Socially Responsible Investing (SRI) has become a nearly $3 trillion dollar industry in the United States. Investors in SRI use screening and shareholder advocacy to influence corporations to improve their environmental practices, social impact and governance issues. What I was surprised to find out was that community investing is the fastest growing area of SRI. According to Social Investment Forum community investing has grown over 540-percent, from $4 billion to $25.8 billion in assets in the past decade and can be a great way to diversify your SRI Portfolio.
Community Investing directs capital from investors to communities underserved by traditional financial services. It provides access to credit, equity, capital, and basic banking products that these communities would otherwise not have. From affordable housing to small business development, community investing allows investors to connect their money to the people and communities they care about both locally and abroad.
One avenue for community investing that I am particulary passionate about is investing through CDFIs. Community Development Financial Institutions range from small non-profit microenterprise lenders with a few hundred borrowers, to good sized banking institutions like Self-Help Credit Union and Ventures Fund with 3600 borrowers and loans totaling $190 million but they’re all capable of putting community investment capital to work. There are three options to directing your investment dollars into CDFIs. Often you can make a direct investment into a CDFI. You can also go through an intermediary to invest in a Community Investment Portfolio. Lastly, Mutual Funds often have exposure to community investment, but screen closely to be aware of what percentage of your funds reach CDFIs. Whatever the avenue, be sure to speak with a qualified investment advisor to assess your risk tolerance for community investing. Just another way to make a social impact from a personal choice.
* Note that this should not be taken as investment advice from the author or ietransfer.wpengine.com
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