Impact in Action

Impact Investing, Local Style

A few years ago, it fell to a friend of mine to reorganize her family’s trust fund. The first thing she did was to work with a “socially responsible” wealth manager, tailoring the investments to her social and environmental values. She replaced public and private holdings whose businesses involved things like extractive industries and tobacco and looked for new holdings encouraging sustainable activities.
She also created a donor-advised fund (DAF), making a one-time donation to an administrative entity. That entity then makes advised charitable donations using her funds.
The DAF funds themselves were initially invested in conventional Wall Street holdings. But one of my friend’s top investing goals was to invest locally. She wanted to get her DAF corpus out of Wall Street and put it to work on Main Street. How, she asked me one day over coffee, could she find local investments?
I opened the newspaper sitting between us on the table and showed her a story about ROC USA. This is a national enterprise managed in our state by NeighborWorks Montana. ROC and NeighborWorks had just helped worked with some Missoulians who live in a manufactured housing court. These residents formed a cooperative and purchased the land their manufactured houses stood on. NeighborWorks helped organize the effort and put the financing together to purchase and rehab the housing court.
“I can really be part of that?” my friend said.
“Let’s find out,” was my reply. 
Because Montana is “one small town with a very long main street,” I already knew the NeighborWorks staff members. Within a short time they had provided my friend with a very complete underwriting notebook: several years of financial audits, a business plan, information on their management and on their track record providing affordable housing in Montana.
I walked my friend through the information. While she was she thrilled with the manufactured housing cooperatives, she also learned that NeighborWorks builds and manages a whole gamut of affordable housing. Their projects are all over Montana, serving lower-income people and neighborhoods, including Indian Country.
She was also thrilled with the NeighborWorks Montana balance sheet and financial performance. Based on the organization’s strength and impact, my friend decided to invest in the entire spectrum of NeighborWorks projects. They inked a simple promissory note: a five-year loan, interest-only payments with the principal due at term. The interest rate is considered “below market” although it is much better than cash deposits pay at this time.
Rosalie Sheehy Cates is a senior advisor with The Giving Practice, a team of consultants who blend customized solutions and deep knowledge of the field to help families, foundations and corporations navigate teh changing landscape of today's philanthropy.

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