Small logo Subscribe to leading news on impact investing. Learn More
The Brief Originals Dealflow Signals The Impact Alpha Impact Voices Podcasts Agents of Impact Open
What's Next Capital on the Frontier Measure Better Investing in Racial Equity Beyond Trade-offs Impact en las Americas New Revivalists
Local and Inclusive Climate Finance Catalytic Capital Frontier Finance Best Practices Geographies
Slack Agent of Impact Calls Events Contribute
The Archive ImpactSpace The Accelerator Selection Tool Network Map
About Us FAQ Calendar Pricing and Payment Policy Privacy Policy Terms of Service Agreement Contact Us
Locavesting Entrepreneurship Gender Smart Return on Inclusion Good Jobs Creative economy Opportunity Zones Investing in place Housing New Schooled Well Being People on the Move Faith and investing Inclusive Fintech
Clean Energy Farmer Finance Soil Wealth Conservation Finance Financing Fish
Innovative Finance
Personal Finance Impact Management
Africa Asia Europe Latin America Middle East Oceania/Australia China Canada India United Kingdom United States
Subscribe Log In

Community development lenders attract new investors to low-income neighborhoods

If you’re looking to help bridge longstanding racial and other barriers to capital for low-income communities, you’ve got yet another option.

Capital Impact Partners, a nonprofit loan fund and federally-certified community development financial institution, or CDFI, this week launched a $100 million fixed-income security that is available to retail investors for as little as $1,000.

Capital Impact’s notes further expand the pool of capital available for low-income, community-development lending. Earlier this month, CNote, based in Oakland, Calif., announced the expansion of its high-yield, low risk savings product; deposits are pooled and invested in CDFIs. The Low-Income Investment Fund launched its online investment offering available to retail investors in 12 states. Earlier this year, The Reinvestment Fund and the Local Initiatives Support Corp., both CDFIs, offered S&P-rated bonds in the public markets.

“CDFIs have long been providing positive impact locally, with positive financial return, for decades,” says Paul Herman, founder of investment advisory HIP Investor. The new issuances “help aggregate impact-oriented investors in a common channel to allocate more easily to impactful, for-profit investments in their community or nationwide.”

A private bond market emerges for low-income community development

Capital impact

“Capital Impact Investment Notes,” rated ‘AA’ by S&P, are available to investors in all states and the District of Columbia except for Arkansas, Pennsylvania and Washington State. The notes are offered in one- to 10-year terms, unsecured, with fixed interest rates based on market conditions at time of sale. The minimum investment is $1,000.

The notes are available to retail investors through broker-dealers using InCapital’s Legacy Platform. With over 800 broker-dealers in its network, InCapital has served as lead agent for offerings from big-name financial institutions such as Bank of America, Prudential, American Express, and corporations like John Deere. The Calvert Foundation also offers its Community Investment Notes through InCapital’s Legacy Platform.

Institutional investors may also invest in Capital Impact’s offering. But the slow-burn, ongoing offering is more friendly to retail investors than a conventional bond offering — it gives them time to get to know Capital Impact Partners and, more broadly, CDFIs as an asset class.

Founded in 1982, Capital Impact Partners has made more than $2.2 billion in loans and investments to organizations that provide services to more than 4.7 million people in low-income communities annually. The investments support healthcare, education, affordable housing, affordable commercial and industrial space and community facilities. The organizations investments are concentrated in Michigan and California.

Capital Impact Partners currently has the highest possible impact rating from Aeris, which rates the impact management and financial strength of CDFIs.

The Reinvestment Fund tests the public bond market’s appetite for social impact

You might also like...