In downtown Chicago, at-risk youths are being taught how to manage money, social entrepreneurs are being advised on how to grow their businesses and help the community at the same time, and builders are given loans to revitalize depressed neighborhoods. These positive impacts are all part of a plan to give borrowers chances to succeed in low- to moderate-income neighborhoods. And it’s all thanks to the Chicago Community Loan Fund (CCLF).

CCLF is a nonprofit community lending institution founded in 1991. Its aim is to ensure that Chicagoland developers have a lender to turn to for projects and enterprises that do a neighborhood good but are hard to underwrite. Investors can support CCLF directly or support it through community investment notes from the Calvert Foundation. Either way, it supports the community. And in the meantime, they can profit. (For as little as $20, investors can buy community investment notes in one- to five-year durations that earn between 0.5% and 2%.)

But CCLF couldn’t do as well as it does without the power of investment technology, which allows the fund to hitch its wagon to Calvert Foundation. The foundation, in turn, can hitch its wagon to broker-dealers such as Chicago-based Incapital, whose platform financial advisors and individual investors can latch on to. Which is some valuable linking. Calvert has raised $175 million via Incapital’s platform. That trickles back on down to CCLF.

Incapital was founded in 1999 to offer securities firms and individuals better access to corporate bonds. The firm now originates and distributes offerings across multiple asset classes. Through Incapnet, its proprietary trading and rerouting site, Incapital’s products can be modeled, created, issued and tracked in real time. That includes impact investments. And that is huge.

“We’ve made [impact investments] easier to access,” says Tom Ricketts, Incapital’s chairman. “And over time we’ve seen these products grow.”

Technology is critical to impact investing because without it entrepreneurs, investors and middlemen such as broker-dealers would operate in a vacuum. Now, networks of all shapes and sizes can be created to foster symbiotic change. The more people read, join and learn from networks, the smarter the network gets. And the more everyone stands to benefit.

Networks also promote transparency—since there are more eyes on deck (which was what Incapital was thinking when it opened the distribution of bonds to a wider audience of buyers, including financial advisors). Likewise, the more people are exposed to impact investments, the more likely it will create demands for that transparency. 

Ricketts says the Calvert notes have “picked up steam” in a world of low interest rates where the competition is weaker. “The returns on the notes at one point were 100 to 200 basis points lower than what you would find in a highly rated bond. Now that interest rates are so low, the opportunity cost—taking social return as financial return—is low.”

“Impact investing creates a virtuous circle of empowerment, opportunity and engagement by connecting investors, underprivileged individuals, and communities,” says Calvert Foundation President and CEO Lisa Hall.

Couple those types of social returns with financial returns that are on par with other investments and there’s a snowball effect in the making. Calvert Foundation is seeing just that.

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