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Experts: As Traditional Banks Fail to Meet More and More Local Needs, Community Investing Poised to Break Through to Mainstream in 2011
Already One of the Fastest-Growing Aspects of Socially Responsible and Sustainable Investing, Community Investing’s Continued Rise Seen As Fueled by 3 Major Trends Among Consumers, Institutions.
To listen to streaming audio of the April 13, 2011 Community Investing telenews event, please click on this link which will be live as of 5:00pm EST.
April 13, 2011
WASHINGTON, DC -- ”Community investing” is already the unsung hero in thousands of towns and neighborhoods across America, where it quietly has added jobs, local services and support for small businesses whe re traditional lenders have been unable or unwilling to do so. In 2011, community investing is poised to become much more widely visible as a result of three trends that could boost related investments from individuals and institutions, according to experts from the Social Investment Forum, Green America, One PacificCoast Bank and the National Federation of Community Development Credit Unions.
Community investment involves capital from investors and lenders that is directed, typically via community development financial institutions (CDFIs) and other community investing institutions, to communities and individuals that are underserved by traditional financial services. According to a major 2010 Social Investment Forum Foundation report (the most recent data set currently available), assets in community investing institutions rose more than 60 percent from $25 billion in 2007 to $41.7 billion at the start of 2010, reflecting healthy growth in all four categories of community investing institutions: community development banks, community development credit unions, community development loan funds and community development venture capital funds. * (For more information, see http://www.socialinvest.org/resources/research/documents/2010TrendsES.pdf.)
In a news conference today, experts from the Social Investment Forum, Green America, One PacificCoast Bank and the National Federation of Community Development Credit Unions identified three trends expected to continue leading to a surge in community investing assets in 2011:
Fran Teplitz , director of social investing & strategic outreach , Green America said: “The fact that community investing has grown steadily over the past decade, despite fears of capital constraints and the impacts of the market downturn, is a strong indicator for future growth. Add to that consumers ’ continuing frustration around mega-banks, and the growing movement to support local economies, and we’re likely to see continued growth of CI in 2011 and beyond.”
Meg Voorhes, deputy director and research director, Social Investment Forum, said: “ For many years, investment managers and advisors specializing in socially responsible investing have helped clients allocate a portion of their portfolios to community investing. It is exciting to see a new wave of interest in community investing as foundations and other institutions look for investments that will have high social impact.”
Cliff Rosenthal, president and CEO, National Federation of Community Development Credit Unions, and a member of the board of directors of the Social Investment Forum, said: “Many Community Development Credit Unions and other CDFIs have played a crucial role throughout the recession in providing credit to borrowers who were shut out of the conventional capital markets.”
Kat Taylor, founding director, One PacificCoast Bank, said: "We believe that Beneficial Banking -- providing fair and transparent transactional and savings services and loan capital for business and job growth in all communities -- is what all banks should deliver for the privilege of federal deposit insurance. In particular, we focus on lending that supports clean technology solutions, regenerative agriculture and natural resource use, critical community institutions, job growth and a living wage, as well as the resilience of consumers in times of setback. Banking that supports people and the planet will be critical in serving the nation as a whole as well as marginalized communities in order to move toward reliable prosperity for all. We understand that a bank cannot measure success and sustainability by focusing on profits alone, which is why community development financial institutions are so important.”
BACKGROUND: THE RISE OF COMMUNITY INVESTING
According to the Social Investment Forum’s 2010 data, top-level trends in community investing include the following:
A major factor in CDFIs’ asset growth has been the capital they have received from the US government, as well as foundations and other institutional investors. US Treasury programs stepped up assistance to CDFIs in 2009 as part of US government economic stimulus and recovery programs. In recent years, a number of campaigns, touting such concepts as “program-related investing” and “impact investing” have helped to increase awareness among foundations, other institutional investors and high-net-worth individuals of the high social impact associated with community investing strategies. However, the threat of a pullback in federal support for CDFIs has the potential to put a crimp in the rise of community investing as the very point where communities need it the most, according to the experts.
ABOUT THE ORGANIZATIONS
Green America is the nation’s leading green economy organization. Founded in 1982, Green America (formerly Co-op America) provides the economic strategies, organizing power and practical tools for businesses and individuals to solve today's social and environmental problems. www.GreenAmerica.org.
The Social Investment Forum is the U.S. membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing (SRI). The Social Investment Forum advances investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact . SIF members support SRI through such strategies as portfolio selection analysis, shareholder advocacy and community investing. www.socialinvest.org. The Social Investment Forum Foundation, the publisher of the 2010 Report on Socially Responsible Investing Trends in the United States, carries out research activities to support the public education mission of the Social Investment Forum.
One PacificCoast Bank, FSB, is an FDIC-insured Community Development Financial Institution (CDFI) that serves businesses, nonprofit organizations, and individuals. One PacificCoast Bank operates from a triple-bottom-line perspective that allows it to place equal importance on its financial, social, and environmental goals while meeting the needs of its communities. One PacificCoast Bank’s beneficial banking services integrate financial literacy, technical assistance, and business education through support from the One PacificCoast Foundation. The bank is headquartered in Oakland, California with branches in Seattle and Ilwaco, Washington, and a lending office in Portland, Oregon. www.onepacificcoastbank.com
The National Federation of Community Development Credit Unions represents more than 225 credit unions that serve low-income communities. The Federation, which co-founded and sits on the board of the CDFI Coalition, has provided capital to low-income credit unions nationwide since 1983. www.natfed.org
MEDIA CONTACT: Leslie Anderson, (703) 276-3256 or email@example.com.
Because of a change in data sources, the pool of certified CDFI loan funds measured for the 2010 report increased from the 146 largest certified CDFI loan funds at the end of 2006, to all 519 at year-end 2009, so a direct comparision is not possible.
Please contact Todd Larsen by email