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January 27, 2005
Calvert Foundation Community Investment Notes Go Electronic
    by William Baue

For the first time, individual and institutional investors will be able to support community investment in the same way they transact most other investments--via computer.

Yesterday, the Calvert Social Investment Foundation announced the "wiring" of Calvert Community Investment (CCI) Notes, the first time that such community investment instruments have been available electronically for both individual and institutional investors. CCI Notes have a solid ten-year track record of supporting community investment, directly financing socially or economically beneficial projects in disadvantaged communities that are underserved by conventional financial institutions. However, electronic investment has supplanted paper-based transactions over the past decade, and the availability of CCI Notes only in the latter form acted as a barrier to entry.

"This is not some technical upgrade, this is truly a red-letter day for community investing," said Wayne Silby, co-chair of the Calvert Foundation, who stressed the potential of the new platform to drive increasing interest in community investment. "We have seen a jump of well over 25 percent in community investment assets annually overall, and that has been surging up closer to 36 percent in the last two years--and all that growth has been for an unwired investment."

"By 'wiring' its Community Investment Notes, the Calvert Foundation is providing ready access for a wide group of investors that may have looked at community investing but have been deterred by the difficulties in entering the marketplace," Mr. Silby continued.

Individual investors can purchase CCI Notes electronically through 24 brokers listed in the CCI Note prospectus, including Legg Mason, Piper Jaffray, and Progressive Asset Management, with Calvert Foundation covering commissions and fees instead of the investor. A collaboration with the Bank of New York allows the CCI Notes to be sold through an electronic (or "book entry") platform via the Depository Trust Corporation (DTC) similar to how stocks and bonds transact electronically.

"Making this DTC removes the barrier both for the investor to make the choice and the consultant to offer it as an opportunity--it makes our lives a lot easier," said Tom Van Dyck, senior vice president of investments at PiperJaffray. "The ability to track all their investments in one statement will help individuals who have been looking to make community investments, because everything's consolidated."

While electronic availability removes significant practical barriers, it also removes the perception that community investment is a lesser form of investment, which created an additional obstacle, particularly for institutional investors with fiduciary obligations.

"The fact that the note will transact in a seamless way, as with any other financial security, is really a psychological benefit," said Shari Berenbach, executive director of the Calvert Foundation. "It lends a level of institutional comfort that community investment is moving from the fringe to the mainstream, even though the underlying risk is still the same."

While institutional investors may have shied away from community investment in the past out of concern over risk, there is a strong fiduciary case that community investment minimizes risk while also providing the added benefit of a "social return."

"The fiduciary case for community investment really lies with the track record that organizations like the Calvert Foundation--in over ten years, our loss rate for our total portfolio is less than two tenths of a percent," Ms. Berenbach told "The fact that we have loss reserves of nearly $2 million as well as credit enhancement of $10 million really shows that the risk in these kinds of instruments can be effectively managed."

CCI Notes also offer flexibility. For a minimum outlay of $1,000, investors can choose a return rate of up to three percent in simple interest compounded annually for a term of one, three, five, seven, or ten years. While the rate of return may change with interest rates, the Calvert Foundation remains committed to securing the social benefits associated with community investment.

"In the current interest rate environment, we're paying about two percent on the shorter term notes, which meets the risk/reward requirements of most fiduciaries," Mr. Silby told "If interest rates go up, we want to keep the cost affordable for the recipient community development financial institutions, so we do not anticipate raising rates substantially from this level."

The Calvert Foundation directs funds from CCI Notes to more than 170 community development financial institutions (CDFIs) listed in its prospectus, including ACCION International, the Cooperative Fund of New England, Fonkoze, Self Help Enterprises, and University Bank. Investors can geographically target where they want to make a social impact.

"We have regional distribution available to every investor from $1,000 on up, so if you live in New England, you could direct it to the New England zone," Elizabeth Glenshaw, the Calvert Foundation's director of Community Investment Industry and Markets, told "For investments of $25,000 and up, you can target specific institutions."


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