Monday, April 25, 2016

$100 million investment fund aims to improve Chicago - Chicago Tribune

$100 million investment fund aims to improve Chicago
Julia Stasch
Julia Stasch, seen here in a 2012 file photo, is president of the MacArthur Foundation. (Brian Cassella / Chicago Tribune)
Gail MarksJarvis Gail MarksJarvisContact Reporter
Chicago Tribune
In a unique attempt to improve life in Chicago, individuals are now able to make investments of as little as $20 that can be used to support causes through a new $100 million impact investment fund announced Monday.

The joint effort between the John D. and Catherine T. MacArthur Foundation, Chicago Community Trust and the Calvert Foundation is called Benefit Chicago. It's intended to make it possible to lend money to nonprofits and community improvement endeavors that otherwise likely wouldn't raise the money they need.

Welcome, 'Benefit Chicago,' to social investing in this city
Welcome, 'Benefit Chicago,' to social investing in this city
Individual investors don't get to choose what causes their money supports, but the MacArthur Foundation will be taking requests for loans and investments from a broad range of social enterprises and nonprofits that need funding for education, child care, affordable housing, energy conservation, job creation and training, small businesses, healthy food and other community needs, said Julia Stasch, president of the foundation.

MacArthur already makes so-called impact investments throughout the world, but is responding to local needs and a growing desire by individuals to improve their neighborhoods through their investments, Stasch said.

The promise and risk of social impact bonds
The promise and risk of social impact bonds
MacArthur has committed $50 million to the effort, and the Chicago Community Trust $15 million. Calvert Foundation is selling bonds that start in $20 denominations and pay interest annually. They can be acquired, starting Monday, directly through Calvert's site or through brokerage firms.

For clients with donor-advised funds, the Chicago Community Trust will give them the choice of investing in impact bonds for Chicago instead of parking money in a money market fund, said Terry Mazany, chief executive of the community trust. The trust is establishing a board that will set criteria for the projects that will be funded. The board will begin reviewing applications in July. The results and updates on the endeavors that will be funded will be reported at

Individuals and families who want to make charitable contributions on an ongoing basis often set up donor-advised funds through philanthropic organizations like the community trust. The donor funds frequently are set up at tax time because taxpayers can then deduct the entire large contribution made into the fund that year and then take their time deciding which charities will get gifts from their fund as time goes by.

While donors decide where to devote their charitable contributions, the money is invested in stocks, bonds and money market funds. There aren't additional tax deductions as the process takes place, and the Benefit Chicago bonds won't carry extra tax advantages.

Research by MacArthur and the Chicago Community Trust shows a community need of $100 million to $400 million, said Stasch. Bonds will have different maturities, ranging from 1 year to 15 years, and interest rates ranging from 0.5 percent to 4 percent. After enterprises are given loans, they will make payments into the impact fund, and that money will then be available for loans to additional organizations.

"It allows the individual or donor to multiply and extend their impact," Mazany said.

National research has shown people are interested in improving their communities through their investments, rather than simply earning a return that will grow their own wealth. So-called "impact investing" is growing as a result, with firms such as BlackRock starting funds like the BlackRock Impact U.S. Equity Fund.

Calvert has worked with foundations in cities such as Minneapolis, Denver and Baltimore, but Stasch and Mazany said they hope the depth of the Chicago effort will be copied in other cities.

Twitter @gailmarksjarvis

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