Richmond-based investment nonprofit to manage $33M guarantee pool

Fund is expected to catalyze more than $150 million in new community investments

Published January 28, 2020 by Kate Andrews

Richmond-based LOCUS Impact Investing, a subsidiary of Virginia Community Capital, will manage a newly formed $33.1 million national guarantee pool to encourage community development, according to a press release Tuesday.

The Community Investment Guarantee Pool has $33.1 million in unfunded guarantee commitments from the endowments of 10 philanthropic organizations, which help mitigate investment risks. The fund is expected to catalyze more than $150 million in new community investments in small businesses, climate and affordable housing nationwide.

LOCUS will serve as the pool’s program manager, working with investors, underwriting guarantee commitments and monitoring and managing the portfolio.

The pool was started by the Kresge Foundation, after commissioning a study in 2017 on the use of guarantees by impact investing and philanthropic organizations through the Global Impact Investing Network, and it is the first pool of its kind in the United States. Kresge has made an initial $10 million commitment to the pool, and other investors include The Annie E. Casey Foundation, The California Endowment, Chan Zuckerberg Initiative, CommonSpirit Health, Gary Community Investments, Jessie Ball duPont Fund, Phillips Foundation, Seattle Foundation and Weingart Foundation. The organization has set a goal to raise investor commitments to $75 million in under-resourced communities, and the first guarantees are expected to be implemented this year.

The pool will span the country, with some geographic preference given to California, Colorado, Delaware, Florida, North Carolina, Texas, Virginia and Seattle.

VCC is both a for-profit bank and a nonprofit Community Development Financial Institution (CDFI) with $413 million in assets, and LOCUS financial strategist Adam Northup currently is executive director of Opportunity Virginia, the state’s marketing arm for opportunity zone investment.

“Through the tool of guarantees, socially motivated investors can leverage their balance sheets without requiring current liquidity to create a backstop and help minimize risk, allowing more traditional capital to feel comfortable putting their dollars into community investments,” LOCUS President Teri Lovelace said in a statement.