Arkansas Community Foundation set a goal of investing the equivalent of 5 percent of endowed assets in local mission-aligned investments by 2024. Starting in 2016, the foundation began making investments in loan funds to support non-traditional borrowers at three area CDFI’s: Southern Bancorp, Communities Unlimited, and FORGE Community Loan Fund. Starting during the COVID-19 pandemic, the foundation has picked up the pace of new investments to support family financial stability and business ownership for women and people of color.
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Recent examples of Impact Investing at the Community Foundation:
- A 2020 loan to HOPE Credit Union enabled the CDFI to make micro-loans to Arkansas credit union members who were experiencing financial hardship due to the pandemic. The loans are intended to be credit-building only: when borrowers successfully complete loan payments, HOPE will report a positive credit event. If a borrower is unable to fully repay the loan, a loan-loss reserve fund also supported by the Foundation will cover the gap, avoiding a negative credit event for the borrower.
- A loan to PeopleTrust Community Loan Fund enabled the CDFI to accelerate the pace of lending through the Paycheck Protection Program.
- A loan to PYT Funds will help the start-up Black-owned fintech company provide last-mile college loans to students at the University of Arkansas at Pine Bluff, using a nontraditional underwriting model that does not require the student to have a credit history or co-signer. These loans are aimed at increasing the likelihood of degree completion for students who have exhausted their available federal financial aid.
- A loan to FORGE Community Loan Fund will support the Imani Fund, a lending pool that will pilot an alternative underwriting model to unlock capital for Black-owned businesses. Through the program, borrowers will receive technical assistance and entrepreneurship support, in addition to low-interest financing.