Calvert Giving Fund
Washington Post (print edition)
July 28, 2008
A Small Investment Can Help Raise a Roof Over Someone's Head
By Simone Baribeau
Don't have time to lend Habitat for Humanity a hand? Now you can lend the group a few bucks instead.
Habitat for Humanity International and the Calvert Foundation have launched a program that allows individuals to earn a return while investing in affordable housing.
Anyone with $100 can buy a Community Investment Note backed by the Calvert Foundation. The Bethesda foundation passes the money to Habitat for Humanity at about a 3.5 percent interest rate. Habitat distributes the money to its affiliates at about the same rate. Initially, the program will be geared toward the United States.
The partnership is part of a Habitat plan to add mechanisms to finance its rapidly expanding affordable-housing program, said Habitat chief executive Jonathan Reckford.
"We think this is an exciting new way of [opening] up access to individual small investors," Reckford said in a conference call with reporters. "We've had two extraordinary years of growth . . . and we want to continue that exponential rate of growth."
The nonprofit group helped families get into more than 49,000 new, rehabilitated and repaired houses in 2007, compared with about 25,000 in 2005.
The notes function more or less like CDs, but the return is smaller and they aren't federally insured. Small investors can buy notes earning up to a 2 percent interest rate for nine to 57 months through MicroPlace.com, a micro-lending platform owned by eBay. Longer-term and larger notes starting at $1,000 can be purchased directly through the Calvert Foundation. Notes can also be bought through brokers and other financial professionals.
The lending has a social mission. "We use investment to accomplish goals that in the past has been the purview of philanthropy alone," said Calvert Foundation chief executive Shari Berenbach. The lending helps create a sustainable income stream for nonprofits, she said.
Berenbach said it would take about two years to raise up to the $10 million the foundation is willing to back in loans to Habitat. The $10 million would represent about 17 percent of the foundation's community note loans in that period. The Calvert Foundation -- which is on the hook for the debt if Habitat cannot repay -- will hold some of the mortgages as collateral.
Habitat has raised about $70 million for affordable houses in just over 10 years through a similar program with institutional investors.
The foundation first approached Habitat with the idea of a partnership more than a decade ago.
"We think there's a broad appetite in the general public," Berenbach said. "It's an idea whose time has come."
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