OTO Baltimore breakfast

An Opportunity for Baltimore’s Changemakers

Last week we had the great pleasure of introducing Ours To Own to the SocEnt breakfast community at the Impact Hub Baltimore. This was the 26th SocEnt breakfast, a series started by, among others, Pres Adams and Ours To Own partner Rodney Foxworth to bring together hundreds of devoted change-makers in Baltimore.

This was the first breakfast held at the new Impact Hub Baltimore location, a co-working, meeting and events space for the Charm City’s creative and mission-driven economy. The space, only months old, already has a unique energy bouncing around its walls. It feels like problem solving personified and gave me hope that those who occupy its space will individually and collectively help Baltimore become a more equitable and thriving place.

Unsurprisingly, our introduction of Ours To Own to this community was received with excitement and many insightful questions. For those of you who were not able to join us, I thought I’d share some of our discussions.

I love the video, but how does Ours To Own really work?

Ours To Own is the plumbing that allows retail (non-accredited) investors to invest in community and economic development projects and organizations across Baltimore. There are four major steps in the capital cycle:

  1. Individuals who live in and/or love Baltimore can purchase an Ours To Own Baltimore-targeted Community Investment Note issued by Calvert Social Investment Foundation (a non-profit financial institution). This Note is a fixed income security that earns interest and pays principal at maturity.

  2. The proceeds of the Note are pooled (your $20+ dollar investment + my $20+ dollar investment, etc.) and are lent to community and economic development projects across Baltimore. These are mission-driven organizations that are generating economic activity but cannot access appropriate funding from traditional markets (think housing, small business development in low-income neighborhoods, and non-profit service providers who need affordable real estate).

  3. These organizations generate economic value and lasting social impact in their communities. Over the life of their loan, they pay interest and principal back to Calvert Foundation and report on all of the amazing work they are doing.

  4. The income generated from the loan portfolio enables Calvert Foundation to repay Ours To Own Baltimore investors. Investors can then re-invest their money back into Baltimore or take their funds and invest or spend it elsewhere.

The video mentions investments in real estate and small business development, but most of the stories are about real estate. What is going on in the small business space?

This is a great question. The investments in Baltimore up to this point have been in real estate, because that is where we have seen the demand thus far. However, as we were developing this campaign over the past two years, we heard a lot of need in the community for stronger access to capital for local small businesses. Given this, we are looking to focus most of our future investments into small business intermediaries, particularly those filling the “funding gap” between micro-loans and available bank debt.

So you lend to intermediaries? Or do you lend to direct operating businesses?

We lend to intermediaries, and we do so for two main reasons:

  1. Calvert Foundation brings the plumbing to channel investor dollars into communities, but we don’t have deep roots and relationships in every city in which we work. In order to ensure investor funds are prudently meeting the demand in their city, we partner with organizations with a local presence who have a much deeper understanding of the need in their neighborhoods.

  2. When we lend to an intermediary, we are able to leverage our capital to have a more extensive reach. For example, if we were to lend $1 million to direct businesses at an average loan size of $250,000, we could provide financing to four businesses. Alternatively, when we lend $1 million to an intermediary who is raising capital from multiple sources, our $1 million may be a part of a $10 million portfolio. With this, they can finance 40 small businesses instead of only four; a much broader and greater impact.

How does Calvert Foundation and Ours To Own make investment decisions?

Investment decisions go through Calvert Foundation’s investment process, which includes a mission screen, deep due diligence, and risk management. Because the Community Investment Note is regulated and available to retail investors, we ensure we are taking appropriate risks so we don’t lose investor money. We have refined and improved this investment process over our 20-year history and so far have always repaid investors full principal and interest.

How do you know that your partners are creating the social impact in Baltimore that they claim?

We maintain close relationships with our borrowers and receive impact reporting from them at least annually. This includes key metrics that they track to demonstrate their own performance and success, including number of affordable housing units built, number of women or minority-owned businesses they have supported, etc. They also provide us with wonderful stories of their work which, while not scientific, allow us and our investors to develop a deeper understanding of the impact in the communities and neighborhoods they serve.

In general, we aim to balance rigor in reporting with feasibility and cost. We work with our partners to determine how to strike this balance.

What additional questions do you have? Feel free to ask them in the comments.