Article by Elizabeth Rogers, Senior Vice President of Marketing & Communications at CEI
Impact investing involves more than the transfer of capital from investor to borrower. The ripple effect of community development occurs when business owners succeed, hire others, contribute to the economy and the environment, and are able to repay their loans or provide a return on equity. For CEI, a Community Development Finance Institution (CDFI) and Community Development Corporation (CDC), connecting patient and flexible capital with businesses that can provide triple-bottom-line return on investment is at the heart of our mission to help create healthy communities.
In Maine, our primary market since 1977, “getting to scale” is a different prospect than in many places around the world. We have few people and a wealth of natural resources. Over 61 percent of Maine’s population lives in rural areas, enjoying over 3,500 miles of coastline, 6,000 lakes and ponds, and 71 million acres of forest. Maine has 16,751 trees per person, more than any other state.
With an economy once dominated by large textile and paper companies, Maine’s development aspirations are not unlike many other regions in the U.S., especially rural, non-metro regions where resiliency drives the creation of new opportunity. Small businesses in Maine represent 97 percent of all employers and employ almost 59 percent of the private sector labor force. Entrepreneurs comprise our economic engine and are the source of the “local initiatives” that define our community development strategies.
CDFIs such as CEI help with the “heavy lift” of aggregating resources, technical know-how, funding and partnerships to support the visions of local groups and individuals and potential they represent in economic value.
Collaborating to Ensure Local Ownership
After 40 years in business, the owners of Burnt Cove Market, V&S Variety, and The Galley, all based in the small, coastal village community of Deer Isle, Maine, decided to sell the stores. When a viable local buyer didn’t materialize, the owners, with their employees, turned to CEI and Cooperative Fund of New England, both CDFIs, to finance a worker-owned cooperative for all three businesses. With assistance from the Cooperative Development Institute and the Independent Retailers Shared Services Cooperative, the former employees created the cooperative and secured financing to purchase the stores and save 62 jobs. Island Employee Cooperative (IEC) is now Maine’s largest worker co-op and one of the larger worker co-ops in the U.S.
“Many of us have worked in these stores for decades and never imagined we could own them,” said Alan White, worker-owner and Board Chair of IEC. “Having a local funder like CEI to help us navigate the process as well as provide technical assistance was crucial to the success of this transaction and in keeping our local community vibrant.”
Meeting Mission with Content Knowledge
CEI’s five-year $128 million, Platform for Sustainable Lending and Investing, was launched in October 2013 to increase scale and impact in employment, income, and ownership for people outside of the economic mainstream. Our lending and investing practice targets traditional community development areas such as small and mid-sized businesses, affordable housing, commercial real estate, and community facilities. CEI’s place-based strategy means that we also connect capital to economic sectors essential to our rural economies. CEI staff members serve as consultants to sustainable fisheries and aquaculture, agriculture and food systems, forestry practices, and renewable energy companies, and respond to diverse strategic opportunities to invest in rural communities.
CEI’s capacity to invest responsibly with significant impact has attracted capital from national markets, and in 2014 we surpassed $1 billion in capital under management or committed. CEI and its subsidiaries are also responding to an increasing number of requests for participation in deals outside of Maine, in the Northeast, and in communities throughout rural America, and as far away as Hawaii, often in partnership with other CDFIs.
CEI’s subsidiaries & resources:
CEI Housing creates sustainable real estate development and affordable housing opportunities for the people of Maine through new construction and rehabilitation of existing properties. CEI is both a developer of and a lender to commercial real estate and affordable housing projects, multi-family and supportive housing.
CEI Ventures manages socially responsible venture capital funds. Founded in 1994 to mobilize private capital markets while advancing social goals, CEI Ventures believes there is value added to financial returns by addressing a multitude of social concerns through all stages of the investment process, and that there are compelling investment opportunities in a range of markets underserved by the financing community.
CEI Community Ventures manages the CEI Community Ventures Fund (CCVF). Licensed by the U.S. Small Business Administration (SBA) in 2003, CCVF was formed to direct equity investments and operational assistance funds to qualifying businesses located or willing to locate in low-income communities in Maine, Vermont, and New Hampshire.
CEI Capital Management provides access to project capital through New Markets Tax Credits (NMTC). In the past 10 years CEI Capital Management has placed more than $793 million in 81 different projects across the U.S. CEI Capital Management evaluates each project according to fiscal soundness, in addition to its benefit to the local community, economic gain and positive environmental impact.
CEI Investment Notes is a fixed-asset investment option for accredited individual and institutional investors who wish to invest with their values and get a financial return, while contributing to the economic, social and environmental well being of people with low incomes and distressed communities in Maine.
Advancing New Technologies in Traditional Industries
Established in 1816, Hodgdon Shipbuilding LLC is the oldest continuously operating boat builder in the US. Located in East Boothbay, Hodgdon has shown a remarkable capacity to adapt and change. The company has established an international reputation for high quality custom yachts and yacht interiors. The company’s use of composite materials for lighter, faster craft and its experienced, highly skilled workforce for interior work have given it an edge in a very competitive industry. Recently, Hodgdon saw an opportunity in the production of tenders for super yachts. To compete successfully in this market, the company needed a demo boat to take to prominent shows where potential customers could test its performance. CEI, CEI Investment Notes and others came together in 2012 with the necessary financing, and the demo tender was a success. Hodgdon is building its reputation – and its pipeline. It recently rented additional space in Damariscotta where the tenders are built, and the company is adding 10 new jobs to its existing workforce of 115.
Investing in People
CEI is committed to helping to create economically and environmentally healthy communities in which all people, especially those with low incomes, are able to reach their full potential. We reach our target populations by: 1) providing loans, equity and financial services directly to entrepreneurs, developers and other non profits to benefit individuals, children and families with low-incomes, 2) investing in small business, natural resources, renewable energy and real estate sectors that revitalize rural regions, 3) structuring affordable housing and community facility development deals that directly address gaps in the marketplace, 4) providing consulting services and employment agreements that include workforce development and training, and 5) engaging in local, state and federal policy initiatives that create resources for economic development.
As a CDFI and a CDC, we are held accountable to our mission by multiple external entities that require comprehensive social performance measuring and reporting. They include banks, foundations, investment institutions, government agencies, and CARS™ (the CDFI Assessment and Rating System).
Creating Financial Security
Efforts to articulate macroeconomic strategies, in the end, come down to impact, scale and sustainability, while improving the lives of individuals. Asal, a CEI Individual Development Account (IDA) client, previously worked for an American company in Iraq. When his family was targeted, they lost everything they owned before escaping to Egypt and then to the U.S. When IDA Program Coordinator Jill Lorom first met with Asal, he was cleaning rental cars at the Portland Maine airport even though he and his wife have degrees in microbiology from Iraq. His immediate priority was reliable transportation so that he could get a better job.
“Asal saved diligently for 9 months,” said Jill. “He met with me for financial coaching to track his spending and develop a plan to maximize his savings. He also increased his credit score by over 100 points. When he had completed his savings and financial education requirements, we worked to identify a vehicle that would have monthly payments he could manage.”
Asal credits the financial coaching he received in helping him to create a spending plan and make deposits every month. In January 2014, Asal received a promotion at work and his wife enrolled at the University of Southern Maine.
Find Out More
Since 1977, CEI has mobilized over $3.5 billion in loans, investments, and leveraged financing for 2,340 businesses. We’ve counseled 46,040 businesses and individuals, and supported 28,246 full-time jobs at loan closing, created or preserved 1,587 affordable housing units, and created or preserved 5,547 childcare slots. Visit us at- www.ceimaine.org
Article by Elizabeth Rogers, Senior Vice President of Marketing & Communications at CEI. Contact her at- email@example.com