For Money Managers
Socially responsible investing (SRI) has become a popular buzz word, but it can be daunting to understand exactly what your clients mean when they talk about SRI. A growing number of clients want their investments to create a positive change in the world around them – even as they seek to minimize their risks and increase the size of their portfolio. Shared Interest is one of many “community investments” structured to direct investments and loans for productive purposes to low-income communities in the U.S. and abroad. They are increasingly popular business-based vehicles that enable clients to use their money to make positive, measurable change it the world.
Community Investing is perhaps the least well-known sector of socially responsible investing, but it is the fastest growing and the one that has the most direct impact on disadvantaged communities. Instead of an investor's capital being channeled to companies that are known by their stock symbols (and how well they adhere to basic human rights issues), community investment is funding nonprofits, small businesses and cooperatives to maintain the critical facilities that healthy communities depend on, and financing loans that enable people to work their way out of poverty and into sustainable jobs and communities. (For information about community investing, please visit the Social Investment Forum’s website: www.communityinvest.org.)
Some financial managers may suggest that their clients interested in community investing make direct loans to or investments in the organization that are not managed by their firms. To learn more about how Shared Interest’s loan fund works, and to determine whether or not it might be appropriate for your clients, please contact us.
Some information that might be helpful to know if this is the first promissory note that you are managing.
Most money managers review Shared Interest and all CDFI’s for approval in a process analogous to the approval of a stock for its suitability for a specific portfolio. You should be aware, however, that all promissory notes and most certificates of deposit from CDFIs, since they are held in physical form rather than as book-entry assets, and since there they do not trade in a secondary market, are regarded as “non-standard assets.” This means that the pricing, receipt of interest payments, and booking of assets by the custodian are largely manual processes with most money managers. Often the community investments are not priced for the client – they are shown as “unpriced assets,” as the absence of a secondary market means that an arms-length “trading price” cannot be established. This means that the value shown on your client’s statement may not match, and will be lower than the actual value. For this reason, you may recommend that your client make a direct loan to us that is not managed by your firm.