Community Investing Overview

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1. COMMUNTY INVESTING OVERVIEW & INSTITUTION/ PRODUCT MATRIX What is Community Investing?Community investing directs capital from investors to communities underserved by traditional financial services and the market. It provides access to credit, equity, capital, and basic banking products that these communities would otherwise not have. In the U.S. and around the world, community investing makes it possible for local organizations to provide financial services to low-income individuals, and to supply capital for small businesses and vital community services, such as child care, affordable housing, and healthcare.Community Investment Institutions (CIIs) can give priority to people who have been denied access to capital and provide them with opportunities to borrow, save, and invest in their own communities. In addition to supplying badly needed capital in underserved areas, CIIs often provide important services, such as education, mentoring, and technical support. They also build relationships between families, nonprofits, small businesses, and conventional financial institutions and markets.In essence, community investing provides opportunities for underserved people to help themselves, whether it is helping a lower-income family in the US buy a home, or helping an entrepreneur overseas escape poverty with a microcredit loan.Investors are increasingly turning to community investing to have a positive impact and connect their money to people and communities they care about. Community investing can be part of any individual or institutional portfolio, and the field is rapidly developing products and services to meet investor needs in many asset classes. Community Investment Industry: Community Investment Institutions (CIIs) serve people in the U.S. and around the world by providing them with opportunities to borrow, save, and invest in their own 2. communities. While all CIIs utilize investor capital to promote community development in underserved areas, there are substantial differences in the institution types, corporate structures, markets served, and products offered to investors.We have tried to standardize the use of the term Community Investment Institutions (CIIs), but sometimes other accepted terms in the community investment industry are used, including Community Development Financial Institutions (CDFIs) and Microfinance Funds.The 4 primary Community Investing Options are:Community Development BanksCommunity Development Credit UnionsCommunity Development Loan FundsCommunity Development Venture Capital Funds In 2007, the assets in community investment institutions (CIIs) based in the US totaled $25.8 billion, up from $4 billion identified in 1995!This growth is due to an increase in the number of community investing institutions (CIIs), improved information on the field, and continued increases in assets among all types of community investing institutions. 3. Socially responsible investment professionals and institutions continue to rise to the challenge of channeling 1% or More in Community, by dedicating at least one percent of portfolio assets to community investments. 100 Social Investment Forum Members are actively taking part in the 1% or More in Community Campaign, investing over $2.4 billion in net new community investments. Visit the Campaigns website at Community Investment Products:This matrix provides an overview of the institutions and products that make up the community investment industry, and is followed by more detailed information about the opportunities. 4. Products Description Rate of InvestmentSecurity Services AvailableReturnTerm Provided to Communities Checking Accounts inMarket-rateNo minimum term. All depositors and/or banks or creditfederally Savingsunions.insured up to $100,000. Account Certificate of Deposit made Market-rate;One month to 120 All depositors Deposit (CD) to a bank or below market rate months.federallycredit union.also available.insured up to$100,000, withbanks in theCDARSprogramCommunity insured up to Development$20 million.Banks Individual Tax-deferred Varies with IRAVaries with IRA All depositors Retirement retirement type (traditional, type; often one-federallyBasic financial & Accountaccount. education, Roth, year minimum. insured up toservices and loanPermitsmoney market)$100,000.products to (IRA)deposits of up and withunderservedCommunity to $4,000 perinvestment term.individuals and Developmentyear, forcommunity Credit Unionswithdrawal after developmentretirement.projects. (Domestic) MoneyCombination of Slightly higherNo minimum term. All depositors Market short-term, low- than a savingsfederally Accountyieldaccount.insured up toinvestments$100,000.(CDs andtreasury bills). Equity Preferred stock No establishedNo maturity dateNot insured. Investment in a bank.return, based on in a Bankperformance ofinvested bank SecondarySubordinateVaries, oftenTerm varies, butNot insured. Capital in a loan that helpsbelow market-generally long Credit Union credit union rate.termbuild balancesheet Senior LoanIndividual or Term set byinstitutional investor; ofteninvestor lendingone-yearmoney to financingcommunity Term set bydevelopment investor; oftenprojects. one-yearminimum Subordinated InstitutionalFunds financeinvestorTerms vary, buthigh-impact Loan must be fairly longproviding a loan communitythat is term or have aNot insured; developmentCommunityVaries withrolling termsubordinate toprotected by projects and small investment term Developmentsenior loans and size, usuallycollateral, loan businesses in theLoan Fundsand helps build loss reserves, U.S., as well as between 0 and (Domestic) the CIIs and the CIIsprovide technical 4%.balance worth. assistance and market Equity Deeply development to Equivalent subordinated borrowers. (EQ2)obligation by aninstitutional Investmentinvestor to helpbuild a CIIsbalance sheet.Can providebank investorswith enhancedCRA credit. 5. Senior LoanIndividual or Varies byTerm set byinstitutional institution, usually investor; ofteninvestor lendingbetween 0-4% one-yearmoney to adepending on financinginvestment termcommunity and size.developmentprojects. GuaranteeInvestment in a Varies byTerm set by Fundsfund that institution, usually investor; oftenguarantees thebetween 0-4% one-yearloans of localdepending on minimum.institutions in a investment term Investments incertain country.and size. funds that workwith microfinanceSmall & Investment in a Varies byTerm set byNot insured;institutions, International Medium fund that institution, usually investor; oftenoften protected cooperatives, andCommunity Enterprisefinances small between 0-4%. one-year by collateral,local banks Development Fundsto mid-sizeminimum. loan loss around the worldenterprises.reserves, and a to provideFunds(International) Fund of Pools ofVaries byTerm set byfunds netfinancing and jobinternational institutions,investor; toFundsfunds thatusually betweenone-year underservedprovide 0-4%.minimum. people anddiversification.communities.Commercial Debt and/or Varies, but oftenVaries, based on Bond equitybetween 5-10% ,offering.investment in a depending onpool of top tiermanagementmicrofinancefees.institutions PrivateInvestment in a Varies, but oftenVaries, based on Equity Funds capital raise for between 5-10%, offeringa pool of depending onmicrofinancemanagementinstitutionsfees. VentureEquity Capitalinvestments in Products newbusinesses inlow-incomeareas in theU.S. andabroad. Equityinvestments andCommunityNew MarketsFor-profitNo establisheddebt with equity Development Venturecompanies thatcharacteristics toreturn. Potential Capitalinvest equity inbusinesses; Venturesmallfor higher returnsNot insured;extensive Capital Funds Companieswhen company Term varies. often protectedenterprises managerial andprofits, and lowerby collateral.located inentrepreneurial(Domestic and returns whenlower-incomeassistance.International)profit is low.areas.Creates new jobsin low-income RuralFor-profitareas. Business companies that Investment invest equity insmall Companiesenterprises inrural,underservedareas. 6. Social Social purposeVaries with Term varies.Not insured.ProvideEnterprise businesses, investmentemployment andProducts often tied to skills in nonprofits, thatunderserved Socialuse their profitcommunities, and Enterprises to further theirraise money (Domestic)mission while through the providing job business to skills in lower-further social incomemission of the communities.organization.Senior and Investments Varies with Term decided by Not insured;A combination ofSubordinated spread over a investment term investor; often often protected services toCommunity Loansnumber of CIIsand size, usually one-yearby collateral,underserved Development that diversifiesbetween 0 and loss communities Pooled Fundsthe portfolio 4%. reserves, and through loans to(Domestic andand lowers risk.creditor investments in International)enhancements. Community Investment InstitutionsFixed Income Pools ofNo established Term decided byNot insured SupportMutual Funds securitiesreturn, please visit investor.affordable (mortgage- and the Mutual Fundhousing, healthCommunityasset-backedPerformance care facilities, and securities, Chart other economic Development municipal development inBond Funds bonds, etc) low and moderate (Domestic)invested in low income and moderatecommunities. income communities.Direct DirectInvestment investment by Varies with institutions that investment have specifics, often in infrastructure to the 7-8% range. monitor investments.Supports the Low Income Tax credits are development of Housing Tax Proprietary Single or Varies with earned over a ten Not insured rental housing for CreditFunds majorityinvestment investor fundsspecifics and year period.lower-income (Domestic)households. through a syndicator loads, syndicator. but often in the 7-8% range.Multi- Funds through Same as aboveInvestor a syndicatorFundswith 2-5 inv. Visit our Online Community Investing Center at your one- stop shop for investing in economic developmentIncluding: Extensive Database of Investment Options Description of Industry and Products Tools for Different Types of Investors Social Impact Information Financial and Risk/Return Information Model Portfolios Resources for Financial Professionals And More 7.


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