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Date: 2020-06-06 Page is: DBtxt001.php txt00000625

Value Metrics
Dialog with Calvert Foundation

Investor Spotlight: Lisa Hall, President and CEO at Calvert Foundation, shares her perspective with the GIIN community.


Peter Burgess

Investor Spotlight: Calvert Foundation
Lisa Hall, President and CEO at Calvert Foundation, shares her perspective with the GIIN community. 09/27/2011

GIIN: How is Calvert Foundation structured and why has it created a business around impact investing?

Lisa Hall (LH): We are a public charity, not an endowed or corporate foundation, and so we raise capital from both individuals and institutions. We operate as an independent 501(c)(3) nonprofit, and we are unique in the foundation sector as a community development finance institution (CDFI) certified by the U.S. Department of Treasury.

We feel strongly that investment is needed in addition to philanthropy to reach underserved communities and people living at the base of the socio-economic pyramid. If we as a society can make investment about mutual respect and dignity, that's powerful. Through investments, we are trying to help people lift themselves out of poverty. We expect that the recipient will repay the money to the lending individual or institution, and we think that's a critical piece of the impact investing paradigm.

GIIN: Please tell us about Calvert Foundation's Community Investment Note, your longest standing impact investment product.

LH: The Calvert Foundation Community Investment Note is an instrument in which individuals can invest increments as small as $1,000 directly through us or using a broker, and as little as $20 online through our partner For 16 years, we have invested in nonprofits and social enterprises in the US and abroad using capital raised through this instrument. Currently just under $200 million is deployed through Community Investment Notes.

GIIN: How old is the Community Investment Note and how has it changed over time?

LH: The Community Investment Note was first offered in 1995. Since then, we have expanded our set of borrowers. Until 2007, we primarily invested in funds like ACCION, FINCA, and Opportunity International - and we still do; all three are still borrowers. But now we also invest directly in MFIs operating in countries all over the world, including the Kenya Women's Finance Trust, PRASAC in Cambodia, and Haas Bank in Mongolia.

We also changed the way that customers can purchase Community Investment Notes. In 2004, one-year and five-year notes became electronically exchangeable, spurring a large increase in sales. In 2007, we launched a partnership with MicroPlace, which allows thousands of small investors to invest as little as $20 directly into microfinance institutions. MicroPlace offers investments that are bound by federal regulations, rather than charitable loans. Investors choose which microfinance institution they want to invest in, and receive interest. The principal is also returned once the Note matures.

GIIN: Are there other ways that Calvert Foundation makes impact investments in addition to the Community Investment Note?

LH: We have been growing two additional business lines in recent years. The first is a registered investment advisor called Community Investment Partners, which operates as a wholly-owned subsidiary. We currently manage over $200 million through that subsidiary. Our largest client is Citi, for whom we are managing an impact investing commitment of roughly $127 million, $82 million of which is currently outstanding, and another $20 million of which has been committed to investments into US CDFIs. We also have 15 other clients, ranging from institutional investors to high-net-worth individuals.

We also manage a donor advised fund, which we began working on seven years ago. Although donor advised funds are traditionally invested in public stocks and bonds, mutual funds, and other public investments, it seemed to us that they would be natural clients for impact investing. Years ago, we approached some donor advised funds to offer investment into socially impactful investments, but they all had objections. So, we created our own donor advised fund and invested into Calvert Foundation Community Investment Notes and other impact investments. We're proud to say that ours was one of the best performing donor advised funds in 2008 because so much was invested in the notes. We are now in the process of spinning the Donor Advised Fund assets into a new 501(c)(3) called ImpactAssets.

GIIN: Who are your clients and why are they motivated to invest with Calvert Foundation?

LH: We are motivated to popularize impact investing and our clients represent a wide range of investors, including retirees, young people who want their money to have meaning, everyday people setting some money aside, and high-net-worth individuals. We also work with institutional investors like Merrill Lynch and faith-based investors like Catholic Health Initiatives and the Church of the Brethren.

GIIN: What types of financial returns do investors expect from your investment products?

LH: Our work is based on the concept of an earned revenue model that may not get market rates, but does return capital. Risk returns have changed dramatically in the last three to four years and it's not as clear what a market rate return is now. Our Notes are available - through us directly, through brokerage accounts, or online - from terms of 1-10 years, at rates ranging from zero to two percent. Though rare, some of our investors do take zero returns.

GIIN: What types of financing do you offer to your portfolio organizations?

LH: For the most part, we use a very standard product - a fixed-rate, fixed-term unsecured loan. In the standard portfolio, our average loan size is around $1 million, and loans range from $100,000 to $6 million. We also make direct equity investments through a small but impactful portfolio called Mission Plus, which is about 2% of our overall portfolio. In the Mission Plus portfolio, investments range from $25,000 to $200,000.

GIIN: What social investment areas do you target?

LH: In the US, we invest in a few categories. One is lending to CDFIs, and this has been a mainstay for us. We are also one of the only institutional investors making unsecured loans to affordable housing developers, especially non-profit developers seeking to raise unsecured dollars for acquisition and pre-development. We also do some lending directly to projects and businesses. We've made loans to charter schools, community health centers, and some for-profit businesses with social benefit.

Internationally, most of our investing has been in microfinance, although we have now expanded into health, alternative energy, and sustainable agriculture. We provided catalytic capital to the first Blue Orchard Fund, and have invested in most of the big microfinance funds, most recently BRAC Africa. Through Mission Plus, we can take on higher risk than in the rest of the portfolio, and we've made some important equity investments in organizations like d.light design, and in funds like the Global Environment Fund and Africap.

GIIN: How do you monitor your social performance?

LH: Currently, we use our own model for monitoring the social performance of our investments. We call it the social calculator, and it generally looks at outputs, such as the number of houses built and the number of jobs generated - rather than outcome-driven results. We also report a lot of qualitative information about the results of our investments.

As the market grows, we know it's going to be important to be able to demonstrate social return with standardized data and metrics. In the past, we were only one of a few players. Now it's a more crowded space and we want to be able to show that we are a serious impact investor. We're currently working to incorporate more social return and benefit measurement, and recently signed on as a GIIRS Pioneer Investor with the Global Impact Investing Rating System (GIIRS).

GIIN: What role does the government play in your work?

LH: The government plays an important role in our work. We like to think of our work as a public good - helping get capital to people and places that wouldn't otherwise have access to affordable, responsible loans. Because the government is hopefully the ultimate provider of public good, we work in concert with them. Specifically, the government provides ancillary funding for our programs - for example, they subsidize affordable housing, and they have played an especially important role guaranteeing small business loans.

GIIN: Why do you think there aren't more impact investment products available to retail investors?

LH: There's not a simple answer. The Note was an innovation when it was launched because impact investing was an innovation. As the field has grown, I think it has focused on institutional investing because there's more 'bang for the buck.' Many people think that expensive marketing and mass campaigns are necessary to scale at the retail level. However, our low-cost strategy is to reach out to financial advisors, which helps us connect with many clients at once. We expect to see more competition over time because aggregated individual capital can amount to real money.

As the first to enter this market with a retail product, we were willing to do work and make investments upfront because we had donors and resources to support research and development in an untested market. This work is part of our broader mission to see this space grow beyond our own interest in producing returns. To us, the addition of many similar impact investment products would be a mark of success. Although our market share could get smaller, the pie would be getting bigger, so Calvert Foundation still stands to grow. In the future, we hope that all investing will have a focus on impact

The text being discussed is available at

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