Invest in Your Street, Not Just Wall Street

Friday, January 13, 2017

By Susan Hammel, CFA, MCF Executive in Residence

Giving locally makes a lot of sense. We’re lucky in Minnesota to have one of the most generous communities in the country and world.* We also have innovative and effective nonprofit organizations that make the most of each philanthropic dollar.

What about our investments? As thoughtful as we are about our donations, most of us tend to segregate our charitable instincts from our investing strategies. The good news is that it’s increasingly possible to combine the two. In fact, there are a growing number of thoughtful financial advisors who can help us think through how to do good AND do well in our portfolios.

For an example close to my home, The Minneapolis Foundation is leading the way with “InvestMpls”, a $10 million initiative for donors to put their assets to work for small business and schools in Minneapolis. Instead of going to Wall Street, local philanthropic dollars will stay here, capitalizing on the love people have for where they live. Individuals and small family foundations with a Donor Advised Fund can participate.

For fans of the Windy City there is the $100 million Benefit Chicago, a place based investment strategy led by the MacArthur Foundation, Chicago Community Trust, and Calvert Foundation that is open to individual investors.  They aim to put money to work in the local community to fill the unmet need for financial capital in the social sector. For as little as $20 investment, individuals can buy a “note” in which they get similar financial returns and safety as a certificate of deposit “CD” rate. We have a similar product here, Ours to Own, run by the Calvert Foundation with local partners Community Reinvestment Fund and  AEON.

Or perhaps your heart lies just east of the Mississippi River. In 2014 the St. Paul Foundation launched the $2.1 million East Metro Loan Fund, an initiative already creating jobs through investing in minority- and women-owned businesses (who are large job creators and remain loyal to their community). Metropolitan Economic Development Association (MEDA) and Neighborhood Development Center (NDC), have approved $1.9 million of the East Metro Loan Fund in low interest loans to local businesses—75% of which are owned by people of color—creating 175 new jobs.

Rural Minnesota is another hotbed for place-based investment strategies. Regional foundations such as the Southern Minnesota Initiative Foundation in Owatonna which has launched a ‘Grow a Farmer Fund’ to support small-scale sustainable farmers. They are accepting donations to jump-start the fund which they will, in turn, lend to farmers.

Consumers have many good options to buy local and donate local; now invest local!

Tweet me your thoughts @susan_hammel.

Update: A Local Investment Opportunity for All of Minnesota

In April 2017, the Minnesota Impact Investing Initiative (MI3) was created by the Minnesota Council on Foundations and its members. The fixed income bond fund raises money to support affordable housing and small business projects throughout the state of Minnesota.

 

*Charitable Source: CBS “Minnesota is the second most charitable state” (behind Utah) in the 2nd most charitable country (behind Myanmar)

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