What is the primary goal of a community wealth building fund?

The primary goal of a community wealth building fund is to generate both financial returns and measurable social and economic benefits within a specific local community. These funds aim to build economic resilience, create local jobs, and address systemic inequalities by investing in local businesses, real estate, and community projects.

Are community wealth building funds only for wealthy investors?

No, community wealth building funds are increasingly accessible to a wider range of investors. While some private funds may require accredited investor status, many Community Development Financial Institutions (CDFIs) offer investment opportunities like CDs or loan notes with lower minimums. Crowdfunding platforms also allow non-accredited investors to participate in local projects.

What kind of financial returns can I expect from these investments?

Financial returns vary widely. Some funds aim for market-rate returns, while others prioritize capital preservation and modest returns alongside significant social impact. It is crucial to review each fund's specific financial objectives and historical performance, as well as its risk profile, before investing.

How do community wealth building funds measure their impact?

Funds typically measure impact through various metrics such as job creation, the number of affordable housing units developed, growth in local businesses, and improvements in access to essential services. Many funds use established frameworks like IRIS+ and provide regular impact reports to investors, detailing the social and economic benefits generated.

What are the main risks associated with investing in local funds?

Key risks include illiquidity (your money may be tied up for a long time), potential for lower financial returns compared to traditional investments, and the inherent risks associated with investing in smaller, local businesses. Regulatory compliance and the challenges of scaling operations can also pose risks for fund managers.

Can I invest in a community wealth building fund in my own neighborhood?

Yes, many community wealth building funds are hyper-localized, meaning they focus on specific neighborhoods, cities, or regions. You can research local CDFIs, community foundations, or online platforms to find opportunities to invest directly in your own community.

What is the difference between impact investing and community wealth building funds?

Impact investing is a broad category of investments made with the intention to generate positive social and environmental impact alongside a financial return. Community wealth building funds are a specific type of impact investing that focuses on generating impact within a defined geographic community, emphasizing local ownership and economic resilience.

Community Wealth Building Funds: Invest Local, Prosper |…