With the launch of the new book, The Social Justice Investor, LISC’s CFO Christina Travers, one of the book’s contributors, reflects on the ways that CDFIs have tapped the capital markets to deepen their impact—working to upend lingering misconceptions among some investors. “Whether we are financing affordable housing, small businesses, health, safety, climate resilience, racial equity or jobs, we see financial performance and local impact as part of the same whole.”
Over the last seven years, access to public capital markets has significantly expanded the scale and scope of country’s community investing activity.
Bonds issued by community development financial institutions (CDFIs) have performed well. Proceeds have supported high-impact projects and programs in both urban and rural communities. And even amid significant economic uncertainty, CDFIs have found ways to blend different sources of capital to support local partners.
Still, that success has not fully proven the broader point to the market—that communities damaged by long histories of disinvestment can be good places to live, work and invest if they have access to the capital they need to build and grow.
There are decades worth of data to back up those assertions, not just from LISC but from other seasoned CDFIs and independent evaluators. But, because our organizations are still relatively recent entrants to the debt market, some investors are still skeptical, even when they see strong credit ratings (like LISC’s ‘AA-’ from S&P) to go along with our strong track records.
A new book being rolled out this week—The Social Justice Investor, by Andrea Longton—may help provide more context, especially for retail investors. Having spent most of my career raising and managing capital for CDFIs, I was thrilled to join many other leaders in the field to contribute to the book (you can read my essay here). In fact, LISC is hosting a launch event this week for the book as part of our ongoing efforts to educate investment advisors, asset managers, fund managers, family offices and others about community investment opportunities.
I was particularly struck by a simple rationale cited in the book—that social justice investors crave stability in our national economic wellbeing, not just for themselves but for everyone else as well.
I think that’s a sentiment that many individuals and institutions can get behind. But there is also this nuance: “Our secret sauce,” Longton writes, “is listening to the communities that sit closest to the problems. Social justice investors restore an equitable flow of capital by asking the impacted communities for guidance on what to finance and how.”
In practice, I think that speaks to the way that local expertise reinforces creditworthiness. This is particularly germane for LISC, since the connection to “local” has always been at the heart of our day-to-day work and fundamental to the way we talk about our Impact Notes offer. Whether we are financing affordable housing, small businesses, health, safety, climate resilience, racial equity or jobs, we see financial performance and local impact as part of the same whole.
Looking forward, I think it will take an increased volume of issuance from CDFIs as well as increased market outreach to finally move past old narratives. We need to highlight the financial strength of our organizations, detail the consistent returns related to our community investments, advance efforts to get capital to smaller CDFIs to deepen our impact, and—ultimately—build market confidence in these instruments we offer.
I also like to remind investors that CDFIs are, in fact, financial institutions. We understand both sides of the investment equation. LISC, for example, seeks to generate strong returns from our portfolio of assets, so we can pour those gains into development projects and community programs, thereby expanding our impact.
But we also feel strongly about investing in line with our values. Over the past few years, we have shifted portions of our portfolio away from more traditional vehicles and toward impact funds focused on critical issues, like climate solutions and inclusive business growth. We have found that we can balance risk and generate acceptable returns while also putting capital to use in service of our larger goals.
I guess that’s a long way of saying that we are living the same approach that we urge investors to consider. We know there is a growing market appetite for financial products that offer rich social impact alongside a reasonable financial return. It’s our job to provide the data, stories and financial tools investors need to make the field of community development part of their impact investing strategy.
About the author
Christina Travers, Executive Vice President & CFO, LISC
Prior to joining LISC, Christina was the CFO of Working Solutions CDFI, a San Francisco Bay Area microlender. During her time at Working Solutions, she focused on the migration to a single treasury management platform, financial management report creation, debt consolidation, financial forecasting and the implementation of a risk assessment based asset management function. Christina also spent over two years at the Low Income Investment Fund (LIIF) as Vice President for Finance & Capital Strategies. In this role, she served as a liaison and resource for LIIF’s banking and other lending relationships. She also oversaw the corporate budget process, financial forecasting, investment portfolio management, treasury services, and cash management. Before LIIF, she spent ten years at LISC as Senior Vice President for Finance & Capital Strategies.