The Fastest Route to a Local Investment Fund
V.2, N.21
Most of us would love to have one or two funds in our backyard that did all the hard work of local investing for us. Neighborhood funds like these would study the full universe of local businesses and projects, pick the most promising ones, allocate capital efficiently, and assiduously nudge these entities toward success. For typical investors who are short on time, a neighborhood fund also could provide with diversification against the risk that one or two of the investments may falter, and liquidity should they want to withdraw their stake to pay urgent bills.
The troubling reality is that, even though the United States has about 10,000 investment funds, the ones that focus on local business and allow grassroots investors to participate probably number fewer than three dozen. But a new model promoted by the National Coalition for Community Capital (NC3) and Cutting Edge Capital could radically expand the number, size, and impact of neighborhood funds.
Thanks to support from the NC3 and the Solidago Fund, several of us prepared a handbook on this topic three years ago: Community Investment Funds: A How-To Guide for Building Local Equity, Wealth, and Justice. We explained that the Investment Company Act of 1940 made it expensive and difficult for a community to create a neighborhood fund. Community organizers therefore need to identify and exploit one of the 20 or more exemptions within the 1940 Act to succeed.
Recently, a team on NC3’s board, led by Brian Beckon of Cutting Edge Capital and Chris Miller, has come up with a new framework that integrates the best of the exemptions. In our first article, Brian Beckon leads the way in laying out the details of what he calls a Diversified Community Investment Fund (DCIF). (You can also listen to this week’s webinar on the topic here.)
Basically, a DCIF is primarily a fund of real estate projects that also allocates up to 40% of its capital for businesses using the real estate. This structure allows a community to raise capital for the fund using investment crowdfunding. An example of a DCIF already in operation is the Kachuwa Impact Fund in Colorado. NC3 is now developing new versions in Cincinnati,Detroit, and Rhode Island, and if your community is interested, please reach out to Chris Miller (chris@nc3now.org).
Our other news articles build on a topic we introduced in the last issue: the challenge of ensuring the healthy transition of millions of great local businesses, which are threatened by the so-called “Silver Tsunami,” hopefully into the hands of new local owners. You will find a terrific overview by Project Equity (which is seeking to convert many of these businesses into worker cooperatives), an interview of the Project Equity program managers by ImpactAlpha, and a deeper exploration of the “Silver Tsunami” challenge that the country faces.
And don’t forget to scroll down and check out our list of events and job opportunities in the field. Spring is in the air!
NEWS
A Diversified Community Investment Fund: A Versatile Vehicle for Democratizing Capital, Cutting Edge Capital (February 17)
The Silver Tsunami of Retiring Business Owners, Project Equity (April 2023)
How Project Equity Is Surfing The ‘Silver Tsunami’ To Help Turn Employees Into Owners, ImpactAlpha (February 17)
Generational Turnover At Work: The ‘Silver Tsunami’ Continues To Roll But There Are Ways To Weather The Storm, Chatanooga Times Free Press (January 1)
PARTNER VOICES
Everytable Secures $8M to Fund Trailblazing Social Equity Franchise Program, Mission Driven Finance (April 12)
Nonprofits And Movements: How Do The Two Relate?, NonProfit Quarterly (March 29)
From Owing to Owning: How Communities Can Control Commercial Land, NonProfit Quarterly (April 5)
EVENTS
Connecting Capital To Neighborhoods That Don’t Normally Get It – In-Person Conference (Jackson, Mississippi). April 24-26, 2023. Jackson, with its 80% Black population, in the poorest state in the nation, provides a clear example of the racial wealth gap. The tools that Neighborhood Economics is identifying can be deployed in Mississippi to repair the damage caused by the connection between race and poverty. This event will bring together investors, philanthropists, entrepreneurs, problem-solvers, and people of faith in a city that needs them all.
NC3: National Coalition for Community Capitol: SuperCrowd23 - Virtual Conference. May 10-11, 2023. Two days of learning about impact crowdfunding that will provide entrepreneurs with invaluable information for fundraising but will also facilitate networking. Use code NC3friend to register for half off. Register here.
Total Impact Summit 2023: Investing for People, Planet, and Place – In-Person Conference (Philadelphia, Pennsylvania). May 1-2, 2023. A two-day, dynamic event for individual investors, family offices, foundations, fund managers, and financial advisors to connect with aligned peers and partners, learn about proven and new investment tools, meet leaders of investable opportunities, and move toward action and investment. See FAQ here.
11th International Public Markets Conference – In-Person Conference (Toronto, Canada). June 8-10, 2023. For over 35 years, the International Public Markets Conference has brought together visionary market managers, community advocates, and civic leaders to explore the changing forces that are shaping public markets today. Register here.
Rural Innovation Webinar Series - Virtual Conference. March 31, April 12, April 26, May 10, and May 12 2023. This free six-part webinar series will talk about how discovering how automated intelligence can save you oodles of time to learning the basics and debunking myths of crowdfunding, this 6-part Rural Innovation Webinar Series has it all. Sign up today to learn something new that can help your business. Register for one, or all of the conferences by clicking the video here.
ICYMI
Candide Group is thrilled to announce the official close of the first phase of the Olamina Fund! (April 2023)
Opinion: Government Banks Never Went Away. Just Don’t Call Them Bailouts, The Globe and Mail (April 1)
New Businesses Ready to Contribute to Local Economy, The News-Herald (March 4)
Community Wealth Building: A Pathway to Advancing Economic and Racial Justice, Ontario Nonprofit Network (March 30)
Ambition Won’t Save Us, Neither Will The American Dream, Yes Magazine (February 27)
JOBS BOARD
Vermont Community Loan Fund is hiring a Director of Housing and Community Facilities Programs and a Career Technical Education Loan Program Project Manager
Project Equity is hiring a Business Engagement and Partnerships - Outbound Manager, a Regional Engagement Program Manager - California, and a Financial Analyst
Mission Driven Finance is hiring for multiple positions
FREE SHORT VIDEOS ON LOCAL INVESTMENT
If you want to short answers to your most pressing questions about local investment, we have prepared a series of 5-10 minute videos. You can find them posted on our website under the “Local Investing Videos” page. Or click on the links below to be directed to videos based on the topic:
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. Our goal is to identify dozens, then hundreds, then thousands of Main Street Champions like you across America. We already have Main Street Champions across the U.S., from San Luis Obispo, CA to Providence, RI, and even Australia! Together, we can move our hard-earned savings from Wall Street back into our communities. Fill out the intake survey below to join this growing cohort!
SOME OF MSJ’s VINTAGE ISSUES
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 a grant from the Heron Foundation. We welcome feedback about everything, from our design to content. And we welcome suggestions of other groups to involve as partners, and other information to include. Please send ideas to Melea Huon-Dumentat at melea@main-street-journal.com.
PARTNERS
We welcome any nonprofit or for-profit committed to local investment as a partner. If your organization is interested, please contact Melea Huon-Dumentat at melea@main-street-journal.com.