ImpactAlpha, Oct. 26 – Virginia Community Capital has turned a $15 million seed investment from the state in 2006 into more than $600 million in loan originations to finance thousands of affordable housing units, healthcare facilities, small farms, business and jobs. The community development financier is among the leaders of Virginia’s emerging impact investing ecosystem.
A map of 185 “impact capital holders” in the commonwealth has identified more than $230 million in impact capital deployed through more than 900 deals last year.
Impact Finance Center’s Colorado Impact Initiative, New Mexico Impact Investing Collaborative, Michigan Collaborative, Minnesota Impact Investing Collaborative and the Georgia Social Impact Collaborative and other state-level collaboratives also are demonstrating the role local investors can play in creating thriving economies in their own backyards (see, “Invest in where you know: Impact investors rediscover the power of ‘place’”).
The new report, from the Virginia Impact Investing Forum, housed within Social Entrepreneurship at University of Virginia, projects another $222 million will be deployed by community and private foundations and community development financiers in the coming year. That represents a tiny fraction of the $19 billion the university team believes could be unlocked with more networking and training, success stories and talent.
The list does include university endowments, pension funds or family offices, which would add tens of billions of assets that could be activated for impact.
“More and more impact investments are being made every year,” says UVA’s Christine Mahoney, who led the project. “But there’s still a lot of capital on the sidelines.”
In Virginia and the broader Appalachian region, communities, local advocacy groups and place-based investors are building a financial ecosystem for a more economically diverse and sustainable post-coal future (see, “Seeding Appalachia’s sustainable future with public and private capital”).
Virginia is for Entrepreneurs, founded by former Virginia Gov. Terry McAuliffe and Sen. Mark Warner, teamed with venture fund Village Capital to connect local startups with venture funds like Steve Case’s Rise of the Rest fund.
Other impact investors in the commonwealth include Virginia Foodshed Capital, a revolving loan fund for small farmers, as well as Richmond Memorial Health Foundation, Community Foundation for a Greater Richmond. Top destination sectors include education, health, housing, food and agriculture.
Allagash Opportunity Zone Fund is mobilizing capital to renovate existing housing stock for middle-class and lower-middle class residents. The new tax incentive is driving a resurgence in interest in community and economic development all across the US (see, “Opportunity Zone capital flows to real estate but not to small businesses – or impact”).
The exercise from UVA demonstrates the value of a flagship university in a state’s impact investing ecosystem. “We can make this connection point and do it in a cost efficient way,” says Mahoney. Everyone wants the work of intermediaries but no one wants to pay for it. At universities, she says, “you’ve got hungry, smart students that want to do some of the research or the due diligence and you’ve got staffing to oversee them.”