IS YOUR MONEY WHERE YOUR MOUTH IS?
Investing in Community - Part I

Socially Responsible Investment Strategies with Darron Stover

Over the past year, I have educated you about the concept of socially responsible investing, everything from screening our investments to social activism, with a brief stop on Community Investment. In this issue, you will have the chance to learn about the Community part of Socially Responsible Investing in much greater detail, including information specific to the Triangle. However, for this topic, I am turning you over to a very trusted colleague; one who has an incredible passion for Community Investing and a greater amount of expertise than I.

Jennifer Lazarus is a Certified Financial Planner™ who specializes in comprehensive financial planning and cash flow planning for individual clients. Although Jennifer does not manage assets for clients as I do, she is a tremendous believer in and advocate of investing with social awareness. Enjoy!!!
~ Darron Stover

The “I” in “Community Investing”
You volunteer.
You donate.
You vote.
You’re a good neighbor.
You buy local produce at the farmer’s market.
You eat and drink at locally-owned restaurants and coffee houses.

You do all these things to help build a strong community – either where you live or globally.

Do you know you can also use your savings and investments to finance community development projects?

Community investing allows us to strengthen and develop our local community and communities around the world.

What are community investments?
Community investments can be familiar savings and investment vehicles with an extraordinary impact. They include savings and checking accounts, CDs, money market accounts, and bond mutual funds.

They allow people and non-profit organizations who may not be able to access affordable financing from the financial services industry to purchase homes, start businesses, develop community facilities, build affordable housing, create jobs, and develop life-enriching community services to help make our collective communities more stable.

Are they as safe as my other investments?
Yes. The community investments offered by banks and credit unions are federally insured – just like conventional bank and credit union products. Those community investments you would buy at your brokerage firm are not insured, just like other investments offered by your brokerage firm. As with all investments, it’s important to do your due diligence.

Perhaps surprising, experience has shown that the default rate on community investment loans is lower than the default rate of conventional lenders. Alison Yonas, VP for Finance at Latino Community Credit Union, adds that “many community development lenders have specialized their lending to address the needs of a certain population, thereby lowering the risk of lending to that community.”

Is the investment return good?
Yes. Many community investments offer very competitive returns.

For example, many traditional banks pay very low interest on their money market accounts and certificates of deposit. By moving your money market to a community development financial institution, you may actually earn higher rates – plus you’ll be supporting community development!

Rates as of 8/23/2007

While many community investments offer a market rate return, in some instances you may choose to receive a below-market rate return. When a community development financial institution (CDFI) pays you slightly less interest for the money you leave on deposit than you might be able to get elsewhere, they can lend out that money at a lower interest rate – making the capital affordable to more people – and generating a higher social return on your deposit.

Tell me more about the social return.
The good thing about community investments is that you get 2 returns – a financial return and a social return.

For example, $10,000 invested for one year at the Latino Community Credit Union (LCCU) can be loaned out to 20 previously unbanked members. This helps them establish a credit history, enabling them to acquire future loans for a vehicle, their own home or to start their own business. Read more of LCCU’s social returns at http://cooperativalatina.org/publications/testimonials.htm

At Self-Help Credit Union, $10,000 has helped fund a $80,000 mortgage for a single mother of 4, allowing her to purchase her first home – and one in a safe neighborhood. Read more of Self-Help’s social returns at www.self-help.org/success-stories/view

In the next edition of Is Your Money Where Your Mouth Is?, Jennifer will discuss how community investments can fit into your financial life. Please tune in.

Jennifer Lazarus, CFP® and NAPFA-registered advisor, works primarily with middle-income individuals and couples who want to know they’re on the right track with their finances. She provides 2 services to her clients - comprehensive financial planning and regaining control of cash flow. She most enjoys helping people reach a place of empowerment and financial calm. She can be reached at (919) 321-0606 or via www.lazarusfp.com.

For over 12 years, Darron Stover has provided wealth management services to clients. It is his higher purpose to help investors meet their financial objectives through socially responsible investment strategies. Darron is registered to offer securities in NC, FL, GA, CA and NY and to dispense investment advice in NC through FSC Securities Corporation, a Registered Investment Advisor & Registered Broker/Dealer, member FINRA/SIPC.  Ask for Darron at (919) 749-7684 or visit www.invest4change.com. 3356 Six Forks Road, Raleigh, NC 27609.