Local Investing for Social Impact

We believe that philanthropic capital can further the betterment of Washtenaw County through grants as well as investments. Impact Investing unlocks additional capital and thus, in turn, more opportunity to pursue and achieve lasting positive change on critical issues—such as affordable housing, access to healthy food, transportation, high-quality education—and it can aid in growing and strengthening our local small business community.

AAACF Vision for Impact Investing

With a focus on racial and social equity, all neighborhoods and communities in Washtenaw County have the same opportunity for generational human dignity with equitable access to our collective community wealth.

What is Impact Investing?

Impact investing refers to the practice of investing in community projects that are intended to generate a financial return as well as a tangible social or community benefit. Unlike grants, investments  are intended to be repaid to the Community Foundation and can be “recycled” back into the community through additional investments.

  • Mission-related investments seek to generate a measurable beneficial social or environmental impact alongside a market-rate financial return. These investments are generally made in for-profit social enterprises as part of a mission-aligned investment portfolio or strategy.
  • Program-related investments or “PRIs” are defined by the IRS as an investment in which the primary purpose is to significantly further a charitable purpose. The recipient of a PRI may be a nonprofit or for-profit social enterprise. Unlike a mission-related investment, PRIs are not expected to produce market-rate returns.
 

Jillian Rosen

VP for Community Investment
(734) 663-0401 x115
Email Jillian

AAACF’s Approach to Impact Investing

As with all our initiatives, the Community Foundation took an intentional and deliberate approach as we enhanced funding approaches beyond grantmaking. We outlined a vision for how our community would benefit from AAACF also making investments. While the tools may be different, the underlying principles of philanthropy tie them together. Philanthropy takes a systems level approach to change: we are trying to transform the ecosystem in which a person operates, enabling an individual to build wealth that in turns enhances their family, neighborhood and ultimately the community at large. Philanthropy identifies opportunities, posits solutions and measures the impact of those interventions. Philanthropy also relies on partnerships. Impact investing, in particular, allows the Community Foundation to bridge the private and public sectors. 
 
To understand how community and capital intersect in Washtenaw County, AAACF commissioned the 2020 AAACF Washtenaw County Capital Research Report, the first research of its kind to establish an independent and objective understanding of the local investing ecosystem. AAACF contracted both quantitative and qualitative expertise—The Urban Institute of Washington DC, Revalue of Ypsilanti, and EntryPoint of Ann Arbor—to produce a comprehensive analysis of the county.
 
Read the Executive Summary below and find the full report here.
 
 

 

AAACF Actions on Issues Identified:

  • Mainstream financial capital in Washtenaw County under-invests in areas with high poverty and neighborhoods where people of color are a majority, resulting in a persistent inequitable local economy.
  • AAACF is becoming a local mission investor to shape an equitable Washtenaw County where access to economic opportunity (in the form of investment capital) is not constrained by race, concentrated wealth, or geography (investing beyond downtown Ann Arbor).
  • We are answering our community’s call to nourish a network that will become a foundation for an equitable local economic system. As we do so, we will use our voice and platform to share stories of opportunity and progress.
  • Untapped investment opportunities exist and we will create the conditions to change the flow of capital (at least $2B at work annually!). Locally owned small businesses constitute 70% of the county’s corporate ecosystem and locally owned businesses keep as much as 48% of capital in our local economy.
  • It is the smart thing to do and the right thing to do: We will no longer ignore economic potential and we will work with others to increase investments in areas with high poverty and neighborhoods and businesses of people of color. Join us! 
 

Current Portfolio of Our Investments—$1.7 million!

The strength of our growing endowment (we have grown in assets from $75M to $175M in the last five years!) allows us to make investments in our community—and to take more risks than other investors. As an endowed institution, we are committed to the long-term. These investments have a longer timeframe than grants. We also take the longview in our goal of creating intergenerational impact.
 
Currently, our $1.7 million in investments is through four vehicles. These partners are working in Washtenaw County because of our investments! We want to encourage others to invest in these opportunities, just as the Community Foundation is committed to making further investments in Washtenaw County in the years to come! As our assets grow, our impact—and our impact investing will continue to grow.

 

Michigan Women Forward: Investing in women-owned businesses empowers community
Making more capital available for women- and minority-owned businesses in Washtenaw County benefits the local economy and supports increased financial stability of entrepreneurs who sometimes lack access to adequate start-up and/or growth capital.  This particular type of micro-loan program is aimed at long-term wealth-building for women and their families.

 

Fair Food Fund: Fighting Food Deserts & Feeding Equity in Washtenaw County
The premise of the FFF Social Impact Notes (the Fund) is simple: if food system entrepreneurs are offered catalytic capital and business assistance through a networked (10–15 companies in our geography) approach, then more of the food economy businesses will be able to provide healthy and nutritious food products that the community desires and can afford. FFF’s focus is on the food system entrepreneur, building their capacity through capital investments, technical assistance, and networks. The Fund wants to make visible the many investable food businesses in our community to attract local and outside capital for future investments.

 

IFF Impact Connection: Accelerate Economic Opportunity in Washtenaw County Through Mission Lending
IFF’s principal focus is lending funds to nonprofit organizations and businesses working to provide vital services and create economic opportunity for low -income and special needs people and places. Its vision is to provide comprehensive solutions with transformational outcomes in low-income and special needs communities throughout the Midwest through its mission (which is to strengthen nonprofits and the communities they serve by providing leadership, capital and real estate solutions). We can invest in affordable housing for families and seniors, early childhood centers, and expand access to health care services through the IFF Impact Connection Initiative. AAACF capital can be invested in neighborhoods previously overlooked and invest in generational human dignity by standing up the resources they have told us time and time again that they need to thrive.

 

Community Capital Management Bond: The CCM Community Impact Bond Fund (Ticker: CRANX)
An investment grade, intermediate duration bond fund that seeks to preserve capital, deliver attractive risk-adjusted returns, and serve as the ballast in a portfolio. The Fund invests in well-researched, fossil fuel free bonds that have direct and measurable positive environmental and societal impacts. In Washtenaw County, funds support affordable housing and small business loans.

 

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