December 10, 2003
US Community Investment Assets Nearly Double Over the Past Two Years
by William Baue
Community development financial institution assets rise 84 percent from 2001 to 2003, making
community investment the fastest growing segment of socially responsible investing.
Providing affordable housing for low-income women recovering from substance abuse in Baltimore and
creating 10,000 beekeeping jobs in rural South Africa. These are just two of the initiatives
supported through community investment, or financing that serves economically disadvantaged people
who are often ignored by traditional financial institutions. Community investment is the fastest
growing component of socially responsible investing (SRI) in the US, with assets in community
development financial institutions (CDFIs) nearly doubling over the past two years, according to
the Community Investing Program.
Yesterday, the Community Investing Program, a project of the Social Investment Forum (SIF) and Co-op America, announced that total assets held by CDFIs in
the US grew 84 percent during that period, from $7.6 billion in 2001 to $14 billion in 2003.
"This new data shows the growing power and reach of community investing in our underserved
communities across the United States and throughout the world," said Jean Pogge, Community
Investing Program chair and ShoreBank senior vice president of mission-based
There are four types of CDFIs: community development banks, community
development loan funds, community development credit unions, and community development venture
capital funds. Of these, the most robust growth occurred with community development banks, whose
assets rose by 130 percent, from $3.1 billion in 2001 to $7.2 percent in 2003. While most of this
increase represents real economic growth, some of it can be attributed to improved data collection.
"Community development bank assets surged 130 percent because of an increase in newly
CDFI-certified banks, the improved capacity of the national network intermediary for development
banks, the National Community Investment Fund,
and growth in existing banks' assets," SIF spokesperson Todd Larsen told SocialFunds.com.
"[Because of the improved capacity of the National Community Investment Fund,] a portion of that
growth is due to better tracking."
Of the remaining three community investment categories,
community development venture capital funds grew by 58 percent, from $300 million in 2001 to $485
million in 2003. Community development credit unions and community development loan funds each
grew by 50 percent: assets in the former rose from $1.8 billion in 2001 to $2.7 billion in 2003,
while assets in the latter increased from $2.4 billion to $3.6 billion.
managers typically allocate CDFI investment through the cash portion of portfolios, whereby they
can earn a market rate return while also being covered by the Federal Deposit Insurance Corporation
"The risk that depositors take
is almost nonexistent--there have not been significant failures or losses in this industry," said
Michael Lohmeier, investment manager of affordable housing and community
development at the General Board of Pension and
Health Benefits of The United Methodist Church, concurs. The General Board allocates five
percent of its assets, or more than $600 million, to community investment, with an additional $400
million in future commitments to community investment.
"We have found, as studies have
shown, that community investing is a safe and sound investment," said Mr. Lohmeier. "The General
Board, in the thirteen years of our program, has never had losses, we have consistently beaten our
benchmark in returns, and we have done this by using a wide range of community development
Since the General Board began its affordable housing and community
development program in 1990, it has earned a compounded annual rate of return of 8.4 percent. Of
the 20,000 affordable housing units underwritten by the General Board, 29 are located in the
Margaret J. Bennett House in downtown Baltimore, Maryland. The Bennett House, a project of the Women's Housing Coalition, provides single
occupancy rooms for low-income women recovering from substance abuse.
Domestic CDFIs also
support overseas initiatives. New York City-based Shared Interest is collaborating with South African
partner Thembani to help
10,000 inhabitants of rural Mpumalanga and Limpopo create new livelihoods as apiarists. The
project will provide bee-keeping and business skills training, a bee-keeping suit, 50 hives of
African bees, and above-market prices for organic honey to each new entrepreneur, 75 percent of
whom are women who are regularly excluded from commercial activity.