This article is from our archives as part of the 100th issue special, celebrating twenty-five years of quarterly newsletters.
Community investment is one of three pillars of socially responsible investing, alongside screening and shareholder advocacy. As natural disasters increase with climate change in the 21st century, this article illustrates why Natural Investments has always made community investing a key component of any client portfolio.
In the fifteen months since hurricanes devastated the Gulf Coast Region, we have participated in revitalizing communities by investing in affordable housing, minority-owned businesses, and redeveloping urban and rural areas torn apart by the storms.
Community development financial institutions (CDFIs) have channeled capital to low-income and displaced people who are traditionally underserved by conventional banks, providing credit to those who have insufficient income or lack credit or collateral. This assistance has been and continues to be critical for those hardest hit by Hurricane Katrina. Because the CDFIs were already in these communities, they had the infrastructure and relationships in place to offer immediate and prolonged help throughout the recovery effort.
Natural Investments investors have invested more than $2.2 million into this community investing initiative through two primary vehicles: CRA Qualified Investment Fund and Calvert Community Investment Notes. The CRAFund (ticker CRAIX), of which NIS investors currently own $1.7 million, is the ninth largest SRI mutual fund, with nearly $800 million in assets—$15 million of which have been bonds supporting reconstruction during the post-Katrina Gulf Coast recovery. In September 2005, CRAFund became the first mutual fund in the U.S. to dedicate fund assets towards post-Hurricane Katrina reconstruction in New Orleans and other damaged portions of Louisiana, Alabama, Mississippi, and also in South Florida and parts of Texas where the largest numbers of evacuees relocated. Since then, CRAFund has invested $15 million in bonds supporting reconstruction in disaster areas.
The Calvert Foundation has directed a total of $1.6 million in affordable loan capital to five groups that are working in the Gulf Coast Region. These loans are based, in part, on investment funds raised since 2005 through the “Gulf Coast Recovery Initiative,” a Community Investment Note program. NIS investors currently hold $525,000 of these notes.
Calvert Foundation has disbursed $1 million to the Community Recovery Fund, partnering with Rural Local Initiatives Support Corporation (Washington, DC) and Enterprise Community Partners (Columbia, MD). They provide permanent affordable housing to working poor and extremely low-income people primarily in Louisiana, Mississippi and Alabama. Enterprise Housing provided emergency housing and support services to 1,500 Hurricane Katrina evacuees and advised the Louisiana Recovery Authority on developing a comprehensive $8 billion housing rebuilding plan. An affiliate of the Local Initiatives Support Corporation has committed a total of $50 million for first mortgage loan capital to support affordable housing development in Louisiana and Mississippi, which to-date has repaired 400 homes and built another 550 homes.
Other Calvert Foundation capital placements include: Affordable Housing Resources of Nashville, TN, which worked with federal subcontractors to settle more than 2,000 evacuees in over 500 trailer homes in Baker, Louisiana, and ASI Credit Union of Harahan, LA and Community Development Capital of New Orleans, LA.
Every dollar invested in a Calvert Community Investment Note is placed in a diversified loan pool with the objective of earning both a financial and a social return. The full value of the capital is invested and then reinvested several times in low-income communities – allowing individuals to “magnify” the impact of their assets in a way that would be impossible to achieve through a simple charitable donation. Community Investment Notes fund a dynamic portfolio of loans to nearly 200 outstanding non-profit organizations in all 50 states, and over 100 countries around the world, that target the following categories: affordable housing (building and refurbishing homes for lower income families and individuals) microcredit (loans of as little as $50 to help the poor turn their lives around); small business loans (helping people start or strengthen job-creating and community-building businesses); community facilities (financing for local nonprofits and cooperatives, supporting healthcare, education, childcare and many other core needs in troubled communities); and social innovation capital (cutting-edge programs such as support for fair-trade farmers, innovations that protect the environment, and the promotion of independent media).
Photo credit: Kenneth Terry and Robert Harry of the Treme Brass Band at a dedication ceremony for homes that were rebuilt after
Hurricane Katrina in the 9th Ward. AP Photo/Bill Haber