![]() Since we're not allowed to get a market rate of return on these types of investments, that allows us to be more flexible. It's also cheaper - our loans are usually 1 to 3 percent. At MacArthur, we invest in these intermediaries, but we put money in that is patient, so we plan an exit of 10 years instead of five or fewer. and they control about $30 billion in assets. There are about 800 of these institutions in the U.S. They also support affordable housing, which has been the biggest area of my own personal work for the past 16 years. Some of them focus on small businesses, helping bring credit to businesses in low-income neighborhoods or businesses owned by minorities and women. Some of them focus on individuals and provide things like alternatives to payday lending, bank accounts and remittance accounts for immigrants that are not abusive in their fee structures. In the U.S., it's mostly thought of as community development financial institutions, or CDFIs. Overseas, development finance is generally thought of as microcredit. In the U.S., there is a giant need for development finance. I also co-lead a $150-million national initiative, Window of Opportunity: Preserving Affordable Rental Housing. In fact, it's not allowed under the IRS tax code definition of a program-related investment, or PRI.Īt the MacArthur Foundation, I oversee a $300-million PRI portfolio of below-market loans and investments that support economic development and affordable housing organizations in the U.S. But if you do the kind of impact investing that I do, you can't seek a market rate of return. It doesn't have to be a market rate of return, although for many people that's what's important. That's what distinguishes it from other areas of "social investing."Īn impact investment is intended to create a positive social impact in addition to a positive financial return. But we're talking about a financial instrument where the social return is intentional. There has to be some expectation of financial return, whether it's through a loan, equity investment or guarantee. Kellogg World > Features > Investing in Solutions > Debra Schwartz '88 Debra Schwartz '88 Director of Program-Related Investments, John D.
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