Community Investment Fund

Kelley Mulville, Esther Park, and Sallie Calhoun at Paicines Ranch in Paicines, CA.

Forty years ago the Institute for Community Economics, led by Robert Swann in Cambridge, Massachusetts, launched the first investment fund with positive criteria.  Until that time investment screens used negative criteria– no alcohol or tobacco stocks, for instance. Pax World Fund excluded military supply companies from its portfolio. Students were lobbying universities to pull out of investments in South Africa because of its apartheid policies.

The Community Investment Fund was actually three separate funds organized as Limited Liability Companies with the Institute for Community Economics acting as general partner. The board of directors included: Robert Zevin who went on to found the first equity fund with social criteria; George Pillsbury of Haymarket People’s Fund; Rochelle Korman of Ms. Foundation for Women; Wayne Silby who later founded Calvert Social Investment Fund; George Benello a principal investor in the Industrial Cooperative Association’s fund for worker-owned businesses modeled on Mondragon Cooperatives; Terry Mollner of the Trustee Institute who together with Robert Swann had worked with Ralph Borsodi to launch the “Constant,” an independent currency in Exeter, NH; and Ed Kirchner of the then newly formed National Cooperative Bank in Washington, DC.

Together this group crafted a set of criteria that has informed social investment funds ever since.

Board members relied on their networks to identify coop housing projects, worker owned businesses, appropriate technology start-ups, community land trusts, and other investment opportunities that met the criteria.

I started volunteering for the Institute in September 1977. I had heard Robert Swann speaking of E. F. Schumacher on radio for the Cambridge Forum and was inspired by the vision of a new kind of economics, a new impulse emerging. It seemed to me that America’s destiny among nations was “to get economics right.” Schumacher’s voice suggested an approach. When the Institute launched the CIFund, I was brought on staff.

The CIFund’s board spent many months knocking on the doors of foundations and universities asking their financial departments to place investments in line with the institution’s social values. But the requests were, for the most part, met with rejection. The explanation was that the investment side was focused on maximizing rates of return so that the program side had plenty of funds to do their good work. The CIFund could not compete on interest rates and still keep to mission.

The CIFund closed after a year and a half without achieving capitalization, but it had raised the question: “Do you know what your money is doing tonight?” It was a question that institutional investors could no longer ignore.

Strong partners did come forth.  Amy Domini and Hazel Henderson were informal advisors to the CIFund and were already exploring their own avenues for “Socially Responsible Investment.” The Interfaith Center on Corporate Responsibility was a trusted ally and made investment commitments to the CIFund as did several pioneering individual investors.

Today Socially Responsible Investment has evolved into Impact Investment, which the Global Impact Investing Network describes as “an exciting and rapidly growing industry powered by investors who are determined to generate social and environmental impact as well as financial returns.” Investment screens are sophisticated and precise, focusing on women/or minority/or worker-owned businesses, depending on the priorities of a fund’s manager. There are place-based funds and funds devoted to organic agriculture or affordable housing or renewable energy. Such conscious redirecting of capital is supported by groups like Transform Finance which provides training to “all stakeholders, from community leaders and activists to investors and entrepreneurs, who are exploring that vision.”

The Boston Impact Initiative founded by Deborah Frieze uses an “integrated capital” approach to meet its priority to “invest in justice.” “We believe that we can best support the creation of resilient local economies by using a range of integrated capital tools: loans, credit enhancements, equity investments, royalty finance, direct public offerings, crowdfunding, grants and more.”

Regenerative Finance, founded by Kate Poole and a collective of young people with inherited wealth, is not only making direct loans to “historically looted communities” but is committed to dispersing their wealth over time in reparation grants to these same communities.

Sallie Calhoun’s NoRegrets Initiative educates by example about how to leverage personal capital into investments that sequester carbon in the soil and so counter act the effects of climate change. Her Paicines Ranch pushes the boundaries in land, crop, and livestock management, to discover the best practices for carbon sequestration for her region of California. Her investment fund seeks projects throughout North America with similar soil regenerative objectives. Her convenings of investors and philanthropists are designed to share knowledge, experience, and fun in order to build a fellowship committed to going all-in for the climate and for future generations.

When the Institute for Community Economics closed its doors in 2008 the Schumacher Center’s Library inherited its archives, books, and records. But there were no pictures of CIFund’s board gathered together. We failed to recognize the moment and capture it. It was pre-internet and we were word focused, not picture focused. Nevertheless a movement was birthed.

Socially responsible investing and impact investing effect change by moving capital to finance projects that meet targeted goals.  Much has been accomplished in this way. But in the end, with a few exceptions, the investor retains ownership of the capital investment. Interest is charged and the rented funds must be repaid. Wealth is not redistributed, but rather re-deployed. What might be further achieved when the creation of money itself is democratized? We will explore this in a later newsletter— beyond financing.

Our thanks to Schumacher Center Friends who have supported the organization through the years. Many good wishes to all for the new year.

Susan Witt, Executive Director