Community Investing at Trillium Asset Management Corporation Over the Past 25 Years
The concept of “community investing” is as old as money itself. People invest directly in their community for the greater good of that community. It is a notion that modern credit unions are built upon.
In 1973, ShoreBank (then South Shore Bank) opened its doors on the south side of Chicago. While other banks were leaving the inner cities, ShoreBank was incorporated specifically to focus on investing in the neighborhoods it served, becoming the first community development bank. In the early days of the social responsible investing (SRI) movement, local credit unions and ShoreBank were just about the only option for people who wanted to do community investing.
When we were founded, our clients were looking for investment opportunities that would provide a high social impact with a modest return. From the inception of Trillium Asset Management Corporation (Trillium), direct community investment has been a core part of our SRI mission.
In 1984 Joan Bavaria invited Chuck Matthai of the Institute for Community Economics (ICE), an organization that helps communities create and sustain land trusts, to a meeting of the Social Investment Forum. It is likely that this was the first time a nonprofit organization with a loan fund would meet directly with SRI managers. Trillium clients began investing in ICE later that year. Many of the clients who made early investments with ICE are still invested in their loan fund.
Our clients were among the first investors in many early community loan funds. Lakota Funds, a Native American CDFI[1] based on the Pine Ridge Reservation, Boston Community Capital and Opportunity Finance Network, among others, received early investments from our clients.
At Trillium, final investment decisions regarding community investments are ordinarily made only after consulting with the client. Clients may authorize TAMC to invest in a range of community investments without further consultation. In total, we have a portfolio of about three dozen international and domestic loan funds, and community banks and credit unions where our clients can invest. We have the ability to invest in organizations that fit the social and geographical concerns of our clients. If a client has a social and/or geographical interest that Trillium can’t fill, we will work with them to find an organization that meets their need.
Trillium made an early commitment to join the Social Investment Forum’s “1% or More in Community Campaign,” pledging that at least 1% of our assets under management would be in community investments. We are also part of an inaugural group of CDFI investors, including banks, socially responsible investors, and foundations, to use CARSTM [2]ratings in our due diligence process.
The money that our clients have placed in community investments instruments has provided capital to non-profit organizations that have created and saved tens of thousands of jobs and homes in the communities they serve. The patient capital these investments provide has been used in the U.S. and in countries on five continents.
The community investing industry still faces many challenges. Currently, most community investments are made manually, with pen, paper and the U.S. mail. Broker/Dealers are reluctant (or refuse) to hold these assets in their client’s account. Over the next decades, much work will need be done to standardize community investments and broaden the market and impact. At Trillium, we see a future where community investments are analyzed and rated by traditional investment analysts and are held and traded on the open market, much like stocks and bonds.
It is a daunting task, but we believe that the SRI community is up for the challenge.
[1] Community Development Financial Institution, or CDFI, is a U.S. Treasury Department designation adopted in 1996[2] The Community Development Financial Institutions Assessment and Rating System (CARSTM) is a third-party administered analysis and rating of non-bank/credit union CDFIs. It was developed by the Opportunity Finance Network to aid investors in their investment decision process.