Community loan funds mix charity with social capitalism

When you are deciding how to allocate your charity dollars before the end of this year, you might want to consider investing in a community development financial institution (CDFI).

Larger institutions work with CDFIs in part because they fulfill their requirements under the Community Reinvestment Act, which requires that banks lend a portion of their loan portfolio to local communities. CDFIs, like conventional lenders, cover their costs through loan interest, closing costs and other fees.

The Chicago Community Loan Fund (CCLF), for example, tackles projects that are often deemed too risky by conventional banks.

It pools money from individual donors, foundations and capital from mainstream banks like Bank of America and PNC Bank, then lends it out to community organizations and social entrepreneurs.

Investors receive a return on investment ranging from 1 to 3 percent annually.

–  Reuters


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