The Boston Impact Initiative closed its second fund at $22 million, surpassing its $20 million target, to invest in New England based small businesses and non-profits.
The community development financial institution, or CDFI, is allocating 30% of the fund for community-controlled real estate projects, including affordable housing purchases and housing cooperatives.
The fund has already invested more than $10 million into 29 companies, supporting over 1,000 jobs and 700 units of affordable housing in the New England area.
Its portfolio companies include 88 Acres, a protein bar and nut butter manufacturer, Nuevo Dia Adult Day Health, an adult daycare center, and the East Boston Neighborhood Trust, which acquires properties in East Boston to maintain affordability.
It raised capital from over 240 impact-oriented and local investors in 24 states.
“There are absolutely investors that continue to care and prioritize those areas of impact,” Francisco said. “They want to invest more into community solutions, as opposed to the stock market, or into extractives like hedge funds.” Boston Impact Initiative’s Betty Francisco told ImpactAlpha
Democratizing impact investing
The fund raised $1 million through community notes sold to local investors in New England and New York, who will receive priority in repayment. The initiative’s nonprofit status allows it to accept investments from non-accredited investors under a charitable exemption. The remainder of the fund was financed through higher-risk, lower-return notes purchased by impact-first investors.
“The purpose of the community notes is to democratize access to this fund and to impact investing,” Francisco said. “We created a capital stack that prioritized the greater return and the greater security for those community note holders.”
Some of these local investors included Boston Medical Center, Union Capital, a local nonprofit that promotes community engagement, and Temple Israel.
Francisco said Union Capital saw the fund as an alternative investment opportunity that aligned with their mission: “Rather than putting it into a CD and a bank, they decided they wanted to put it into an aligned partner.”
Doubling down
Ishita Shah, an investment advisor who underwrote BII for clients at Align Impact and now for an unnamed family office, noted how the fund’s success reflects how many impact-first families are doubling down rather than stepping back.
“What you end up seeing is a lot of family offices and foundations doubling down on DEI, doubling down on their capital commitments to impact first strategies,” Shah told ImpactAlpha.
Registered investment advisors including Trillium Asset Management, Natural Investments, and Clean Yield connected BII with family offices in this fundraise.
“A lot of family offices and foundations understand that, especially under this administration, this is not a moment for panic, but a moment of opportunity and a moment to step up” Shah said.
She said impact investing has opened an alternative to philanthropy for families focused on wealth preservation. “There is a greater pool of investors who are looking to preserve their wealth, rather than accumulate greater wealth.”
