How's That Unique Impact Investing Effort Playing Out in Chicago?

 Chicago's South Side

Chicago's South Side

Who said impact investing is just for major wealth holders?

Last year, we highlighted an innovative initiative that aims to let pretty much anyone with a little extra money get involved in financing efforts to tackle societal problems. It’s a $100 million collaboration called Benefit Chicago that involves the MacArthur Foundation, Chicago Community Trust, and the Calvert Foundation. And basically, it brings the complicated realm of impact investing down to a much more public and accessible level.

As we described at the time, investors at all levels—individuals and institutions—can purchase Community Investment Notes issued by the Calvert Foundation that are targeted at improving Chicago communities. As Benefit Chicago explains, these "are fixed-income securities with principal maturities ranging from one to 15 years and interest payable annually. They are available through a brokerage account with a minimum investment of $1,000 or online starting at $20."

Beyond dramatically lowering the barriers to impact investing, this is an interesting partnership because of MacArthur’s tremendous giving power, Calvert’s financial expertise, and access to CCT’s donor-advised funds.

Read:  In Chicago: Impact Investing for the People, Not Just the Privileged

Last month, a year after launching, Benefit Chicago announced its first round of loan recipients to finance six borrowers and projects in diverse neighborhoods. What makes these loans stand out is that the financing is both flexible and patient. To date, Benefit Chicago has raised $77 million of its original $100 million goal, and Calvert has issued 169 individual community investment notes.

Let’s take a look at the very first round of loans totaling $12 million to see where the money is going. 

These are the first six recipients of Benefit Chicago loans and investments: AutonomyWorks, Chicago Neighborhood Initiatives (CNI), Garfield Produce Company, IFF, the Southwest Corridor Collaborative of LISC Chicago, and Sweet Beginnings, the for-profit subsidiary of the North Lawndale Employment Network. The issues they address range from jobs for the formerly incarcerated to employment for adults with autism and revitalizing Southside and Westside neighborhoods. Other loans have backed year-around farm produce and financed community projects like child care centers and youth sports facilities.

But what these loans have in common is that they've gone to nonprofits that have found it difficult to access capital from commercial banks because of who they serve and/or where they’re located. Both for-profit and nonprofit entities under this umbrella have been considered for Benefit Chicago support. Also, loans have been extended to both new and well-established organizations.

The important thing to note, here, is that these are just the first of many more loans to come. The executive director of Benefit Chicago shared in a press release that it has already received over 80 applications for financing, so this effort is really just getting off the ground.

Thus far, the Benefit Chicago team seems to be looking for diversity in applicants and industries rather than picking out a couple target issues to focus on. But based on the first round of recipients, we notice a slight leaning toward the topics of job creation and workforce development—and a keen interest in Chicago right now, which has a very high African-American unemployment rate. Among other things, addressing this economic distress is widely seen as a key to lowering the city's tragically high murder rate. 

“Our region benefits from the great diversity of organizations that generate jobs and provide essential services and from the broad range of individual and institutional investors eager to help facilitate their growth and ensure their success,” said MacArthur CEO Julia Stasch. MacArthur has committed at least $50 million of its own assets to Benefit Chicago as part of a broader push to be more responsive to the entrenched social and economic problems its home city. 

Meanwhile, under Terry Mazany's leadership, CCT has been intent on bolstering the core capacity of key nonprofits in Chicago, and this effort is a way to do exactly that. Benefit Chicago also offers more choices to those with donor-advised funds at CCT. The DAF piece of this is interesting to watch, since more donors are interested these days in impact investing, and community foundations are looking for ways to cater to that desire. 

“Through Benefit Chicago, we’ve combined forces to help bring needed financial capital to organizations that are poised to innovate, expand, and grow," Mazany said. "Investors in donor-advised funds at the Chicago Community Trust are among those who are eager to help our neighborhoods and their residents thrive.” CCT purchased a $15 million community investment note to support the cause.

To date, Benefit Chicago investors have donated as little as $20 online all the way up to $2 million from institutions. New applications are still being accepted for Benefit Chicago, and local groups are welcome to give it a shot. But be mindful that there’s also a strategic outreach process underway to identify potential borrowers in key sectors and neighborhoods. Information about how to apply for one of these loans can be found here. The process starts with a simple email, as there are no publicly provided forms on the Benefit Chicago website yet.