SOCIAL TOPICS (Archive): COMMUNITY DEVELOPMENT INVESTING

Published, March 1998

       After months of seemingly countless and endless brown bag lunches to discuss our proposed community development investing service, we launched our program in early 1997. Intent on providing a broad geographic representation of loan funds and community banks, our first offering included Acción International, Self-Help Credit Union, Northern California Community Loan Fund and Boston Community Loan Fund. We plan to periodically spotlight an organization included in this service. The first will be devoted to our local Boston Community Loan Fund.

       Most of us associate community loan funds with providing affordable housing within low-income communities and, indeed, that has often been the seed of such funds. Started in 1985 with a capital base of $3,500 and one employee, Boston Community Loan Fund today has assets over $10 million with nine employees. Among its volunteer board members is Charlie Clark, a loan officer at our lending affiliate, USTrust.

       Since its beginning, the Fund has provided more than $26 million to low-income communities in the Greater Boston area. With this growth has come an expansion of loan projects. Once primarily financing homes and rental units, the Fund now provides capital for day care centers, social service agencies, and housing units for people with AIDS, battered women, the elderly and people in transition. Not only does the Fund provide loans that individuals and organizations might not be able to obtain from traditional lending sources, it does so while maintaining its mission of funding projects that will contribute to sustainable health and longevity within their communities.

       A common misconception arises about the risk associated with loans to projects which are unable to obtain conventional financing. Thus far, Boston Community Loan Fund’s losses have totaled less than one-half of one percent, far better than the vast majority of commercial banks.

       The Boston Community Loan Fund receives its funding primarily through individual investors, religious organizations, foundations, corporations and banks such as our commercial bank affiliate, USTrust. To help the Fund achieve its mission, these investors loan money at below market or zero interest rates. Among its tools are debt financing, equity investments, fund management and technical assistance.

       In 1997, the organization restructured and formed Boston Community Capital to reflect its expanding presence in community development. The new name incorporates the Loan Fund as well as two new initiatives. Boston Community Venture Fund invests in low-income neighborhood businesses such as Cooperative Home Care of Boston, thereby offering a financial return to investors while providing jobs, income and services to neighborhood residents. Boston Community Managed Assets offers financial management services to community organizations and their loan programs.

       Casa Myrna Vazquez (services for victims of domestic violence), Jumpstart (college students providing tutoring to pre-school and kindergarten children), Pine Street Inn (homeless shelter and services), Valley Home Care (home care for the elderly), and Codman Square Neighborhood Development Corporation (affordable housing) are a small sample of the many, diverse groups that have received support from Boston Community Capital. We are delighted that many of our clients are now investors in these projects which ensure the integrity and sustainability of these neighborhood communities.

Walden Asset Management began its Community Development Investment Service in 1996. Twice a year, we provide our clients with a choice of pre-selected community development loan funds, banks and credit unions that target international, national, regional or local projects, primarily in affordable housing and small businesses. All investments are client directed and are registered in clients' names. In the spirit of our clients’ willingness to accept a below market rate of return, USTC does not charge a fee on below market investments unless they exceed 5% of a portfolio.