Is ‘Place-based’ investing a crisis response strategy for Impact Investors?

From the Covid-19 public health crisis to its subsequent economic downturn and rising protests against racial inequality in the US, the past few months have ignited impact investors to review their strategies both at the portfolio and deal levels. One particular conversation that Toniic and the Impact Terms teams have observed on the rise concerns “place-based investing”. We’ve been internally discussing the scope of what “place-based” means and struggled to hone-in on any fixed definition and strategy. In the spirit of the collaborative and curated approach of the Impact Terms Platform, we decided to extend an invitation to experts in our network to develop a better understanding of what “placed-based investing” means to them, what their place-based investment strategies include, and how they are empowering people disproportionately affected by the recent events, most notably ethnic or racial minorities.

This article is based on the most insightful inputs we gathered from our friends at five US-based organizations, including Blueprint Local, IFF, and Mission Driven Finance.

  • What does “place-based” investing mean?
    All 5 organizations define place-based investing as a focus on communities:

“Long-term investing consistently and systematically in communities with the goal of encouraging an inclusive economy” – David Robinson Jr., Blueprint Texas

“Investing with a geographic lens in addition to other impact goals, and building an interconnected portfolio of companies that reinforce each other and the power of community” – David Lynn, Mission Driven Finance

“Long-term commitment to a community; ensuring capital and development decisions are made at the invitation of and in service of community.Yi Wei, IFF

“Investing in local communities over time – investing with folks who know the community, are part of the community, and investments that help build wealth in local communities.” – Executive Director of a large US Foundation

  • What are the investment strategies they are deploying?
    Most focus on building wealth in local low-income communities.

Mission Driven Finance uses debt and debt-like structures in the sectors of education, health, jobs, and community development.

IFF helps non-profit organizations own their real estate, which in turn gives them more control over staying in place and stronger programmatic outcomes.

Blueprint Local/Blueprint Texas targets whole neighborhoods (as opposed to one-off deals) and focuses on undervalued assets and companies that have the potential to grow and reinvigorate neighborhoods.

  • Is there a focus on empowering people disproportionately affected by economic and racial disparities?
    Most responded that they are committed to continuing to provide capital to underserved communities and organizations unable to access affordable capital from traditional sources. One organization, which is currently adjusting its strategy, will be specifically targeting opportunities in Black communities.

We are interested in further developing this article and invite you to collaborate with us. Please share comments in the section below or reach out to our team to expand on this topic. 

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