The scale of investment needed to fund critical infrastructure, services and access to capital in low-income communities in the United States far exceeds available public, private and philanthropic resources. The scarcest resource, philanthropic capital, is critical to growing community investment due to its ability to act as a catalyst for conventional capital; to demonstrate solutions that can be emulated by public resources; and to drive investments that seek meaningful and measurable impact in communities. However, institutional barriers, regulatory restrictions and narrow programmatic mandates have restricted philanthropic activity in community and impact investing broadly and hampered the collective action necessary to leverage these scarce resources to create meaningful change. New collaborations and infrastructures are necessary to broaden the ways in which philanthropy can effectively invest for impact. These collaborations are critical to advancing the impact investing ecosystem and facilitating more community development impact investments.
Guarantees are an underutilized tool in the social investing landscape. The Global Impact Investing Network (GIIN) released a study in 2017 that identified two common barriers to scaling the use of guarantees: perceived product complexity by guarantors and the challenges that financial organizations face identifying and accessing credit enhancement sources. To ease this friction, investment practitioners are designing pooled vehicles to aggregate guarantee commitments from philanthropic institutions and provide targeted guarantees to community lenders, intermediaries and aspiring entrepreneurs. This session will detail the mechanics – like custom underwriting criteria, pro-rata loss sharing and impact targets – of these guarantee pools.
The Community Investment Guarantee Pool (CIGP) is a ground-breaking collaborative guarantee pool launching in the fourth quarter of 2019 with $33.1 million in capacity from a group of founding investors. Founding investors include The Kresge Foundation, Annie E. Casey Foundation, Dignity Health, Phillips Foundation, Gary Community Investment, The California Endowment, Weingart Foundation, Chan Zuckerberg Initiative, Seattle Foundation and Jessie Ball duPont Fund. CIGP is being launched as a demonstration project to the field – bringing together healthcare systems, private foundations, community foundations and family offices – to address critical financing needs in the area of affordable housing, job creation and climate solutions without requiring any current liquidity from investors.
Relevance for CDFIs Serving Native Communities and Populations: One of the CIGP’s overarching goals is to diversify the type of intermediaries who are able to access sources of credit enhancement and increase the amount of capital that is available to invest in affordable housing, entrepreneurship and climate solution technology – particularly in Native communities and communities of color.
– Feature learnings from the guarantors who will, by the time of Oweesta conference executed the first panel of guarantees to qualified intermediaries across the country.
– Discuss how diversity, equity and inclusion values are being operationalized to generate meaningful impact.
– Detail CIGP’s robust impact and evaluation framework and workplan.
– Invite the speakers – some ranging from experienced to novice users of guarantees – to share some guidance on the power of credit enhancement as a tool for enabling the flow of capital to innovative projects, products and communities.
– Discuss the feedback that we’ve heard from financial intermediaries about how the guarantee structures are enabling greater flow of capital.
Presented by Teri Lovelace, Locus Impact Investing; Christine Ryan, The California Endowment; Joel Smith, Native American Bank
Included in general registration.