What is the minimum investment required to join a Community Investment Club?

The minimum investment varies widely by club, but most are designed to be accessible. Many clubs require monthly contributions as low as $25 to $100, making it feasible for a broad range of individuals to participate. The goal is often to pool smaller amounts from many people.

Are investments in Community Investment Clubs tax-deductible?

No, direct investments into Community Investment Clubs are generally not tax-deductible. However, the club's earnings (e.g., interest, dividends, capital gains) are passed through to members and are subject to individual income tax, typically reported on a K-1 form.

How do Community Investment Clubs typically exit their investments?

Exit strategies vary, but common methods include the business buying back the club's equity stake, the business being acquired by another entity, or the club selling its stake to another investor. For debt investments, the exit is typically when the loan is fully repaid according to the agreed-upon schedule.

What kind of businesses do Community Investment Clubs typically invest in?

Community Investment Clubs primarily invest in Main Street businesses that serve the local community. This includes restaurants, retail shops, service providers (e.g., salons, auto repair), small manufacturers, and local food producers. They focus on businesses vital to the local economy and character.

What are the risks associated with investing in a Community Investment Club?

Risks include illiquidity (difficulty selling your investment quickly), loss of capital if a business fails, and valuation challenges for private businesses. It's crucial to understand that these investments are generally higher risk than public market investments and require a long-term perspective.

How are investment decisions made within a Community Investment Club?

Investment decisions are typically made collectively by the club members, often through a majority vote. This process usually follows a thorough due diligence period where members research the potential business, review its financials, and discuss its viability and community impact.

Can a Community Investment Club provide mentorship or support to businesses beyond just capital?

Yes, absolutely. Many Community Investment Clubs actively provide mentorship, strategic advice, and networking opportunities to the businesses they invest in. Members often bring diverse professional expertise that can be invaluable to small business owners, making the club a source of both capital and intellectual support.

Community Investment Clubs: Revitalizing Main Street…