Community
investment background
For
more information on community investment across Canada, please visit
the Canadian Community Investment Network Co-operation at www.communityinvestment.ca
Community
investment background
Community investing –
sometimes called alternative investing – is the placement of money in
businesses or investments reflecting a vision of an alternative kind of
economy. Community investors generally place money in community loan funds
providing capital to local entrepreneurs, co-operative or
community-oriented enterprises such as worker or consumer co-ops, regional
development bonds, not-for-profit enterprises or community loan funds.
Alternative investors want their investments to help create local jobs,
develop local enterprise, provide essential services or empower workers or
consumers.
Community investment
represents an important means to raise new capital for the development of
local business. A critical factor in community investment funds is the use
of volunteer and public resources to establish funds, identify borrowers,
manage risk and raise capital. These low-cost resources enable community
investment funds to provide capital that cannot be offered by banks and
other for-profit financial institutions. In addition, by bringing
mentoring or government-funded resources to the process, community
investment helps to provide training, networking and other technical
support.
Some of the loan funds or
other mechanisms open to investment by individuals and institutions
include:
In
2003, SIO and the Riverdale Community Development Corp. completed a major
national study into the community investment sector in Canada. The
study is the first comprehensive survey of the sector in Canada. SIO
and RCDC thank the funders of the study:
The
Study is divided into three parts. Word versions of the three parts
of the study are available here.
SIO's
Campaign for RRSP Fairness for Community
Investments
Backgrounder
In
January 2000, an inter-faith coalition in
Winnipeg launched The Jubilee Fund Inc., a
community development fund to mobilize capital
for business, housing projects and social
services that create opportunities for
low-income neighbourhoods. These funds are put
to use in financing development projects in the
inner-city or other low-income neighbourhoods of
Winnipeg. Jubilee's capacity to raise new
capital is severely limited by the fact that it
cannot raise money as an RRSP-eligible
investment.
Last
year, Jubilee Fund sent a request to the
Department of Finance asking that the Income Tax
Act and/or regulations be amended to allow RRSP
investments in independent, community
development loan funds. After much delay, in
March 2001, the request was declined.
On
behalf of Jubilee Fund and our members, the
Social Investment Organization is asking Finance
Minister Paul Martin to review this matter and
to ask his staff to take action to grant RRSP
eligibility to independent, community
development loan funds.
Social
and Economic Impacts
The
Jubilee Fund is one of a number of such loan
funds across Canada. The social and economic
importance of these vehicles is enormous. They
help to provide start-up and expansion capital
to low-income entrepreneurs who otherwise would
be unable to obtain conventional bank financing.
Studies show that there is great need for this
type of capital by struggling
micro-entrepreneurs.
Given
the current economic downturn, it is more
important than ever to provide creative,
sustainable financing mechanisms for small
business. As well, at a time when the federal
government has granted Canadians the right to
invest more of their RRSP savings worldwide, it
is appropriate that Canadians also be given the
right to invest their registered retirement
savings in their own neighbourhoods and
communities.
The
SIO urges its members and supporters to write to
Finance Minister Paul Martin to express support
for this proposal.
SIO's
Letter to Paul Martin
Sample
Letter
