By Jerilyn Klein Bier
For nearly 30 years, Trillium Asset Management, a leader in sustainable and responsible investing, has been helping clients invest directly in communities to create social impact in exchange for modest financial returns.
"The money that our clients have placed in community investments instruments has provided capital to non-profit organizations that have created and saved tens of thousands of jobs and homes in the communities they serve," says Randy Rice, Trillium's Community Investments Manager and a senior portfolio associate in its Boston office.
Most directly placed community investment vehicles are loan funds, community development banks and credit unions. These organizations usually offer debt vehicles, which Rice says provide a fixed exit for investors.
He adds there's a clear funding advantage to domestic loan funds being certified Community Development Financial Institutions (CDFIs), a designation from the Treasury Department that makes them eligible for monetary awards and tax credits.
Trillium currently has $22 million in directly placed community investments (a figure that also includes some private equity and venture capital), up from $3.5 million in 1999. Although that's just over 2% of its total $1 billion of assets under management, most clients have allocated at least a small portion of their portfolio here, says Rice.
Clients direct a small portion of their total investments to this sector. The impacts they seek revolve around jobs, safe places to live and healthy environments. After Hurricanes Katrina and Rita, Trillium saw an uptick in interest in investments tied to the Gulf Coast. Sustainable agriculture and affordable housing are currently popular preferences.
Trillium initially tries to fill clients' individual interests from the approximately 30 community investments it holds. "If there's a hole, we work to find an organization that fits," says Rice.
The firm usually invests for three to five years in loan funds, and their re-up, or rollover rate (how often clients reinvest for another period) is well over 85%.
Some clients still invest in the Institute for Community Economics (ICE), the first loan fund Trillium got involved with in 1984. Now part of the National Housing Trust, it makes loans to community land trusts and nonprofit organizations to bring permanently affordable housing to lower-income people. Rice says it's helped residents of mobile home parks cooperatively buy them so they can pay rent for the land beneath their homes to themselves instead of to a landlord who could sell the park and evict them.