Community Investment Vehicles

Description and History

Community investment vehicles, or CIVs, are hyperlocal, democratically governed mechanisms that allow for residents to direct their own money into their own neighborhoods. The legal and financial structures of these vehicles varies, but the ultimate goal is for community members to have a stake—to own—the assets (i.e. land, labor) in their community while simultaneously growing their personal wealth (Community Desk Chicago 2022). 

CIVs is one of the fastest growing and most diverse elements in the locally rooted finance pillar of community wealth building. Though Market Creek Plaza in San Diego is considered to be the first model of a CIV in the United States, communities around the country are innovating new vehicles with unique legal structures and financial stacks, including: 

  • perpetual purpose trusts; 

  • C corporations; 

  • real estate investment trusts; 

  • real estate funds; 

  • diversified community investment funds (NC3 n.d.); 

  • charitable loan funds; 

  • revolving loan funds; 

  • cooperatively-owned social enterprises that provide financing; and so much more! 

The money in a CIV can be used for a myriad of community-identified purposes and many, as a result of their investments, generate returns for their investors. Some might be used to purchase land or real estate to expand affordable housing in a particular neighborhood. Others might be used to revitalize a commercial business corridor, thereby supercharging a neighborhood’s local economy. CIVs can also be used to invest in entrepreneurs and/or small businesses who might be considered “too risky” by traditional financing institutions. Essentially, “this form of community capital pooling serves as an alternative funding mechanism to traditional lending and investments” (Community Desk Chicago 2022). 

Community Investment Vehicles, Locally Rooted Finance, and the Community Wealth Building Wedge 

Community investment vehicles can be both redistributive and pre-distributive, both critical elements of a successful community wealth building strategy. 

Some CIVs are only open to accredited investors. According to the U.S. Securities and Exchange Commission, or the SEC, accredited investors are individuals with a net worth of over $1 million (not including their home) or those with an individual income of over $200,000 in the past two years, with the expectation of the same for the year in which they choose to invest (2024). In this way, CIVs are redistributive mechanisms, because they provide an opportunity for wealthy individuals to redistribute their wealth into their communities. 

While initially intended as a way to protect investors without resources, the impact of this regulation and status has been the concentration of wealth—and, thus, ownership of assets—in the hands of only 15% of American households (Federal Reserve 2022). So, for those CIVs open to nonaccredited investors (i.e. the majority of us), they provide an opportunity to have collective ownership over not only the wealth created as a result of the investment, but of the investment itself (Shade 2021)—be it housing, land, a local food system, child care, health care, and/or a local business. In this way, CIVs can also be predistributive. 

Further, these kinds of investment opportunities are often more democratic and participatory than their predecessors with advisory bodies composed of community members directing investments. This kind of “authentic community engagement” is critical for both community wealth building and economic change (U.S. Impact Investing Alliance 2021). 

Examples

Example # 1: Kensington Corridor Trust 

Designed to revitalize Kensington Avenue, a 1.6-mile commercial corridor historically and presently frequented by working class Philadelphians (Black 2024), the Kensington Corridor Trust (KCT) is a perpetual purpose trust (KCT 2024) dedicated to preserving both the culture and affordability of the community of Kensington (Abizadeh 2024). The purpose of KCT is to acquire neighborhood real estate along Kensington Avenue and place it into the trust so that it may be 1) safe from extractive, speculative development and vacancy and 2) collectively owned and governed by the community in perpetuity (Black 2024).  

KCT is governed by local residents and small business owners in the form of a non-profit Board of Directors and a Perpetual Purpose Trust Stewardship Committee (KCT 2023). The Trust employs a unique capital stack which includes non-recoverable grants (for operating costs, including four full-time staff) and patient, low-interest capital (to fund acquisition of properties along the corridor) (Black 2024). Over the past four years, they have acquired 12 vacant lots and seven commercial mixed-use buildings (KCT 2023) and raised $2.5 million in grants and $10.85 million in loans (Black 2024). They have yet to receive significant capital from market-based investors. 

Example # 2: Black Farmer Fund

The Black Farmer Fund (BFF) was established in 2020 to support Black farmers in the Northeast, many of whom have been left out of traditional financing mechanisms for decades. Between 2009 and 2016, for example, the United States Department of Agriculture lent less to Black farmers than they did between 2001 and 2008 (BFF 2024). 

Designed as an integrated capital fund and governed by a 12-person investment committee of Northeast farmers and Black food system advocates (BFF 2023), the pilot fund was able to raise $1 million to support eight Black-led food businesses in New York. Since then, they have launched BFF Fund 2.0, a $20 million integrated capital fund dedicated to supporting Black agricultural businesses across the Northeast through loans, gifts, and royalty capital (BFF 2024). 

Example # 3: East Bay Permanent Real Estate Cooperative

One of the most popular (and successful!) examples of community investment vehicles in the solidarity economy movement is the East Bay Permanent Real Estate Cooperative (EBPREC), a community-centered development cooperative in the increasingly expensive and speculative real estate market of the Bay Area in California. 

Supported in its founding by the Sustainable Economies Law Center (SELC), EBPREC leverages collective purchasing to raise funds—from community investors using a direct public offering—and buy rental properties in Oakland and the East Bay. In this way, not only does the cooperative take housing off the speculative market, they also enable existing residents (renters) to stay in their homes and build equity (without needing to purchase a home on their own) (EBPREC 2024).

Since their founding in 2018, EBPREC has obtained 19 residential units, three commercial buildings, and 2,500 square feet of vacant land (EBPREC 2023). All of these properties will be co-governed and stewarded by EBPREC staff, residents, and community members.

Challenges & Limitations

Community investment vehicles are powerful interventions. But presently, their scope is limited (U.S. Impact Investing Alliance 2021). 

Take, for example, retirement savings—a pool of money with which many Americans have made long-term investments. As of last year, Americans have $37.8 trillion of their retirement savings invested in the stock market (Congressional Research Service 2023). One of the most common vehicles to move retirement money out of public markets and into community investments (like into CIVs!) is through self-directed individual retirement accounts, or SDIRAs. However, despite the uptick of this particular mode of community investing, only about $50 billion are held in SDIRAs—not even 1% of total retirement savings in the U.S. (compound n.d). For individual people, even with the support of a few wealth management advisors who work with unaccredited investors, the due diligence required to make prudent investments takes significant time and effort.

Further, many investors need a portion of their investments to be liquid, meaning that they should be able to reach into their accounts and withdraw a lump sum at any time. CIVs, because of their community-oriented nature, require patient capital, meaning money that can be locked in for several years at a time. As a result, investments made in CIVs are often considered illiquid, and many investors won’t see returns for several months to years. For those who are already struggling to make ends meet, CIVs can be an unattractive investment. 

Finally, at a structural level, CIVs are often the result of creativity and innovation that take advantage of loopholes in current legal and financial systems. As a result, many communities hoping to start their own vehicle may be subject to obscure and convoluted regulations and a timeline that often feels disconnected from the urgency of the wealth inequality and insecurity at hand (Hacke et al. 2015). 

Taking It Forward

In spite of these challenges, there are several leaders and organizations around the country working diligently to expand the accessibility, feasibility, and reach of community investment vehicles. Community Desk Chicago, organizational sponsor of the “Community Investment Vehicles Playbook” (2022), highlights five key elements of a successful CIV: 

  1. purpose and process; 

  2. funding and investments; 

  3. legal and governance;

  4. assets and operations; and 

  5. external stakeholders and allies. 

These elements are echoed in the National Coalition for Community Capital and The Solidago Foundation’s collaborative publication, “Community Investment Funds: A How-To Guide for Building Local Wealth, Equity, and Justice” (2015), with additional attention paid to the role of policy and popular education. The former enables a conducive ecosystem for CIVs while the latter works to expand communities’ imagination and narratives of what’s possible in terms of local financing for collective ownership.

Additional Resources