REPORT: INVESTORS INCREASINGLY DRAWN TO COMMUNITY INVESTING, WITH 40 PERCENT JUMP IN ASSETS
WASHINGTON, D.C.///March 28, 2006///Community investing -- the capital that institutions and individuals invest in towns and neighborhoods in the U.S. and around the globe that are underserved by traditional financial institutions – surged by 40 percent from 2003 to 2005 and nearly quintupled in the last decade, according to the “Community Investing Trends Report” of the Community Investing Program (http://www.communityinvest.org), a project of the Social Investment Forum Foundation and Co-op America.
With a focus on revitalization through increasing home ownership, small business job creation, and vital community-level services, community investing rose to $19.6 billion in 2005 from $13.7 billion in 2003 and just $4 billion in 1995. Over the past decade, the community investing measured in the report has grown more than 388 percent, making it one of the fastest-growing segments of socially responsible investing (SRI), according to the CI Trends Report.
Shared Interest Executive Director and Community Investing Program Chair Donna Katzin said: “Community investing remains one of the fastest growing areas in the world of socially responsible investing and that trend is likely to continue with the heightened interest in community investing in the wake of Hurricane Katrina. While the socially responsible investment strategies of screening and shareholder advocacy focus on promoting corporate responsibility, community investing enables individuals and institutions to invest directly in local organizations and projects that create more equitable and sustainable communities around the world. The continuing surge in community investing assets is increasing economic opportunities for lower-income communities and spurring industry developments that make it easier for a broad range of investors to participate in this expanding field."
Trillium Asset Management Vice President/Director of Finance and Administration Linnie McLean said: “Investors are increasingly attracted to community investing because it allows them to have a strong impact on low-income communities domestically and internationally while earning a return on their investment. Community investments are helping people rebuild in areas impacted by hurricane Katrina and last year’s tsunami, it’s helping families around the world by creating business opportunities through microenterprise loans, and it’s helping low-income people across the United States take part in the American Dream of owning a home. No matter what their social or geographic interests, investors can find a community investing product that works for them.”
Underdog Ventures President and Founder David Berge said: “It’s really encouraging to see community investors combine their absolute commitment to a positive impact in communities, with an increasing sophistication across the risk and return spectrum. Community investors who began their involvement with market-rate insured deposits at community development banks or credit unions are now turning as well to loan funds, pooled funds and venture capital products to diversify their community investment portfolios while creating a high-impact in targeted communities.”
Highlights of the “Community Investing Trends Report” include the following:
* Since 1999, the first year the Community Investing Program separately tracked community investing sectors, the assets in Community Development Banks have grown more than 247 percent from $2.9 billion in 1999 to $10.1 billion in 2005. Since 2003, assets of Community Development Banks have increased 41 percent from $7.2 billion.
* Assets in Community Development Credit Unions grew by 749 percent from $610 million in 1999 to $5.1 billion in 2005. In 2003, $2.7 billion in community development credit unions’ assets were identified.
* Community Development Loan Funds’ assets increased 97 percent from $1.7 billion in 1999 to $3.4 billion in 2005, growing by $83 million since 2003. Of this $3.4 billion in loan fund assets, $165 million are in international funds that provide or guarantee loans for small business creation and community development abroad.
* Assets in Community Development Venture Capital Funds have grown 480 percent since 1999, from $150 million in 1999 to $870 million in 2005. In 2003, $485 million were identified in Community Development Venture Capital.
* Socially responsible investment professionals and institutions continue to lead in channeling money to community investing, including over $2 billion from Social Investment Forum members.
As the Community Investing Trends Report notes: “Community investing arose to support the spectrum of community development organizations working to revitalize distressed communities. Since the 1970s, national and international community investment institutions have been making loans and investments and creating permanent, positive changes in the poorest neighborhoods in cities, in rural areas, on Native American reservations, and in other places underserved by traditional financial institutions. Economic self-help — the concept of giving a hand up, not a hand-out — and truly empowering the communities served, are at the heart of community investment institution’s missions. Through providing loans and financial services, as well as mentoring and education, these institutions have helped lower income families and communities begin to control their own financial destinies.”
The impacts of community investing can be clearly seen in the areas affected by Hurricane Katrina. For example, in Marrero, Louisiana, Sandra and Alvin LaBeaud suffered extensive damage to their home from the hurricane: the back half of their house was missing, the ceiling had caved in, and there was mold everywhere. Hope Community Credit Union was able to offer them an emergency six-month, no-interest/no fee loan to help the LaBeuads catch up on their mortgage and rebuild their lives. Community investing institutions throughout Louisiana and Mississippi are having similar impacts on people’s lives in affected communities.
HOW TO BECOME A COMMUNITY INVESTOR
Any institution or individual can become a community investor. The Social Investment Forum Foundation and Co-op America encourage all investors to direct at least 1 percent of their assets to community investing. One of the most popular ways to invest in communities is by opening an account at a community development bank or credit union.
Most individual investors open money market accounts or certificates of deposits. Checking and savings accounts, CDs and IRAs also may be provided through community development banks or credit unions, which will use the deposit to strengthen the local community. If there is not a community development bank or credit union in their local community, many investors open up accounts in community investment institutions in other locales
Another approach is to invest in community development loan funds, pooled funds, and venture capital funds. These investments support local or international projects that are serving lower-income communities. For individuals and institutions wanting to invest in mutual funds, some mutual funds have a community investing component as well.
For the most comprehensive list of community investing options, visit the Community Investing Center on the Web at http://www.communityinvest.org.
ABOUT THE COMMUNITY INVESTING PROGRAM
The Social Investment Forum Foundation and Co-op America started the Community Investing Program in 2001 to help spur investment into the community investing field, especially from socially responsible investors. The Program works with institutional and individual investors on overcoming the barriers they face to community investing and educating them about their options. The Social Investment Forum Foundation is a national nonprofit organization providing research and educational programs on socially responsible investing. Co-op America is a national nonprofit organization founded in 1982 that provides the economic strategies, organizing power and practical tools for businesses and individuals to address today's social and environmental problems. The program's Web site is http://www.communityinvest.org.
CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com.
With a focus on revitalization through increasing home ownership, small business job creation, and vital community-level services, community investing rose to $19.6 billion in 2005 from $13.7 billion in 2003 and just $4 billion in 1995. Over the past decade, the community investing measured in the report has grown more than 388 percent, making it one of the fastest-growing segments of socially responsible investing (SRI), according to the CI Trends Report.
Shared Interest Executive Director and Community Investing Program Chair Donna Katzin said: “Community investing remains one of the fastest growing areas in the world of socially responsible investing and that trend is likely to continue with the heightened interest in community investing in the wake of Hurricane Katrina. While the socially responsible investment strategies of screening and shareholder advocacy focus on promoting corporate responsibility, community investing enables individuals and institutions to invest directly in local organizations and projects that create more equitable and sustainable communities around the world. The continuing surge in community investing assets is increasing economic opportunities for lower-income communities and spurring industry developments that make it easier for a broad range of investors to participate in this expanding field."
Trillium Asset Management Vice President/Director of Finance and Administration Linnie McLean said: “Investors are increasingly attracted to community investing because it allows them to have a strong impact on low-income communities domestically and internationally while earning a return on their investment. Community investments are helping people rebuild in areas impacted by hurricane Katrina and last year’s tsunami, it’s helping families around the world by creating business opportunities through microenterprise loans, and it’s helping low-income people across the United States take part in the American Dream of owning a home. No matter what their social or geographic interests, investors can find a community investing product that works for them.”
Underdog Ventures President and Founder David Berge said: “It’s really encouraging to see community investors combine their absolute commitment to a positive impact in communities, with an increasing sophistication across the risk and return spectrum. Community investors who began their involvement with market-rate insured deposits at community development banks or credit unions are now turning as well to loan funds, pooled funds and venture capital products to diversify their community investment portfolios while creating a high-impact in targeted communities.”
Highlights of the “Community Investing Trends Report” include the following:
* Since 1999, the first year the Community Investing Program separately tracked community investing sectors, the assets in Community Development Banks have grown more than 247 percent from $2.9 billion in 1999 to $10.1 billion in 2005. Since 2003, assets of Community Development Banks have increased 41 percent from $7.2 billion.
* Assets in Community Development Credit Unions grew by 749 percent from $610 million in 1999 to $5.1 billion in 2005. In 2003, $2.7 billion in community development credit unions’ assets were identified.
* Community Development Loan Funds’ assets increased 97 percent from $1.7 billion in 1999 to $3.4 billion in 2005, growing by $83 million since 2003. Of this $3.4 billion in loan fund assets, $165 million are in international funds that provide or guarantee loans for small business creation and community development abroad.
* Assets in Community Development Venture Capital Funds have grown 480 percent since 1999, from $150 million in 1999 to $870 million in 2005. In 2003, $485 million were identified in Community Development Venture Capital.
* Socially responsible investment professionals and institutions continue to lead in channeling money to community investing, including over $2 billion from Social Investment Forum members.
As the Community Investing Trends Report notes: “Community investing arose to support the spectrum of community development organizations working to revitalize distressed communities. Since the 1970s, national and international community investment institutions have been making loans and investments and creating permanent, positive changes in the poorest neighborhoods in cities, in rural areas, on Native American reservations, and in other places underserved by traditional financial institutions. Economic self-help — the concept of giving a hand up, not a hand-out — and truly empowering the communities served, are at the heart of community investment institution’s missions. Through providing loans and financial services, as well as mentoring and education, these institutions have helped lower income families and communities begin to control their own financial destinies.”
The impacts of community investing can be clearly seen in the areas affected by Hurricane Katrina. For example, in Marrero, Louisiana, Sandra and Alvin LaBeaud suffered extensive damage to their home from the hurricane: the back half of their house was missing, the ceiling had caved in, and there was mold everywhere. Hope Community Credit Union was able to offer them an emergency six-month, no-interest/no fee loan to help the LaBeuads catch up on their mortgage and rebuild their lives. Community investing institutions throughout Louisiana and Mississippi are having similar impacts on people’s lives in affected communities.
HOW TO BECOME A COMMUNITY INVESTOR
Any institution or individual can become a community investor. The Social Investment Forum Foundation and Co-op America encourage all investors to direct at least 1 percent of their assets to community investing. One of the most popular ways to invest in communities is by opening an account at a community development bank or credit union.
Most individual investors open money market accounts or certificates of deposits. Checking and savings accounts, CDs and IRAs also may be provided through community development banks or credit unions, which will use the deposit to strengthen the local community. If there is not a community development bank or credit union in their local community, many investors open up accounts in community investment institutions in other locales
Another approach is to invest in community development loan funds, pooled funds, and venture capital funds. These investments support local or international projects that are serving lower-income communities. For individuals and institutions wanting to invest in mutual funds, some mutual funds have a community investing component as well.
For the most comprehensive list of community investing options, visit the Community Investing Center on the Web at http://www.communityinvest.org.
ABOUT THE COMMUNITY INVESTING PROGRAM
The Social Investment Forum Foundation and Co-op America started the Community Investing Program in 2001 to help spur investment into the community investing field, especially from socially responsible investors. The Program works with institutional and individual investors on overcoming the barriers they face to community investing and educating them about their options. The Social Investment Forum Foundation is a national nonprofit organization providing research and educational programs on socially responsible investing. Co-op America is a national nonprofit organization founded in 1982 that provides the economic strategies, organizing power and practical tools for businesses and individuals to address today's social and environmental problems. The program's Web site is http://www.communityinvest.org.
CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com.
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