US Impact Investing Alliance Releases New Report on Community Investing and How to Generate More Capital to Underserved Communities

NEW YORK, June 3, 2021 /PRNewswire/ — Today, the US Impact Investing Alliance (“Alliance”), an organization dedicated to building the impact investing ecosystem, released a report on community investing titled “Impact in Place: Emerging Sources of Community Investment Capital and Strategies to Lead it at Scale.” The full report, which was commissioned by 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 flows to local economic development, including how emerging sources and strategies could help shape the future of the community investment field. The report provides recommendations for investors and others looking to increase the flow and effectiveness of investment capital to underserved communities.

Fran Seegull, Chairman of the US Impact Investing Alliance: “Community investment is a powerful tool that has the potential to transform underserved communities that have been denied adequate access to economic development opportunities for too long. The crises of the past year have highlighted the importance to inject capital into these communities at scale, effectively and with profound impact.”

Darren Walker, Chairman of the Ford Foundation and Chairman of the US Impact Investing Alliance: “As is too often the case, the COVID-19 pandemic and economic crisis have disproportionately affected 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 quickly to invest in communities that have historically lacked the resources to deliver real and equitable impact. »

David Erickson, Senior Vice President and Head of Outreach and Education at the New York Fed: “This report aims to spark discussion and ultimately direct capital towards powerful projects and approaches that help advance economic resilience and mobility. The Alliance is a critical voice in this space, and we are proud to partner with their team to launch this report.”

The year 2020 has seen a diverse and growing number of institutions, especially businesses, engaging in community investing. In the report, the Alliance explores some of these initiatives, as well as notable innovators that are leveraging capital and community participation in particularly innovative ways. Details and links to individual case studies are included below.

  • “Leveraging Community Investment Ecosystems to Help Small Business: Local Collaborations to Support Main Streets in Chicago, California, New York and beyond” https://www.prnewswire.com/news-releases/us-impact-investing-alliance-publishes-new-report-on-community-investment-and-how-to-drive-more-capital-to-underserved-communities-301305290.html
  • “Corporate Support for Local Economic Development in Response to the Racial Justice Crisis: New Commitments from PayPal, Netflix, Twitter and Others” https://www.prnewswire.com/news-releases/us-impact-investing-alliance-publishes-new-report-on-community-investment-and-how-to-drive-more-capital-to-underserved-communities-301305290.html
  • “A Multifaceted Approach to Community Investment Engagement: Growing the Opportunity Finance Network with Google Small Business Fund and Google Sustainability Bond” https://www.prnewswire.com/news-releases/us-impact-investing-alliance-publishes-new-report-on-community-investment-and-how-to-drive-more-capital-to-underserved-communities-301305290.html
  • “Flowing Donor Advised Fund Capital to Communities: Innovative Strategies from ImpactAssets and CapShift” https://www.prnewswire.com/news-releases/us-impact-investing-alliance-publishes-new-report-on-community-investment-and-how-to-drive-more-capital-to-underserved-communities-301305290.html
  • “A Participatory Model for Restorative Community Wealth Creation: A Look at the Ujima Fund” https://www.prnewswire.com/news-releases/us-impact-investing-alliance-publishes-new-report-on-community-investment-and-how-to-drive-more-capital-to-underserved-communities-301305290.html

While 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, ill-defined market segmentation, misperceptions or concerns about fiduciary duty, the difficulty of integrating community investments into traditional portfolios, and the need to more qualified investment professionals who understand the industry.

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 results for members of these communities. . These recommendations include the following:

  • Investors should do more to meet the huge need for risk-taking capital: There is strong 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 risky positions in the capital structures of community development financial institutions.
  • Investors should help streamline the process of raising capital for community intermediaries: Investors should develop more streamlined and predictable investment approval processes that are fully transparent to the intermediary borrower and aim to provide capital more quickly.
  • Client-facing channels, including registered investment advisers and private wealth management platforms, should increase their awareness of community investment strategies: Both impact-focused and traditional platforms should have a basic level of knowledge about community investing and its potential to achieve client goals. As the demand for values-aligned investments 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 investment can be leveraged to build an equitable recovery.

About the American Alliance for Impact Investing

The US Impact Investing Alliance (“Alliance”) is an organization dedicated to building the impact investing ecosystem by filling market gaps and addressing common 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, visit www.impinvalliance.org.

Media Contacts
17 Communications
Dmitri Ioselevitch
[email protected]

SOURCE American Alliance for Impact Investing

Related links

http://www.impinvalliance.org

Jill E. Washington