Investing in Your Own Backyard

The push towards "local" is mostly viewed through consumer eyes.  Whether shopping at local stores rather than national chains, or eating local foods rather than those shipped from thousands of miles away, being local is emerging as vital to the sustainable development movement. 

Socially responsible investors can get in on the act as well.  Supporting community development financial institutions (CDFIs) is a great way to make your money work for your community. CDFIs are unique because they focus on providing financial services to distressed and under-served areas, with a focus on community development. 

The CDFI Coalition, a non-profit supporting the industry, breaks down CDFIs into six categories: community development banks, community development loan funds, community development credit unions, microenterprise funds, community development corporation-based lenders and investors, and community development venture funds.  Each has a distinct purpose, and presents a distinct type of investment opportunity for the socially responsible investment. 

Jean Pogge believes that SRI has only just begun to explore the ways in which in can direct money to CDFIs.  "The first steps have been taken. Domini Social Investment showed thoughtful leadership in 1994 when they established the Domini Money Market Account at ShoreBank; this account deploys millions of dollars in deposits into community investing.  The creation of the CDARs program, which offers up to $30 million of FDIC insurance to a single customer, has been a tremendous leap forward for larger investors.

Calvert Foundation's Community Investment (CI) Notes is the first product that can leverage the large mainstream broker network to gather retail investments.  These efforts, however, are only first steps toward meeting the needs of the diverse SRI investor community. Collaboration must continue in order to create the rich product line needed to ensure that community development banks have the funds available to meet growing loan demand."

For those who aren't interested in stocks, or would like to see their investments directly impact their local area, CDFIs are an exciting avenue.  To learn more about the different opportunities check out the following links:

Community Development Banks: http://www.communitydevelopmentbanks.org/
Community Development Loan Funds: http://www.opportunityfinance.net/
Community Development Credit Unions: http://www.natfed.org/i4a/pages/index.cfm?pageid=1
Microenterprise Funds: http://microenterpriseworks.org/
Community Development Venture Capital Funds: http://www.cdvca.org

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Disclosure: The author works for CDVCA, the trade-association for community development venture capital funds.