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.”
“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.