Sustainable Investment Leaders Urge US Community Development Advocates to Develop New Messages and Products to Attract Additional Sources of Capital

Report also finds growing investor interest in community development finance

WASHINGTON, DC — Investment vehicles targeted at community development in the United States are poised to attract new sources of capital—especially from high net worth individuals, family offices, donor-advised funds, community foundations and pension funds—if some important changes are made in the way these products are structured and marketed, according to a report released today by the US SIF Foundation in collaboration with the Initiative for Responsible Investment and the Milken Institute. 

Expanding the Market for Community Investment in the United States
argues that while the recent financial crisis and recession reduced investment opportunities and created a heightened perception of risk for potential investors, managers of community investment vehicles could benefit from a countervailing trend: the growing interest in social “impact” and place-based investing.  

Community investments focus on marginalized areas or communities that conventional market activity does not reach and aim to deliver social benefits such as affordable housing or healthier communities.  The financial products range from concessionary loans and equity investments in nonprofit community groups to market-rate investments in for-profit real estate development.

Historically, the institutions most active in supporting community investing products have been religious institutions, sustainable and responsible investment management firms, and a relatively small number of foundations.  The 18-month research project led by the US SIF Foundation investigated how to broaden the network of investors committed to community development finance, an especially urgent task given that  many forms of community investment are closely tied to public support and tax expenditures that face uncertain futures in a period of constrained public resources. 

The report's authors, in addition to recommending ways to attract new accredited and institutional investors, urged community investing advocates to develop products that are liquid enough to attract retail investors and are readily available through the investment platforms retail investors typically use. 

The report, intended both as a practical guide for those who develop and manage community development vehicles and as a primer and list of resources for potential investors, draws on interviews and conversations with representatives of over a dozen community development investment vehicles and more than 30 current and potential community investors, including foundations, pension funds, wealth management firms and asset managers.  US SIF Foundation led the project in collaboration with the Initiative for Responsible Investment at the Hauser Institute for Civil Society at Harvard University and the Milken Institute. 

Lisa Woll, the CEO of US SIF Foundation, said:  “It is time for investors to take another look at the options available in the community investment space.  We know that many investors who may be unfamiliar with the history and concept of community investing will be drawn to this sector because of their interest in financing health and healthcare services, fresh food provision, sustainable agriculture, and transit-oriented development in ways that include and serve lower-income residents of US communities.  Our report encourages community investment practitioners to appeal to these potential investors' interests and to educate the financial advisors and consultants on which these investors rely.”

David Wood, Director of the Initiative for Responsible Investment at the Hauser Institute for Civil Society at Harvard University, and a co-author of the report, cautioned that, “Our research underscores that a ‘one-size-fits-all' approach will not be as successful as one that is geared towards a specific investor group.   For example, while foundations and many high net worth investors are willing to invest in high-impact products at below-market rates of return, pension funds invest exclusively at market rates of return and on a large scale.”

Paul Irving, the President of Milken Institute, said, “I believe that this report will increase understanding among potential investors of the range of community investment products already available and those products that are now in development. For interested investors, an array of investment options and opportunities exists across asset classes - from public and private debt and equity to direct investments in real estate and operating businesses.” 

Expanding the Market for Community Investment in the United States provides an appendix of resources for community investing, including links to relevant research, potential partners and investment opportunities. 

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The US SIF Foundation undertakes educational and research activities in support of US SIF:  The Forum for Sustainable and Responsible Investment (  US SIF is the US membership association for professionals, firms, institutions and organizations engaged in sustainable and responsible investing. US SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. US SIF's members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and pension funds, foundations and other asset owners.

The Initiative for Responsible Investment at the Hauser Institute for Civil Society at Harvard University serves as a research center on fundamental issues and theories underlying the ability of financial markets to promote wealth creation across asset classes, while creating a stronger society and a healthier environment. The IRI accomplishes its mission by developing and presenting original research, providing a platform for dialogue, and taking practical action around issues of importance to the responsible investment community.

The Milken Institute is a nonprofit, nonpartisan think tank that believes in the power of capital markets to solve urgent social and economic challenges. Its mission is to improve lives around the world by advancing innovative economic and policy solutions that create jobs, widen access to capital and enhance health.

Expanding the Market for Community Investment in the United States was made possible through the generous support of the Ford Foundation.

CONTACT: Megan Smith, 202.747.7820, or