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Linking Institutional Investors to Economic Revitalization The Role of Community Partners

Linking Institutional Investors to Economic Revitalization The Role of Community Partners. Anna Steiger Federal Reserve Bank of Boston December 10, 2007. Motivation for Research. Examine partnerships between the investment vehicles and community partners. Role of the community partner

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Linking Institutional Investors to Economic Revitalization The Role of Community Partners

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  1. Linking Institutional Investors to Economic Revitalization The Role of Community Partners Anna Steiger Federal Reserve Bank of Boston December 10, 2007

  2. Motivation for Research Examine partnerships between the investment vehicles and community partners • Role of the community partner • Incentives to promote participation of community partners

  3. Investment Vehicle and Community Partner Relationship Investment vehicles intervene between the investor and the community by: • Pooling investments • Spreading risk across investors • Pricing the transaction up to the associated risk. They also link with community partners, who draw on their specialized knowledge of the local area to: • Help source deals • Ensure social benefits for lower-income and underserved residents.

  4. Structures of Investment Vehicles • Contractual Model • Ownership Model • Legislative Model • Fund Manger Model

  5. The Community Partner Toolkit • Financial tools • Social/political tools • Material tools

  6. Types of Community Partners • Nonprofit fund sponsor • Nonprofit affiliate • Mission-driven lending intermediary • Local government or public official • Minority or women-owned business/business in underserved area

  7. Case Studies Urban Strategy America (USA) Fund • Olmsted Green (Mattapan section of Boston) – in partnership with Lena Park CDC • Parcel 24 (Chinatown section of Boston) – in partnership with the Asian CDC Coastal Enterprises Inc. (CEI) – CEI Capital Management (CCML) NMTC deals in partnership with: • The Nature Conservancy, DC • Western Massachusetts Enterprise Fund, MA • Capital Regional Development Corp. (CRDC), NH • Rural Opportunities, Inc., NY

  8. Role of the Investment Vehicle • Source deals • Financial engineering • Develop the niche industry

  9. Role of the Community Partner • Source deals • Ensure community benefits Benefits accrued to community partner: *Stronger organizational capacity *More innovative *Increased collaboration

  10. Conclusions • Best practices for investment vehicles, community partners • Incentives to attract investment • Incentives to promote participation of community partners

  11. Contacts Anna Steiger anna.steiger@bos.frb.org Tessa Hebb thebb@ouce.ox.ac.uk Lisa Hagerman lisa.hagerman@bnc.ox.ac.uk

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