June 18, 2007
One and Two Percent Allocations Add Up for Social and Community Development
by Anne Moore Odell
TIAA-CREF allocates 2% of its Social Choice account for proactive social investments while the
Social Investment Forum and Co-op America's 1% or More for Community campaign aims to double the
amount invested in community development.
Investors can make a big difference by assigning a small percent of their assets to social
investments and community development. For the past six years, Co-op America and the Social Investment Forum's "1% for Community " campaign has
signed up institutional investors to dedicate 1% or more of their assets for community development
programs. TIAA-CREF recently announced that it will
invest up to 2% of the CREF Social Choice account in community-oriented investments.
TIAA-CREF is the largest supplier of retirement services in the academic, medical, and
cultural fields. The CREF Social Choice account has $8.9 billion in net assets as of March 31,
2007, which makes a 2% allocation a substantial amount of money. By the fourth quarter of 2007, it
will start reporting its progress of hitting its 2% target.
"We continue to listen to our
participants views on a wide range of social investing issues and understand that making
investments that support social and environmental issues are important to many of them," said Scott
Budde, Managing Director and head of TIAA-CREF's Global Social and Community Investing Department.
"Our new target for proactive social investments in CREF Social Choice will help address a wide
range of pressing social problems through market-based solutions that can also generate competitive
returns for our clients and is a natural extension of our existing microfinance and community
investing programs," Budde added.
TIAA-CREF will use the 2% allocation to invest with
publicly traded fixed income securities that help to finance economic development programs,
affordable housing and alternative energy. The securities will be both domestic and international,
and will be selected by TIAA-CREF's Global Public Markets group using the same criteria as
TIAA-CREF's other fixed-income investments.
TIAA-CREF already has in place the TIAA
Traditional account that invests in the private market and makes some of its investments in
microfinance, affordable housing, and community development. The new allocations of the Social
Choice account are designed to work with the investments of the Traditional account.
TIAA-CREF joins a growing trend in social accounts supporting community development.
"An awareness of the powerful role community development plays in uplifting low and moderate
income communities across the US and abroad, coupled with a call to action through socially
responsible investing has resulted in a surge in community investments over the past six years,"
said Prianjali Mascarenhas, Community Investing Program Manager, for the Social Investment Forum.
The 1% or More in Community Campaign, organized by the Social Investment Forum (SIF) and
Co-op America, helps socially responsible investors move money into community investments. The
campaign reports that the community-investing field has quadrupled in size, with approximately $15
billion in new assets since 2001. Current community investing figures stand at $20 billion in 2006.
"As one of the leading providers of retirement services we applaud TIAA-CREF in joining
the ranks of other SRI mutual funds that have incorporated such an allocation. The allocation is in
line with the Forum's 1% or More in Community Investing goal," Mascarenhas told SocialFunds.com.
"This is a great new flexible community investment vehicle that demonstrates how mutual funds can
allocate a percentage of the fund's assets to investments in affordable housing, alternative energy
and jobs creation. "
"The 2% allocation is a good starting point for individual investors
looking to explore Social Choice and its equity and fixed income securities. The investment is
attractive both from a low-risk and high return perspective that holds investors values as a
priority," Mascarenhas added.
Recent events such as Muhammad Yunus's Nobel peace prize
have helped push community investing into the mainstream.
The Federal Government has also
played a role in providing incentives to encourage investments into Community Development Financial
Institutions (CDFIs). One example of this is the Certificates of Deposit Account Registry Service
(CDARS). This service allows small, medium, and large-sized community banks to offer customers up
to $30 million in FDIC insurance through a single bank relationship when investing in certificates
of deposit at CDFIs.
The 1% or More in Community Campaign is working to sign up new
investors, increase the amount current members have in community investments, and recognize the
institutional and individual investors who support community development.
allocation of just 1% or 2% can make a difference," explained Mascarenhas. "It's simple, it's
doable, it's easy to calculate and the numbers add up to a lot! Community investments as a result
of a 1% allocation have harnessed latent skills and talent in low-income people, giving them a
renewed lease on life. The 1% or 2% allocation has long-reaching impacts on the lives of low-income
people at the same time having a negligible impact on our portfolios."