Three years ago, many philanthropists were asking their advisors, “What is impact investing?” Today those same philanthropists are asking, “How do we become impact investors?”
Finding an easy answer to that follow-up question can be challenging. Luckily, The Chicago Community Trust is here to help with a new impact investing opportunity called Benefit Chicago.
Benefit Chicago is a collaboration between The Chicago Community Trust, the John D. and Catherine T. MacArthur Foundation and the Calvert Foundation, with a goal of expanding economic opportunity and strengthening communities in the Chicago metropolitan area.
After surveying the nonprofit and social impact landscape in Chicago for nearly two years, the collaboration partners identified a need of between $100 million and $400 million for access to capital to increase social impact.
Given this identified need, the collaboration will mobilize up to $100 million from individuals and institutions to provide loans and other forms of investments for nonprofit organizations, businesses with a social purpose and financial intermediaries focused on community development, entrepreneurship and job creation.
Recipients will use the loans for a variety of purposes, including business that create jobs in struggling neighborhoods; companies that offer green energy solutions; neighborhood health clinics and child care centers for low-income families; and nonprofits that provide affordable housing.
How Can Impact Investors Participate?
The beauty of Benefit Chicago is the ease with which philanthropists and impact investors can participate.
Investors purchase Chicago-targeted Community Investment Notes issued by Calvert Foundation. These are fixed-income securities with principal maturities ranging from one to 15 years and interest payable annually.
They are available through a brokerage account with a minimum investment of $1,000 or online starting at $20. There is no income tax charitable deduction available when an investor purchases Chicago-targeted Community Investment Notes.
If a potential investor is interested in obtaining an income tax charitable deduction, the investor can choose to open a donor advised fund with The Chicago Community Trust and have the fund invest in Benefit Chicago.
The donor can select the maturity range, and during this time the donor advised fund assets are used by Benefit Chicago for impact investments. When the maturity range is up, the funds can be reinvested into Benefit Chicago or granted out to charitable organizations.
As noted, donors who choose to open a donor advised fund may be eligible for an income tax charitable deduction, subject to the applicable IRS rules.
Please note: Different investment minimums apply when opening a new donor advised fund. Please contact The Chicago Community Trust for more information about investing your new donor advised fund in Benefit Chicago.