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Looking for Good Alternatives to the Stock Market?

| Thursday November 20th, 2008 | 0 Comments

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logo-calvert_foundation.jpgIf you’ve been seriously bruised in the stock market lately, and your 401k is starting to look like a 201k, maybe it’s time to consider investing your money where it can do some good. The expanding area of socially responsible investing (SRI) is offering a growing selection of innovative financial products that provide both financial and social returns. Consider it much safer and certainly much more rewarding than the stock market, which is starting to resemble a night out in Vegas.
When considering SRI, you have a number of approaches, but few offer the impact of Community Investment groups that invest in areas under served by traditional financial institutions. These groups invest in nonprofits and social enterprises that are tackling critical social problems. The Calvert Foundation is one of the leaders in this area, and also an organization that is bringing the social capital market to life – connecting investors with social investment opportunities. They were one of the sponsors at the recent SoCap08 conference where I had a chance to speak with Shari Berenbach, the President & CEO.


Triple Pundit: What is Community Investing, and how is it different than other forms of social investing like microfinance?
Shari Berenbach: As a Community Investment foundation, we invest directly into organizations that will use the investment capital as a tool to end poverty or to make a direct community impact. We invest in many different organizations like microfinance institutions overseas, community development financial institutions here in the US, affordable housing developers, fair trade cooperatives, and community development corporations. Each borrower has their own strategy for how they use capital to finance community revitalization and create economic opportunity for all. Microfinance is just one strategy.
3P: It sounds like Calvert Foundation is involved in a lot of different development activities. Can you give us examples of ones that are having big social impacts?
Chestnut-Linden-Courtyard.jpgSB: A good portion of our portfolio is invested in community-based organizations that work on the front lines of the affordable housing fight to get and keep families in their homes. One great example close to home is BRIDGE Housing based in San Francisco who are the largest non-profit developer and manager of affordable housing in California. They’ve built over 13,000 affordable homes in California many in the highest-cost areas of the state.
3P: How do you think Calvert Foundation is unique?
SB: What is really unique about Calvert Foundation is that we make it possible for every day people to invest in community initiatives with full confidence that their money will come back with interest. This is a real investment product that is sold by brokers and financial planners, and is held in brokerage accounts and transacts like most other securities. What sets it apart is that the full value of the investment is lent to non-profits to create real change at the community level. It’s the rigor and discipline we bring to the non-profit space that allows us to serve as a bridge between investment and community impact.
3P: You make your investments through Community Investment Organizations? How are these organizations vetted and monitored?

SB: Calvert Foundation has an in-depth due diligence process to vet our potential investees. We have a team of investment officers who define our sector strategy and oversee the work of outside analysts who actually underwrite individual projects. As Calvert Foundation tends to lend as a general recourse, unsecured lender, and we generally do not have collateral for our loans, we actually rely upon in-depth monitoring to ensure the credit quality of our lending. We literally update the due diligence on our borrowers each and every year, so active monitoring is an important part of our business model.
social_innovations.jpg3P: How much of your investment money comes from individual investors versus large investment partners?

SB: More than half of the funds come from larger institutional investors – Calvert Funds alone represent about a quarter of the capital raised. We then also have significant investments from others in the financial services world (e.g. Merrill Lynch), faith based investors, family foundations and other associations like the Council on Foundations. We still have thousands of individual investors, however, who have placed anywhere from $100 to $5,000 in the Community Investment (CI) Note. We allow investors to pick the geographic region where their capital will go and choose the return they receive anywhere from 0 to 3%.
3P: Has the recent credit crisis affected you ability to attract investors or make loans?
SB: On the ability to make loans, the answer is no. There is more demand for capital than ever before with commercial credit drying up. For the most part our portfolio continues to perform well and our existing investor base is stable. We’ve been active for more than a dozen years, with over $200 million in total assets, 4,000 investors and 230 borrowing non-profits. Even with all this growth, we feel that this market is just now getting ready to take off!
On Shari’s advice, I spent a few minutes reviewing Calvert’s current Social Impact Report where you can find so many examples of how Community Investment is making an impact in local communities throughout the world. I was especially moved by the story of Patience Wilson who suffered an unstable home situation throughout her childhood in Minneapolis. Like 1800 kids on any given night in Minneapolis, Patience found herself homeless at age 17. That’s when she discovered St. Barnabas apartments for homeless youth, a property of Calvert Foundation borrower Aeon. Thanks to the stable environment provided by St Barnabas, today, Patience is in college and working part-time.
Demand is high, returns are safe, the investor base is stable, and the portfolio is performing well. Sounds like a perfect place to invest in these turbulent times, plus you get the added satisfaction of positively impacting so many lives.


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