The Big Vision in America's Smallest State

V.3, N.10

May 30, 2024

Rhode Island was the first colony to establish an explicitly secular government, the first to call for a Continental Congress, and the first to renounce the British crown. Now, two and a half centuries later, residents are pioneering an ambitious statewide investment fund. In this issue of MSJ Extra!, you will read our interview with Jessica David, one of the founding board members of Local Return, the powerhouse grassroots organization developing a Diversified Community Investment Fund in Providence.

You will also find our latest local investment offerings so you can be a powerhouse yourself.

~ Michael Shuman, Publisher

Over the next few months, Local Return plans to launch a new local investment fund in Rhode Island. One of the founding board members, Jessica David, has lots of suggestions about how other communities might get started.

MS: Tell us about Local Return. When did you start it, and what does it do?

JD: Six of us began meeting in 2020, focused on the idea that wealth was largely missing from local conversations around COVID—but also opportunity and equity more broadly. We founded Local Return the following year with the mission to build community wealth, particularly in neighborhoods that have experienced historical or generational disinvestment, through community ownership and investment. The name was suggested by one of my co-founders, Josh Daly: “Local” for obvious reasons, and “Return” to suggest investment return, the circular economy, and returning to a focus on local.

From the beginning, we focused on building our community investment ecosystem. We hosted your workshops and loosely mapped the community’s local assets. For the past three years, we’ve been working on the community investment fund, which I know we’ll talk more about. Local Return also advocates for local policies and practices that support a vibrant and just local economy. For example, we proposed using $50 million of state ARPA funds to create neighborhood trusts, an idea that didn’t get enacted. And we work with local and national partners to increase community consciousness around strong, resilient local economies.

MS: I first became aware of your work in 2021 when you organized an online workshop, Local Investment 101, that I led. In retrospect, was the educational deep dive into local investment an important prerequisite for launching a fund?

JD: Yes, those workshops were the first time we went out into the community to gauge interest in local investing. It was a really important milestone for us because it suggested that people were eager and enthusiastic—but that they also needed to feel supported. You also provided us with a foundation of knowledge and a vocabulary to talk with each other. Our community was all over the map in terms of our awareness of and knowledge about community investing, so this was a way of creating a common baseline among a core group.

Also, because our goal has always been to build out the ecosystem rather than just create a single fund or program, it was really useful to start with the investor perspective. Of course, a lot of this was revealed in hindsight; at the time, it just seemed like a good way to do something!

MS: I recall that your group had a bunch of ideas for the next steps to take together, including investment clubs, web listings of local business offerings, and state policy reforms. What made you decide on a fund?

JD: We spent the last workshop with you brainstorming ideas, and then we held a follow-up in-person session to further engage around the ideas that rose to the top for Local Return. Ultimately, we decided on a fund because of, again, our commitment to ecosystem-building. To me, a community investment fund is a critical form of community infrastructure. One of our values is: “Powerful communities sustain powerful infrastructure.” (I borrowed this quote from Alicia Bell, who shared it during a webinar about local news.) By starting with a fund, we are elevating and educating around community wealth and community investing topics, not just executing a single project (which, in my experience, can be more easily tuned out).

It also became clear after your workshops that those of us who had bought into the idea of local investing still needed support in identifying, vetting, and executing opportunities. Plus, none of us has enough capital to do something huge on our own. In a small state like Rhode Island, we need to think about how to have the biggest leverage. A fund is a way to create something together.

MS: There are lots of designs of local investment funds. You chose to pursue a Diversified Community Investment Fund (DCIF), which prioritizes real estate. Why?

JD: We originally conceived of a small business fund, but once we learned about the DCIF concept, we changed our minds. The concept made sense to us for two main reasons: First, it matched our focus on place. Place is the locus of opportunity, and it also reflects our unjust and racist systems. There’s a slide I like to show that compares the median household income and poverty rate of three pairs of census tracts in Rhode Island. For example, in Providence, the Olneyville neighborhood (where 81% of residents are people of color) has a 45% poverty rate and $25,000 median household income, compared to 4% and $140,000 in the East Side neighborhood (where 10% of residents are people of color). Those are appalling differences that have monstrous implications for the residents, the city, and our society as a whole.

And second, there are significant barriers to community-driven real estate. Real estate projects in Rhode Island are funded either by the private sector or by intermediary-run programs that carry a lot of restrictions. It’s so difficult for the community to act in this really important space. There is a desperate need for more flexible capital.

MS: What are some examples of the kinds of projects you would like the fund to invest in?

JD: We describe our fund as possibility capital–to enable projects that otherwise wouldn’t have much of a chance. There are two examples I’m particularly excited about: First, we’d like to help small businesses “control their real estate destiny” (this is a phrase I borrowed from the Kachuwa Fund in Colorado). So many independently owned local businesses have invested a lot of money into their space but don’t own it, meaning they’re at the mercy of their landlords and aren’t building equity. So, we hope to help some small businesses achieve greater stability and asset ownership through real estate.

Second, we want to help residents of the neighborhoods we’re prioritizing for investment become real estate developers themselves. Real estate is how a lot of people achieve financial independence and build generational wealth. But right now, this option isn’t available to everyone because of a lack of access to capital and also knowledge. Plus, residents know their neighborhoods best. (We’re partnering with Jump$tart to customize their training program for Rhode Island, so people have the opportunity to learn how to be responsible, successful developers.)

MS: What’s your strategy for raising the initial capital for the fund?

JD: Our goal is to raise $3.5 million for our fund, called the Rhode Island Community Investment Cooperative. We’re about to launch a direct public offering (DPO) in Rhode Island. It was really important to us that the fund be accessible to small, unaccredited investors—in other words, that all residents in Rhode Island have the opportunity to invest.

We’re offering three types of preferred stock: Series A, for “Neighbor” members, is available for a minimum investment of $500 and has a base++ return; this is specifically for low-income community residents. Series B, for “Community” members, requires a minimum investment of $2,500 and has a base+ return. Series C, for “Sponsor” members, has a minimum of $5,000 for individuals and $25,000 for institutions; it offers a base return. Every investor will get one vote, regardless of the amount of their financial investment.

We are also planning a 506c offering to attract accredited investors from other states. And we’re raising philanthropic funds for a loss reserve and operating costs.

MS: I assume you will want hundreds, if not thousands, of Rhode Island residents to put money into the fund. What’s your marketing plan for selling them on the idea?

JD: It’s all going to come down to relationships. Rhode Island is a small state, and we like to joke (although it might actually be factually true) that there are way less than Kevin Bacon’s six degrees of separation between our residents. Rhode Islanders will be the best spokespeople for the fund. We’re starting with our own networks, and we hope to grow outwards from there.

MS: If I can nudge a little more on this point, how do you plan to reach people? A newsletter? Social media? Conferences? Neighborhood groups?

JD: Yes to all four! We have an email newsletter that reaches a small but engaged group, and we’ve been working on growing that audience. Same with social media. We presented a few weeks ago at Grow Smart RI’s Power of Place Summit, and we’ll take any opportunity we can to table, distribute materials, and present at community events in the months ahead. We also started to map out the neighborhood and community organizations that can help us get the word out. We’re starting our outreach with a list of about 100 people who have the potential to be early adopters and influencers or ambassadors for the Cooperative. Our hope is to then demonstrate a significant level of meaningful support and buy-in to institutional and higher net-worth investors who might not yet be as aware of community investing.

MS: Have the state, county, or local governments been helpful to your effort?

JD: We haven’t engaged with the government around the Cooperative. That’s largely by choice; we wanted to create the fund deliberately, without being influenced by government funding restrictions or political pressures. That said, several local officials have been supportive of Local Return’s mission, and we’re hoping to build on that in the years to come. There is a lot that our state and local governments could do to retain community wealth and invest their own assets locally.

MS: For other communities that are thinking about starting their own funds, what are the three most important you would advise them to do to be “ready”?

JD: My first piece of advice is to be as clear as possible about what problem you’re trying to solve. What is the unique need you’re addressing in your community? For many of us in this space, there are such gaps in the ecosystem that it could be any number of things, so the more concrete and focused you can be, the better. For us, we had three requirements: the ability to involve unaccredited investors, a community governance model, and a place-based strategy for investments.

From there, it’s helpful to isolate the variables. There are so many factors to consider: legal, operational, fundraising strategy, messaging, pipeline development, etc.—that you have to be super intentional about which factors you’re addressing with which decisions. We frequently found ourselves in unproductive spirals and had to take a step back to disentangle the various elements.

Finally, I feel pretty strongly that the effort needs to be led by a consistent team of people who are willing to get their hands dirty. Consistency is important because the learning curve is steep, and there is much interrelated work to do. Champions who truly believe in the concept and are willing to see it through are vital.

MS: Finally, how do you invest locally now?

JD: I tend to invest in any local crowdfunding opportunity I come across, like the 25 Bough project and New Majority Capital—although there is a crowdfunding dearth in Rhode Island. That’s something else we hope to start working on once the fund is up and running. More significantly, I’m a proud member of the Urban Greens Co-op Market, and I invested in the DPO that helped them build their grocery store in Providence. I’m an investor in the Capital Good Fund, an amazing CDFI based in Rhode Island that offers inclusive financial services and alternatives to predatory lenders. I support several organizations through charitable giving and board service. But my biggest local investment is probably the time and resources I’ve invested into Local Return and the Rhode Island Community Investment Cooperative!

MS: That’s an impressive answer! Good luck launching the fund.

Local Return co-founders (left to right): Carmen Diaz-Jusino, Jessica David, Raul Figueroa, and Sue AnderBois.

Read our past interviews:

✔️ Marjorie Kelly

✔️ Amy Cortese

✔️ Elias Crim

✔️ Devin Thorpe

✔️ Nia Evans

✔️ Chris Miller

✔️ Jenny Kassan

✔️ John J. Berger

✔️ Kevin Jones

NEW INVESTMENT OPPORTUNITIES

Below is our list of recently posted investment opportunities across the United States. Please note that our listing of these opportunities is not an endorsement, and remember that all investments are risky, so click on the hyperlinks and read all the details carefully before investing. Over time, we plan to add more commentary around these listings and tools to help you become a successful local investor. Please let us know your ideas!

To access our complete listings of local offerings on our website, please create a free account here.

INVESTMENT OPPORTUNITY SPOTLIGHT

2040 Energy (Bloomington, MN) Wefunder: Developing a heat pump boiler to meet the high-temperature needs of hot water radiators.

COMPREHENSIVE LISTINGS

Click the images below to see our complete list of investment opportunities by theme or region.

NEW OPPORTUNITIES

ENERGY INVESTMENT OPPORTUNITIES

FOOD INVESTMENT OPPORTUNITIES

HOUSING INVESTMENT OPPORTUNITIES

GREAT LAKES INVESTMENT OPPORTUNITIES

MID-ATLANTIC INVESTMENT OPPORTUNITIES

MIDWEST INVESTMENT OPPORTUNITIES

NEW ENGLAND INVESTMENT OPPORTUNITIES

ROCKY MOUNTAINS INVESTMENT OPPORTUNITIES

SOUTH INVESTMENT OPPORTUNITIES

SOUTHWEST INVESTMENT OPPORTUNITIES

WEST COAST INVESTMENT OPPORTUNITIES

LOCAL ECONOMY FUND HIGHLIGHT

Place-Based Pioneers Look to Expand Their Impact, ImpactAlpha (May 9)

GRASSROOTS INVESTOR FUND HIGHLIGHT

Boston Impact Intitiative Fund - Offering Memorandum: Focused on economic and racial justice. Open to investors in CT/MA/ME/NH/NY/RI/VT.

FUNDS OPEN TO GRASSROOTS INVESTORS

The following is our first draft of funds that invest in local businesses and are open to non-accredited investors. Please help us add to this list!

(Fund Types: BC = Short-Term Business Credit Institution; DA = Donor-Advised Fund; NP = Nonprofit; RE = Real Estate Investment Fund)

BECOME A MAIN STREET CHAMPION

Have you always wanted to start a local investment club? A website of local investment offerings in your community? A local investment study group?

Whatever your interest or ambition, we invite you to “go public” to help others in your region find you, scheme with you, and start a local investment movement in your community. We aim to identify dozens, then hundreds, then thousands of Main Street Champions like you in every corner of the globe. Together, we can move our hard-earned savings from Wall Street to Main Street into our own communities. Fill out the intake survey below to join this growing cohort!

CHAMPIONS BY STATE

AZ | CA | CO | DC | FL | GA | HI | IA | IL | IN | KY | LA | MD | ME | MN | MI | MT | NC | NH | NE | NY | OH | OK | OR | PA | RI | SD | TX | VA | VT | WA | Australia | Belgium | Canada | India

Become a Main Street Champion

SOME OF MSJ's VINTAGE ISSUES

Share The Main Street Journal

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. Also, we welcome suggestions of other groups to involve as partners and additional information to include. Please send ideas to Jen Risley at jen@main-street-journal.com.

And if you want to help support our work, please use the button below. Thank you!

Make a Donation

Our Team:

Michael Shuman – Publisher
Jen Risley - Editor
Jessica Landman - 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 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

We welcome any nonprofit or for-profit committed to local investment as a partner. If your organization is interested, please contact Jen Risley at jen@main-street-journal.com.