Becoming an Investor

Purpose
History
Who are our Borrowers?
Who are our Investors?
Terms and Interest Rate
Payments of Principal and Interest
Security
How to Make an Investment

Purpose

The Institute for Community Economics (ICE) has operated a Revolving Loan Fund since 1979 to help meet the capital needs of community land trusts and other community-based organizations engaged in permanently affordable, resident owned or controlled housing and other economic development projects. The loan fund complements ICE's other ongoing programs of technical assistance and advocacy for the community land trust movement.

ICE's loan fund builds a bridge between socially-concerned investors and grassroots organizations revitalizing communities and creating permanently affordable housing. An investment in the fund helps community-based organizations throughout the country meet the needs of people with lower incomes in ways that ensure long-term benefits and community control.

History

Since its creation in 1979, the Fund has made more than 380 loans totaling over $35 million to community-based organizations in 30 states. These loans have helped to create or preserve more than 3,800 units of affordable housing, as well as jobs and community resources.

In 1998, as a certified Community Development Financial Institution (CDFI), ICE received $1.125 million from the U.S. Department of Treasury's CDFI Fund to increase ICE's net worth and help to ensure the long-term health of its Revolving Loan Fund. ICE also received a $405,000 award from the Fund in 1999 to create a 10- to 30-year long-term financing program for ICE's borrowers.

In addition to operating its own loan fund, ICE has been a leader in promoting community investment by socially responsible individuals. ICE is a founding member of the Social Investment Forum, a national non-profit trade association of socially responsible investment advisors. ICE also has played a leadership role in the development of many locally-and-regionally-based community development loan funds throughout the country, and is a founder and member of the National Community Capital Association, the national association of CDFIs.

Who are our Borrowers?

ICE's principal lending goes to community land trusts, limited equity cooperatives, and community-based nonprofit organizations creating housing that is permanently affordable to low-income people. ICE most often finances the acquisition or improvement of land or the acquisition, construction and rehabilitation of housing. Other frequent uses of financing include the acquisition of office space or other property by a nonprofit community service organization. ICE also provides technical assistance to more than 40 community land trusts and limited-equity housing cooperatives each year. This gives ICE the capacity to help assure the success of many projects receiving loans from the Fund.

Who are our Investors?

Today, capitalized at over $13 million, the RLF consists of more than 400 socially concerned individual and institutional investors and over 50 community-based borrowers. Over 80% of ICE's loan fund investors are individuals, with the balance comprised mostly of religious organizations and foundations.

Although the majority of our investments are from individuals, the John D. and Catherine T. MacArthur Foundation and Domini Social Investment Fund have current investments in the Revolving Loan Fund. The LCWR/CMSM (Leadership Conference of Women Religious / Conference of Major Superiors of Men) collaborative of more than 40 religious congregations also provides more than $1.2 million to help borrowers in the New England area. ICE is also in regular communication with investment advisors at Trillium Management, US Trust, and Calvert Community Investments who refer investors to ICE.

Terms and Interest Rate

Investors propose the size, term, and interest rate of their investments. Because many of ICE's borrowers require low-interest loans to adequately serve community residents, we encourage our investors to consider their actual need for interest returns in relation to the needs of those whom the Fund serves. ICE seeks investments of at least $1,000 for at minimum of one year. We ask that investors propose a fixed rate of return between zero and our maximum rate that is adjusted quarterly. Currently, ICE is able to offer interest rates of up to 3.5% for loans of five years or more, and up to 3% for loans of four years or less. We readily accept loan offers within these constraints, but we hope for lower interest rates to subsidize our work and that of our borrowers.

Payments of Principal and Interest

ICE mails interest payments to investors on an annual or other periodic schedule. Repayment of loaned principal is usually by lump sum payment on the due date of the loan.

Security

Promissory notes to investors are backed by the totality of ICE's assets, not by a particular borrowing community group. Although loans to the Fund are not insured, ICE has loss reserves and a pool of permanent capital as a cushion against potential losses. No investor to the Revolving Loan Fund has ever lost a penny. Loan losses to date have been less than 1.5% of total loans placed.

The ICE Loan Committee carefully evaluates each loan application and approves loans that are socially worthwhile and financially sound. ICE typically requires security on loans to its borrowers, generally in the forms of mortgages or deeds of trust on real property. Other forms of security have included guarantors, insured inventory and liens on equipment. In the event of default, ICE would move to foreclose to recover its loan. ICE’s technical assistance and collegial relationship with many of its borrowers is also a form of security. These relationships allow staff to make informed lending decisions and assist groups as problems arise.

How to Make an Investment

Making an investment with ICE is easy. To make a loan offer, investors (or their investment managers on their behalf) should contact ICE's development office for a Loan Fund Response Form. Upon completion of this form, ICE will prepare a loan agreement in duplicate to be signed, according to individual needs and preferences, by either the investor or the investment manager. After receipt of the funds and one copy of the agreement, ICE issues a promissory note. Please contact J Wellington at (413) 746-8660, extension 109, in ICE's Development Office for the necessary materials, or email ltaadmin@iceclt.org.