Scrooge Rates of Returns
V.2, N.62
The stock market highs over the past year have made most investors feel like they are geniuses. And now, Scrooge-like, they want more! Even so-called impact investors trying to save the world demand annual returns of 15% or higher. To put this most UnChristmas-like expectation into proper perspective, the historic returns of the S&P 500, with perfectly timed entrances and exits, are in the 7-8% range. And most mortals—including most angel, venture, mutual fund, and pension investment managers—underperform the market. If you really want to serve your community, consider lowering your private return expectations in exchange for greater social returns in the form of more jobs, income, and community services.
To give just one example of the depressing escalation of investor expectations, our lead story from ImpactAlpha reports on twenty-two impact investment funds financing transitions to employee ownership. Eight of the funds, with more than half the total capital of the twenty-two, now seek annual returns greater than 15%. But this comes with a cost. The higher the target return, according to a new report from Ownership Capital Lab and Transform Finance, the lower the employee ownership goals. To be Bah Humbug blunt about it, greater private returns mean lower social returns. If you want to embody the Holiday Spirit, aim higher—with more social returns and more realistic private returns.
Also, in this issue, you will find the following articles:
A summary of a recent conference reflecting on the evolution and challenges facing the community development financial institutions (CDFIs).
The emergence of CDFIs in states like Tennessee aims to replace the pernicious practices of payday lending.
Recommendations on how philanthropy can and should support community finance for a green, just transition.
News that Honeycomb Credit has acquired Raise Green—further evidence of a disturbing pattern of consolidation of crowdfunding portals that is reducing competition in this struggling industry.
New strategies for investing in the “care economy.”
A powerful argument that food deserts represent the failure of federal anti-trust regulators to prevent price discrimination by big food suppliers.
You will also find our usual assortment of local investment blogs, events, jobs, and other opportunities.
For many of you, this will be the last issue you can read entirely for free. As I explained in a funding appeal I sent you last week, we can only continue publishing if more of you become paid subscribers. So starting in January (we are taking next week off), you will only be able to read the introductory material to both The Main Street Journal and MSJ Extra! until you upgrade to paid. But reading everything only requires $5 per month—basically a little less than your next over-the-counter latte.
If you’re stretched financially, just write to jen@main-street-journal.com, tell her you want the Local Santa Deal, and we’ll comp you for a few months. Being a paid member entitles you to our full weekly issues as well as our monthly virtual meetings.
Finally, best wishes for a happy holiday season! May your best dreams for 2025 be local ones.
- Michael Shuman, Publisher
NEWS
Capitalizing the Employee Ownership Opportunity, ImpactAlpha (December 4)
What’s Next for Community Development Finance? Nonprofit Quarterly (December 11)
Providing Alternatives to Predatory Small-Dollar Loans, Next City (December 4)
Philanthropy Accelerates the Next Economic Upgrade, Alliance (December 3)
Honeycomb Credit Acquires Raise Green, Crowdfund Insider (December 4)
Investing in the Care Economy, ImpactAlpha (December 3)
The True Origin of Food Deserts, The Atlantic (December 1)
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✔️ Partner News & Voices
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✔️ Asks
WHAT YOU MISSED IN THE LAST MSJ EXTRA!
SPONSOR CORNER
The National Coalition for Community Capital (NC3) is dedicated to educating, advocating, and activating community capital—and serves as MSJ's fiscal sponsor. Thank you for being a part of a growing movement! Contact NC3 for support integrating local investing in your work: info@nc3now.org.
NC3 UPDATES AND ANNOUNCEMENTS
Coalition Conversations: Our December conversation took place today with Brian Beckon, Managing Partner at PathLight Law. Brian spoke with NC3's CEO, Chris Miller, about community investment fund structures. View this Coalition Conversation on NC3's LinkedIn and stay tuned for next month's.
Changing the Paradigm: Mobilizing Community Investment Funds: Community investment funds are the structures NC3 is building in communities across the nation to facilitate wealth-building. Join us on March 7, 2025, in East Lansing, MI, to hear insights from communities we're working in and meet experts on a fund for your community. Register here today—early bird pricing ends January 17!
PARTNER NEWS & VOICES
Crowdfunding Is Not “Bottom of the Ladder” Finance, Crowdfund Capital Advisors (December 7)
Empowering Communities with Renewable Energy, Superpowers for Good (December 3)
New Employee Ownership Strategies for Advisors, Project Equity (November 18)
NOTABLE NEW RESOURCES
Community Capital Live: Kathleen Paylor of RSF Social Investment Fund (December 18)
How States Can Maximize Clean Energy Benefits with Local Ownership, Institute for Local Self-Reliance (December 10)
Employee Ownership State Policy Database, Project Equity (December 5)
Ownership Lens Investing, Ownership Capital Lab (December 3)
MSJ EVENTS
Community Capital Live: Havell Rodrigues of New Majority Capital - Virtual Event: January 15, at 2 pm ET
MORE EVENTS
Innovations in Baby Bonds - In-Person Event (New York, NY): January 16
Changing the Paradigm: Mobilizing Community Investment Funds - In-Person Event (East Lansing, MI): March 7
Neighborhood Economics: A Deep Dive into Local Entrepreneurship - In-Person Event (Asheville, NC): April 1 - 2
JOBS BOARD
Partnership for Southern Equity: Just Growth Organizer
ASKS
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About The Main Street Journal
The Main Street Journal aims to catalyze the movement of $50 trillion from Wall Street to Main Street to facilitate economic development and economic justice. It’s sponsored by the National Coalition for Community Capital, with grants from the Heron Foundation, Wallace Global Foundation, and the Bondi Foundation. We welcome feedback about everything, from our design to content. Please send ideas to Jen Risley at jen@main-street-journal.com.
Our Team:
Michael Shuman – Publisher
Jen Risley - Editor
Wendy Wasserman - Strategic Advisor
PARTNERS
Abrams+Angell | American Independent Business Alliance | Candide Group | Capital for Change | Capital Institute | Community-Vision Solutions | Council Fire | Crowdfund Better | Crowdfund Capital Advisors | Democracy Collaborative | Exit to Community Collective | Fair Food Network | Impact Finance Center | ImpactPHL | Initiative for Local Capital | Institute for Local Self-Reliance | The Kassan Group | Mission Driven Finance | National Coalition for Community Capital | Natural Investments | Neighborhood Associates | Neighborhood Economics | New Majority Capital | Next Egg | Nonprofit Quarterly | Ownership America | Ownership Capital Lab | Ownership Matters | Partnership for Southern Equity | PathLight Law | Project Equity | Project for Public Spaces | Prospera Partners | Raise Green | Revalue | Rising Tide Capital | Schumacher Center for a New Economics | Shelterforce | Slow Money | SOCAP | Sun Valley Institute for Resilience | The Super Crowd Inc. | Transform Finance | Uwharrie Bank | Village Well | Zebras Unite
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