April 25--In a unique effort to improve Chicago, individuals are going to be able to make investments of as little as $20 that can be used to make loans and other investments through a new $100 million impact investment fund expected to be announced Monday.
The joint effort between the John D. and Catherine T. MacArthur Foundation, Chicago Community Trust, and the Calvert Foundation is intended to make it possible for individuals and philanthropic donor-advised funds to lend money to nonprofits and community improvement endeavors that otherwise likely wouldn't raise the money they need.
The MacArthur Foundation will be taking requests for loans and investments from social enterprises and nonprofits that need funding for education, child care, affordable housing, energy conservation, job creation and training, small businesses, healthy food and other community needs, said Julia Stasch, president of the MacArthur Foundation. The foundation already makes so-called impact investments throughout the world but is responding to local needs and a growing desire by individuals to improve their neighborhoods through their investments, she said.
The foundation has committed $50 million to the effort, and the Chicago Community Trust $15 million. Calvert Foundation will sell bonds starting in $20 denominations. They can be acquired by individuals directly through Calvert's vested.org or through brokerage firms. Chicago Community Trust will be giving individuals and families with donor-advised funds the choice of investing in impact bonds for Chicago instead of parking money in a money market fund, said Terry Mazany, chief executive of the Chicago Community Trust.
Research by MacArthur and the Chicago Community Trust shows a community need of $100 million to $400 million, said Stasch. Bonds will have different maturities, ranging from 1 year to 15 years, and interest rates ranging from 0.5 percent to 4 percent. After enterprises are given loans, they will make payments into the impact fund, and that money will then be available for loans to additional organizations.
"It allows the individual or donor to multiply and extend their impact," said Mazany.
National research has shown people are interested in improving their communities through their investments, rather than simply earning a return that will grow their own wealth. So-called "impact investing" is growing as a result, with firms such as BlackRock starting funds like the BlackRock Impact U.S. Equity Fund.
Calvert has worked with foundations in cities such as Minneapolis, Denver and Baltimore, but Stasch and Mazany said they hope the depth of the Chicago effort will be copied in other cities.
gmarksjarvis@tribpub.com
