Traditional lending treats borrowers as risk factors to be managed. But what if we prioritized the psychological well-being and dignity of borrowers alongside their financial health?
This is a question at the heart of the Just Transition Integrated Capital Fund (JTIC Fund), a movement-owned, democratically governed loan fund that shifts capital and power to communities on the frontlines of building a regenerative economy. Launched in 2023, it challenges traditional investment models by putting justice, democratic decision-making, and community self-governance at the center.
Now the fund, which I steward on behalf of Justice Funders, is sharing a suite of resources we used in launching the fund, such as term sheets, policy statements, loan agreements, and a conflict resolution policy. These resources will aid like-minded funders, investors, and movement funds seeking to apply a Just Transition lens to their investment practices.
Capital with community at the center
The JTIC Fund offers philanthropic organizations and impact-first investors a learning vehicle to move assets to BIPOC and working class-controlled funds and grassroots projects. It offers non-extractive financing in the form of 0%-interest, seven- and ten-year loans and accompanying grants. The fund prioritizes long-term engagement, reparative terms, patient capital, and relationship building over more traditional financial returns.
Five groups govern the fund: Climate Justice Alliance, East Bay Permanent Real Estate Cooperative (EB PREC), Equitable Food Oriented Development (EFOD), the Moonsoon Fund, and Right to the City Alliance.
These governing body members draw on lessons they’ve learned from launching their own non-extractive and reparative funds working across sectors – investing in climate solutions, regenerative agriculture, Indigenous communities, affordable housing, and community-owned commercial real estate.
Slowing gentrification, building wealth
The JTIC fund has deployed $5 million in 0% loans and catalytic grants to date. Now, it is attracting new, values-aligned investors who want to learn alongside communities that are stewarding capital in radically different and innovative ways.
For example, a recent $2.25 million, 0%-interest loan with a matching $100,000 grant to the Right to the City Loan Fund proved to be a valuable opportunity to learn how to integrate capital strategies with long-term community organizing and policy strategies.
The investment supported tenants who were purchasing apartment buildings from their landlords and transitioning them to cooperatives. These types of projects help slow gentrification, build assets for working class people, and ensure housing stability for families. They also provide an opportunity for tenants to practice democratic governance and ownership of communal property.
Investments into tenant-owned buildings also provide a powerful organizing base of Right to the City members working on affordable and accessible housing issues across the country, connecting impact investing to a larger strategy for systems change.
Reimagining the rules: Navigating and redefining financial structures
Confronting how to work within existing – and often rigid – financial and legal structures that were set up to protect wealth holders has been an ongoing challenge for the JTIC Fund.
In partnership with their fund managers at Just Futures, the JTIC Fund governing body members have identified strategies that not only build power and impact, but also point to how impact-first investing can be reimagined from the inside out.
To do this, the team first had to redefine risk – and get clear about who bears that risk – within financial transactions. Acknowledging that foundations and impact-first investors express a desire to serve a greater mission, the JTIC Fund asks wealth holders to engage in a capital preservation strategy (with a net 0% financial return). Greater financial risk is balanced by greater relationship-based outcomes that span learning, social and ecological returns. The fund’s visionary Investment Policy Statement released in 2023 was the first step in transforming what other financial documents could look like.
Centering borrower well-being: Tools for non-extractive investing
The JTIC Fund has developed a suite of materials that center borrowers’ financial and psychological well-being – not only through reparative terms, but also through non-extractive practices that honor relationships and support trust-building. For example, the fund’s due diligence process values capacity building while taking into account the negative experiences many community borrowers have had with traditional underwriting processes.
Earlier this year, the JTIC Fund launched the virtual JTIC Fund Tool Lending Library, releasing its suite of materials in an open-source format. It is a valuable resource for emergent, community-controlled funds exploring new pathways and seasoned investors looking to evolve their practices.
The JTIC Fund Tool Library includes:
- Term Sheet for Borrowers & Investors: These documents outline both financial engagement and relationship engagement terms for investors and borrowers, including an investor and borrower readiness checklist.
- Contract of Interdependence: In lieu of a traditional conflict of interest policy, the JTIC Fund governing body created a Contract of Interdependence to express the values and spirit of their governance structure and approach to finance.
- Conflict Resolution Policy: When conflict arises, this is the policy the JTIC Fund uses to address concerns. Rather than using punitive measures for borrowers, it is rooted in transformative justice practices. Conflict is viewed as an opportunity for the lender and borrower to reach a deeper understanding of each other’s positions and build trust.
- Relationship and Capacity Building Process: The JTIC Fund’s due diligence process and the materials it collects from potential borrowers are outlined in this document. It seeks to transform due diligence from a process that protects the wealth and power of investors to one that centers the dignity, safety, and self-determination of borrowers.
- Loan Agreements for Investors and Borrowers: These loan agreements center the financial and psychological well-being of borrowers through both terms and practices.
These tools are already inspiring investors and borrowers to reevaluate their practices and approaches to center the people at the core of any investment. Each document prioritizes transformation over short-term transactions.
Invest alongside us
If the fields of philanthropy and impact-first investing truly desire to move humanity and the planet toward a path of sustainability, democratic decision-making and shifting capital to the frontlines, community-based solutions will be increasingly critical. Meeting the current moment means sharing power with – not wielding power over – investees.
For investors and foundations serious about systems change and excited by experimentation, an investment into the JTIC Fund and using the JTIC Fund Tool Lending Library offer pathways for learning, impact, and growth.
Lora Smith is the Director of Investment Partnerships at Justice Funders, where she stewards the Just Transition Integrated Capital Fund.
