by Beth Bafford, Investments Director, and Rodney Foxworth, Invested Impact on February 21, 2017
This month we celebrate the one-year anniversary of Ours To Own in Baltimore. Ours To Own is an investment initiative created to engage individual investors in the creation of local economic and community value in the Charm City with the belief that small investments can create strong communities.
This effort – a partnership between Calvert Foundation, Humanim, and Invested Impact – has yielded exciting results in its first year. We have engaged new audiences in the idea of localized impact investing, raised millions in new capital from local residents, made initial investments that are thriving, and have built a pipeline and community around small business development that will be our focus in the years ahead.
We are excited to share our progress with those who have been a part of making this happen – our investors and partners who call Baltimore home.
Building a community of local investors
Donors and every day Baltimoreans have long recognized the tremendous potential of the city. However, the city’s promise cannot be fulfilled with philanthropy and government alone. Ours To Own presented a unique opportunity for all of Baltimore to invest in the city’s promise.
The Aaron and Lillie Straus Foundation and Goldseker Foundation adeptly understood how Ours To Own could unlock local capital to advance social impact and enterprise in Baltimore. Their generous support of the Ours To Own investment initiative created a new path for local investors to participate in making Baltimore a stronger, more prosperous city. Additionally, these foundations understand that their philanthropic contributions would catalyze even greater investment from citizens and institutions across the city, and so far they have seen $12 invested for every $1 donated.
The concept of local investing–and creating social impact from that investment–proved to be appealing to a broad swath of Baltimore residents. From the Millennial social entrepreneur working at the Impact Hub to high net worth donors looking for additional ways to contribute to the civic fabric of the city, Ours To Own resonates with many in Baltimore. As one investor noted, “If I can invest in something positive that I can then show my grandchildren, something that improves a community or advances education, and get a return on my investment, why wouldn’t I make that investment?”
In the first year of Ours To Own in Baltimore, we have raised $4.2 million from individual and institutional investors. The investment sizes have ranged from $20 to nearly $2 million, with each investor excited to use a portion of their investments to bring community change to their hometown.
Early investments in Baltimore
Our early investments are already generating impact across Baltimore. One investment helped AHC, a local developer of affordable housing, acquire a new 312-unit multi-family, mixed income property for Baltimore residents. This loan, in partnership with the Low Income Investment Fund, enabled AHC to leverage $57 million in total project funds. The acquisition of this property will increase access to affordable housing and preserve the long term affordability of this important property.
We have also seen the continued success of our investment in Seawall Development’s Remington Row, a new construction project that is bringing workforce housing, health services and other important community amenities to the Remington neighborhood. The building opened its doors in 2016 and its 100+ workforce and affordable apartments are nearly 100% occupied. Residents in this historically underserved neighborhood are benefiting from this renewed commercial activity that was created from their collective input.
Supporting small businesses with capital and services
Lastly, we have spent the past year working with partners across the private, public, and social sectors to develop a coordinated strategy to address challenges with access to capital and support for small businesses in Baltimore.
Access to capital
Early in 2016 we ran a survey to understand the needs of local small businesses to inform our work. We learned that:
- 43% said they needed less than $50,000 to support their businesses growth; 31% were seeking capital over $100,000;
- More than 50% said they needed the capital for start-up funding or flexible working capital, both of which are hard to find in the market today;
- Many of these business owners have “fair” or “bad” credit and 50% stated that their business financing needs have hurt their personal credit, indicating that they are accessing the wrong kind of capital because of lack of affordable, quality options;
- 98% said they would grow their businesses if they had access to capital and 90% said they would hire additional employees;
- The largest barrier for these businesses are typically lack of equity or collateral, which is required for nearly all available lending products today.
With this information in hand, we convened a group of local leaders and lenders in partnership with Baltimore Community Lending to further inform the landscape. This group’s combined experience confirmed many of the findings of the survey and helped provide the necessary nuance so we could understand the extent of the challenges. Once we had a handle on the problems, we used the group to develop new capital solutions.
We have been working on these new lending products for Baltimore’s small businesses that we hope to bring to market in 2017. We look forward to sharing more soon.
Access to services
There is no denying that burgeoning and growing entrepreneurs and small businesses have trouble accessing capital–as the Ours To Own survey demonstrated. However, we also understood advisory services and technical assistance are essential for creating sustainable businesses. Ours To Own has been a critical catalyst to creating greater awareness–and resources–to address the challenges Baltimore small businesses and entrepreneurs face accessing opportunities to the appropriate services to start and expand.
Our partners at Humanim understood this intimately, from decades of launching social enterprises and supporting local entrepreneurs. Through the partnership with Ours To Own, Humanim has been able to expand their sector-based strategy for growing social enterprises and sustainable businesses, launching nascent entrepreneurs through Humanim’s City Seeds and School of Food initiatives. School of Food is a capacity building initiative for food entrepreneurs–and the program has demonstrated that investment alone is but one critical component for starting and growing businesses–hands-on support, guidance, and access to procurement opportunities are critically important as well.
We are excited to have the opportunity to celebrate the many successes of our first year but know that our work continues. We hope to reach at least 100 new investors and many of Baltimore’s neighborhoods in 2017 to broaden our impact and expand the network of local investors. We will keep you updated on our progress and always welcome your feedback.
And, if you haven’t already, you can join us in investing to support Baltimore today!
This post was originally published on CalvertFoundation.org
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