An Increase in Demand Means Higher Rates for Investors
May 10, 2016
In April, alongside the release of our new prospectus, Calvert Foundation raised the interest rates on our Community Investment Note®.
We have already received a lot of questions about this change: Did this have anything to do with what the Federal Reserve is considering, or other market forces? No. Did our portfolio yields suddenly increase that we can pay investors more? No. Do we see record amount of demand for community projects? Yes.
The rate increase reflects our need to keep pace with the increasing demand for our financing from our current and prospective portfolio partners.
As a non-profit impact investing organization, Calvert Foundation’s rates are not determined by broad market forces, rather the financing needs from our portfolio partners. Since our founding in 1995 we have financed organizations that meet community needs ranging from affordable housing, small business financing, education, health, clean energy, and other critical services. Overall, we aim to finance high-impact projects, while providing consistent financial returns to investors. Today, demand for our financing is at an all-time high. To help meet this demand and keep financing this important work, we have raised our interest rates to attract more investment.
There has always been an underlying question in impact investing: Are there enough high-impact deals looking for capital? Or put another way: Does the industry have “absorptive capacity” for investments? It’s a nuanced question (and sure there are some limits in every opportunity set) but from where we sit today, our answer to that question is yes!
With this growing demand for capital, there is even more opportunity for investors to put their money to work for good. We hope the higher rates will not only attract new investors, but also serve as an opportunity to communicate the financial and social value these investments can have.
We hope you’ll join us and our community of over 15,000 investors who have invested for positive social impact around the world.