Giving Compass' Take:
- A new book being rolled out this week, titled The Social Justice Investor, by Andrea Longton, explores how CDFIs are quality community investment opportunities.
- What are the benefits of CDFIs and how can donors help expand them?
- Learn more about CDFIs here.
What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Over the last seven years, access to public capital markets has significantly expanded the scale and scope of country’s community investing activity.
Bonds issued by community development financial institutions (CDFIs) have performed well. Proceeds have supported high-impact projects and programs in both urban and rural communities. And even amid significant economic uncertainty, CDFIs have found ways to blend different sources of capital to support local partners.
Still, that success has not fully proven the broader point to the market—that communities damaged by long histories of disinvestment can be good places to live, work and invest if they have access to the capital they need to build and grow.
There are decades worth of data to back up those assertions, not just from LISC but from other seasoned CDFIs and independent evaluators. But, because our organizations are still relatively recent entrants to the debt market, some investors are still skeptical, even when they see strong credit ratings (like LISC’s ‘AA-’ from S&P) to go along with our strong track records.
A new book being rolled out this week—The Social Justice Investor, by Andrea Longton—may help provide more context, especially for retail investors. Having spent most of my career raising and managing capital for CDFIs, I was thrilled to join many other leaders in the field to contribute to the book (you can read my essay here). In fact, LISC is hosting a launch event this week for the book as part of our ongoing efforts to educate investment advisors, asset managers, fund managers, family offices and others about community investment opportunities.
I was particularly struck by a simple rationale cited in the book—that social justice investors crave stability in our national economic wellbeing, not just for themselves but for everyone else as well.
I think that’s a sentiment that many individuals and institutions can get behind. But there is also this nuance: “Our secret sauce,” Longton writes, “is listening to the communities that sit closest to the problems. Social justice investors restore an equitable flow of capital by asking the impacted communities for guidance on what to finance and how.”
In practice, I think that speaks to the way that local expertise reinforces creditworthiness. This is particularly germane for LISC, since the connection to “local” has always been at the heart of our day-to-day work and fundamental to the way we talk about our Impact Notes offer. Whether we are financing affordable housing, small businesses, health, safety, climate resilience, racial equity or jobs, we see financial performance and local impact as part of the same whole.
Read the full article about social justice investing by Christina Travers at LISC.