For Joe and Susannah McQuillan, pulling back on family spending and shielding investments from risk in the stock market was a natural reaction to the recession. As the economic crisis deepened, investors the world over were doing similar things. However, there are some socially-motivated investors, like the McQuillans, who view the harsher climate as an opportunity to step up and increase efforts to help distressed communities.
“We increased our investment in TRF, and the difficult economic environment spurred us to do so,” Joe explains. “It is exactly the right time to renew efforts to expand economic vitality in struggling communities and to support those in need and we think TRF is the best avenue to pursue those social and economic goals.”
In tough economic times, Community Development Financial Institutions (CDFI) like TRF, found themselves in a particularly difficult position. Tighter credit requirements and higher yield demands limited access to conventional capital sources. At the same time, in distressed communities across the nation, demand for basic needs such as affordable housing, quality schools, child care and jobs, continued to grow.
Like TRF, CDFIs across the country have continued to demonstrate the ability to make prudent loans in underserved communities. While TRF has never promised its socially-minded investors a high return, an investment in TRF in 2000 would now be faring better than an investment of the same amount of money in the S&P over the same decade.
While some investors increased their commitments, others stepped up involvement by branching out. For years, Jonathan Snipes turned to Wall Street to invest his money. As the market began to collapse, Jonathan started to explore alternatives for his investments.
“I decided it was time to put my money where my thoughts had been – something that benefits my local community and promotes the kinds of values that are important to me and my family,” shared Jonathan. “Investing in TRF was new to me but I made a 15-year commitment. The return on the investment was lower than what I had expected in the past, which in itself turned out to be unrealistic given that the market collapsed. With TRF, I felt that I was doing something good and I know exactly where and how TRF is investing the money. That in itself is invaluable to me.”
Similarly, the van Ameringen Foundation’s activities had traditionally been limited to philanthropic grantmaking. However, as the demand for capital increases, van Ameringen recognized the value of making a socially responsible investment.
The foundation was keen to increase its involvement in the communities where they had traditionally made grants and an investment in a CDFI was a logical next step; van Ameringen’s loan to TRF became its first such investment.
The prescription for an ailing economy is often making credit available. By investing in TRF during hard times, socially-motivated investors have seized the opportunity to make an even deeper impact.