October 16, 2001
Strengthening Communities in Massachusetts and the Northeast
by Anne Moore Odell
Boston Community Capital offers investors opportunities to provide loans and equity for affordable
housing, community infrastructure and business start-ups.
Started in 1984 with $3,500, Boston Community Capital (BCC) has grown into one of the nation's
leading community development financial institutions. BCC strives to build healthy communities:
places where people feel connected, where the infrastructure works and where there are local links
to broader regional, national, and global economies.
BCC is a holding company
comprising three non-profits and one for-profit company. The non-profits include the Boston
Community Loan Fund (BCLF), the Boston Community Venture Fund (BCVF), and the Boston Community
Managed Assets Corp (BCMA). They are joined by a for-profit limited liability company, BCLF
DeWitt Jones, President of BCLF and Chief Operating Officer of BCC, explains
BCC's Loan Fund and Venture Fund: "Both share a mission to build healthy communities where
low-income people live and work; operate in a way that uses the tools of finance to create
affordable housing, build businesses, generate wealth, and expand social services; and both are
committed to social and financial performance, meaning that we repay our investors."
Boston Community Loan Fund, which started with a limited charter to finance affordable housing, has
now moved on to financing other projects that strengthen communities, like the construction of day
care centers and the creation of social services. Although it often funds projects that could not
obtain financing from traditional sources, the Loan Fund's total losses are less then one-third of
The Boston Community Venture Fund makes equity investments in emerging
businesses located in low-income Massachusetts communities. These businesses in turn create stable
jobs, provide goods and services, reinvest in neighborhoods and link low-income communities to
broader economies. The Venture Fund's position is that investing in low-income areas can be both a
smart financial decision and a way to create economic stability.
The Venture Fund
comprises two separate funds. Fund I, started in 1997, totals $5 million and is fully invested in
11 companies. Fund II was recently created to supplement Fund I and will be available throughout
the Northeast. The size of the fund will be $15-20 million.
"We had our first exit (i.e.
the Venture Fund received its investment back from a company) last week," said Mr. Jones. "We
received a 17% annual return."
Borrowers can count on BCC to provide assistance throughout
the process - from the initial research into the project's viability to the exit from the program.
Borrowers get help structuring the financing of community development projects. Members of BCC
also sit on the boards of portfolio companies, in order to can see the inside workings of the
companies in which BCC invests.
Individuals, religious organizations, banks, foundations
and corporations provide the capital that makes BCC possible. The minimum loan to the Loan Fund is
$1,000, and the minimum equity investment in the Venture Fund is $100,000. Generally, only
seasoned investors, such as institutions and high net worth individuals, are allowed to make
BCC helps make Boston and the surrounding areas better places to work, live,
and raise a family. One example of this is the homeownership program "One-to-Four Family
Program." Through the Loan Fund, houses with one to four units are renovated for sale to
first-time homeowners. Neighborhoods are being rebuilt, and people are again taking pride in
houses and businesses they own.