Fact Sheet #3:  What is Community Investing?

Community investing consists of direct investments in projects that benefit specific communities or constituencies, especially in economically disadvantaged areas. These investments usually take the form of loans or equity investments that can be either at or below market rates. In Canada, community investment includes:

• Micro-enterprise Lending.  Community-based organizations providing capital for micro-entrepreneurs unable to obtain capital from conventional financial institutions.  Loans are usually less than $25,000 with typical loans in the $2,000 - $5,000 range.

• Community Development Venture Capital.  High risk loans or equity placements in locally based businesses meeting community or social needs.  This sometimes includes non-profit development organizations but can also include venture capital companies.  The focus here is on businesses with an emphasis on community-building that meets local needs.

• Non-profit Lending.  Lending to non-profit organizations pursuing a social mission that are unable to obtain capital from conventional financial institutions.  This is usually done by non-profit lenders.

• Co-operative Development. Funds making loans or equity placements in new co-operatives.

• Lending for social or affordable housing.  Risk mortgages or construction loans for housing targeting low-income markets.

• Economically Targeted Investments (ETIs). These are community development investments made by pension funds or other institutions.

• Other forms of locally-based investment targeted to meeting the needs of particular communities or groups.

Community investment helps to link local investors, consumers and business – embodying the philosophy of “think globally, act locally.”

Community investors want their investments to help generate a high “social return” in the form of local job creation, the development of local enterprise, the provision of affordable housing and the empowerment of workers and consumers. These investors are generally willing to accept a slightly lower financial return as a result.  For more information on community investment, please visit the Canadian Community Investment Network at www.communityinvestment.ca