needed a new building, the members turned to a bank that supports environmental values and community investing for a loan.
Member/ owner Miles Uchida says many traditional banks would have been skeptical of giving a loan to them because they sell organic produce and planned to build a new store that incorporates green building practices. But Shorebank Pacific gave them $388,000 precisely because of this. This FDIC-insured community development bank was created to support projects that combine environmental awareness and economic development.
Since opening in 1997, the bank has supported projects from British Columbia to San Francisco. Its borrowers have used their loans to establish an environmentally focused alternative school, redevelop an historic apartment building, create a green office building, and expand an organic dairy, among others. The bank also has staff who work with potential borrowers to help them further reduce waste and pollution, and conserve natural resources.
About 1100 people from 47 states make the loans possible through their "EcoDeposits," which are savings accounts, CDs, or IRAs they hold with the bank. "When someone places money with ShoreBank Pacific, those funds are immediately loaned to a small business owner to strengthen a business and bring environmental awareness to it," says deposit manager Laurie Landeros. Financial returns are similar to traditional banks.
