According to the 2022 census, 11.5% of the U.S. population lives in poverty. That’s nearly 38 million people. Living in poverty means earning less than $15,060 per year for an individual, or $31,200 for a family of four. It also means struggling to access quality food, education, healthcare, and economic opportunities.
In some communities, the poverty rate is a staggering 40% or more, especially in parts of the South and Southwest. Children often attend subpar preschools in these neighborhoods—if there are preschools at all. Their public schools, which rely heavily on property taxes for funding, have trouble attracting high-quality teachers, let alone equipping educators with the best technology and infrastructure. Access to grocery stores that offer fresh fruits and vegetables is often limited, as is access to good healthcare, as doctors and hospitals migrate to wealthier suburbs where patients are covered by private insurance.
The barriers to escaping poverty in this country are steep and complex, but Capital Impact Partners (CIP), a mission-driven, nonprofit community development financial institution, is tackling them head on. CIP invests in high-poverty areas that are often overlooked by traditional financial institutions. It is part of Momentus Capital—a mission-focused financial services organization based in Arlington,VA, that serves as the umbrella for Capital Impact Partners, CDC Small Business Finance, Ventures Lending Technologies, and Momentus Securities.
CIP’S WORK FOCUSES ON SEVERAL STRATEGIC PILLARS
- Creating systemic change so all people have a path out of poverty
- Supporting equal access to economic services
- Strengthening the links between health, education, housing, and economic opportunities that help people and communities thrive
- Promoting the revitalization and growth of diverse, mixed-income communities that spur economic mobility
While its goals are ambitious, CIP has developed a robust set of programs and services that combine to create substantial and sustainable impact. They include:
- Offering flexible and affordable loans to “community pillars” in health, education, retail, food, affordable housing, and cooperative businesses
- Investing in growth-stage companies that create social impact
- Providing training, mentoring, and network initiatives to real estate developers and entrepreneurs
- Advancing sound public policies through advocacy that increase access to critical social services and support equitable generational wealth building
The numbers say a lot. CIP has deployed more than $2.5 billion since its founding in 1982, serving nearly five million people and creating more than 32,500 jobs nationwide. It has also supported the creation of more than 570 community health centers, 275 high-quality charter schools, 100 food retailers, 42,000 affordable housing units in 281 communities, and nearly 225 worker-owned cooperative businesses.
One of those businesses is Obran Cooperative— a unique holding company that finds, acquires, and holds small- to medium-sized businesses and real estate on behalf of its worker owners. Founded in 2019 in Baltimore, MD, the company focuses on three areas: healthcare, employment services, and logistics. Now headquartered in Seattle, WA, Obran also operates an institute that aims to grow the field of worker-owned businesses and launch innovative worker well-being programs.
Obran Health, a portfolio of healthcare companies developed and acquired by Obran Cooperative, recognizes the power of home as a key to healthy aging, but it also acknowledges that the people who provide that care—personal care assistants and home health aides—are often undervalued and underpaid. It aims to change that equation by empowering workers as owners and helping local, small home health companies stave off acquisitions by outside strategic investors.
When Obran Cooperative sought to acquire Torrance, CA-based Physicians Choice Home Health and transition it into a worker-owned business, it needed an infusion of capital.
Private equity and venture capital weren’t a good fit, as traditional investors in these arenas tend to focus more on turning a profit than creating sustainable impact. Similarly, meeting the criteria to obtain commercial loans from traditional banks seemed questionable. That is where CIP entered the conversation. It made a $1 million preferred equity investment to support the acquisition of Physicians Choice Home Health in 2022, and structured the transaction using non-dilutive capital, meaning it didn’t take ownership away from the workers. Rather, CIP will get paid a portion of the profits for three to five years, and then it will exit, leaving full ownership and wealth building with the workers and the communities they serve.
Capital Impact Partners periodically offers investment notes—short-term bonds that pay interest to their holders and a return of principal at maturity. Investing in them has allowed many Natural Investments clients to participate in CIP’s efforts to address wealth inequality and build healthy, inclusive, and vibrant communities.
This publication is distributed to clients and friends of Natural Investments, LLC (NI). NI is an investment adviser registered with the SEC. It is for educational purposes only and is not intended to contain recommendations or solicit sales of any specific investment. Authors, representatives, or related persons of NI may own securities mentioned in here.
