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Community Investment Products for Retail Clients

CDFI investment products are a powerful tool for financial advisors with clients interested in community investing, social justice and environmental justice.

I cut my teeth at a boutique consulting firm in Washington, D.C. arranging financing for development projects in emerging markets. In a quiet period for a $50 million telecom project in Afghanistan, I visited my mother’s family in Appalachian Kentucky. Driving past houses with tarps for roofs and the local high school crumbling in on itself, I was struck that conditions in my grandmother’s town were just the same as, if not worse than, conditions on the ground in countries where I was directing capital. My eyes had been opened to how much work there is to do in our own backyard. I left the international consulting firm and signed on at a U.S.-based Community Development Financial Institution (CDFI), dedicated to driving non-predatory loans to people and places that are disconnected from America’s main financial arteries.

CDFIs are private financial institutions that drive affordable capital to low-wealth communities across the country. CDFIs can be for-profit or non-profit, depositories (banks and credit unions) or non-depositories (loan funds and venture capital firms). CDFIs earn and maintain their designation with the U.S. Department of Treasury through a rigorous application and ongoing compliance requirements.

Since then, I’ve embedded myself in community development finance and held onto my front-row seat to the industry’s rollout of off-the-shelf, gatekeeper-friendly investment products available to a retail audience. Over the past five years in particular, CDFIs developed community investment products based on guidance from retail investors and their financial advisors. Today, financial advisors may explore CDFI products across multiple asset classes to for their clients’ consideration.

Cash and cash-equivalent products. Many retail investors are seeking low-risk, high-liquidity community investments. Opening CDs or money market accounts at FDIC-insured CDFI banks or NCUA-insured CDFI Credit Unions are a convenient way to dip your toe in the community investment waters.

  • Self-Help Credit Union, a 40-year-old depository financial institution has used deposits and other capital sources to drive over $9 billion in financing to individuals, families and businesses across North Carolina, South Carolina, Florida and Virginia. Self-Help Credit Union offers Money Market accounts and Community Recovery or Green CDs for retail investors. 
  • Hope Credit Union, a federally regulated, minority- and women-owned financial institution located across the Deep South is oftentimes the only depository institution in the communities it serves. An example is the town of Itta Bena, a small, majority Black Mississippi Delta town with a poverty rate of 42% and a median household income of $20,400. Working within areas of persistent poverty, Hope Credit Union must import capital from beyond its local geography to finance small businesses, housing, healthcare and other vital needs. Hope Credit Union offers Transformational Deposits CDs and Money Market accounts with rates comparable to conventional banks but with great social impact.

Fixed income products. In the past five years, CDFIs have consistently appeared in fixed income markets, including a handful that are S&P-rated and offered on a continuous basis.

  • Local Initiatives Support Corporation (LISC) is issuing up to $150 million of S&P AA- rated-fixed income Impact Notes. The Notes are for general corporate purposes, including up to $10 million for our recently announced commitment to racial equity—Project 10X. Through Project 10X, LISC will invest in building equity and wealth for Black, Indigenous and People of Color (“BIPOC”). This includes investments in homeownership and small business ownership, building credit and savings, strengthening BIPOC-led financial institutions, investing in community assets and wellbeing, and supporting quality jobs with good wages and benefits.

    LISC’s notes are available through Incapital, an underwriter and distributer of securities. Incapital enables individual investors to purchase LISC’s notes, offered through its InterNotes debt program, through their brokerage accounts. These notes are sold on Incapital’s Legacy Platform in $1,000 increments, with maturities ranging from 1-10 years, and at fixed rates of interest. Pricing is market driven and based off of similarly rated corporate financials. To learn more and obtain LISC’s prospectus and most recent pricing supplement, visit  
  • Other S&P-rated notes include Capital Impact Investment Notes and Century Sustainable Impact Notes.

Equity products. CDFIs like Oportun and Amalgamated Bank offer equity products that retail investors may consider to round out their holistic community investment portfolio.

As every financial advisor knows, no financial product is risk-free. Each investment must be assessed based on the client’s individual parameters governed through their Investment Policy Statement.

CDFI investment products are a powerful arrow in the quiver of financial advisors with clients interested in community investing, social justice, and environmental justice. Since learning about community investing, I discovered that CDFIs like Fahe and Natural Capital Investment Fund actively lend into places like Martin County, Ken. where much of my family still resides. Places that are often disconnected from mainstream financial institutions, but are very much connected to their place-based dreams and potential.

Andrea Longton, CFA, is the founder of The Social Justice Investor. You can follow Andrea on LinkedIn and Twitter.  

TAGS: Fixed Income
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