We've seen tremendous growth of interest and dollars getting put out into community investments. We were talking about this and see the pressure coming onto this community and welcome the opportunity to put billions of dollars into your hands.

These people on our panel have great hands on skill. There are dozens of people in this room who could be on this panel so at some point we'll turn this into a town meeting, maybe a little Meet the Press, Jeopardy and the Gong Show. I'll be an active moderator, cutting people off when necessary, which should make this fun.

To start us off we have a little exercise. You're on an elevator with an interested colleague who will listen to you for a minute. They tell you they have $50k they want to invest. What's the best shot you have for your elevator speech?

Julie Eades: I'm too from the Chuck Matthei school. We get our money from people like you and me. Take some slice of that and put it into community investment.

Ron Phillips: I work in a rural town from Maine. I'd like to take you to an Eritrean restaurant and talk to you about what we do with new immigrants who come into Maine. We could help find many ways to start investing your $50K.

Elizabeth. I'm way up high in the elevator. I'd talk about economic opportunity not recognized in the markets such as child care.

Linne: I'm very low down on the elevator. I understand you have about $50k to invest. I'd like to take you to lunch and tell you about a very safe vehicle that provides a lot of return.

David: We're a venture capital fund and we have something that's illiquid but you could invest in something that offers money to small companies up and down the seaboard.

Tim: What are the elements of a successful pitch? What do you think when you meet someone that will draw someone into being more interested?

Linnie: If you're talking about the elevator speech in terms of gauging the person. I might have flipped in my speech. If I thought that the person was interested in helping people or if they're interested in returns, I will flip what I talk about with each person.

Julie: After the first expression of interest, I try to find out what they're about, who their community is. I try to make the link between them.

Ron: After you get through the safety of the capital, you can offer a modest return. I don't like to get hung up on these two areas but often people want to know that. I want to get to the strategies in what we're doing in making a difference in the lives of people which are integrated into community-based development.

Elizabeth: Because we're an aggregator and we put money out to these organizations, we often get people who don't have a lot of knowledge in the field. They want to know if they can really make a difference. We do the work for them and have a professionally managed portfolio. About a quarter of our investors opt for the 0%. They just want to make sure they get their principle back.

David: In venture capital I think it is a very high touch area. The building of confidence through peers is key.

Tim: How does a community development investor get access to lists and information that helps you find investors?

Elizabeth: The Social Investment forum is a good place. If you go to commynityinvest.org you'll find a lot of resources. I see community investing gets to a lot broader market not just the social investor. Our average client is male, 50-65, no children, techno-savvy, average income of $50K-100K. High net worth is important but our average investor is not there. Most of our clients come from financial advisors and only part of those are SRIs. Which was totally counter-intuitive to me. I always focus on women. Seventy three percent do not have children.

Julie: As I listen to this and I was in a development office at a university, I would be panting. If they could give that as a bequest I'd be thrilled.

Ron: I'm panting too with Julie! The investors we have too are also small investors.

Tim: Who are the new categories of investors who are comfortable and more active in community investing?

Linnie: There is an increase of individuals. We don't proactively market for SEC reasons. We are client driven. The way they know about us is whenever we have a client come in we give them a questionnaire to find out if they're interested in community development which then gives us permission to talk to them about what we offer. We get quite a bit of business from the internet now because Trillium comes up if you look up socially responsible investing.

David: We deal with the higher end investors. There is a bigger market out there if they're looking for diversification.

Elizabeth: Because of regulation, retirement money has some challenges, but it is a new opportunity. The Church of the Brethren created a pension fund that our investors can direct 5% into. Self-directed IRAs also have some flexibility. We have a custodian who provides services in that. I think it comes down to some legislation to have that option be included.

Julie: I think wherever you find new money you'll find a champion or an advocate for us. The best way to find out what the obstacles are is to ask yourself why you're not lending. We need to each become champions.

Ron: We were one time to attract Japanese investments. It's important to put on the table what the new markets tax credit is. We need to understand what the impact of it is. We can look at GE Capital, GMAC, which are new names for us but through this tax credit they're looking at us too.

Tim: When would you recommend an investor to go direct or through an intermediary?

Elizabeth: I always try to have them go directly. Why we exist is that we can provide comfort when there is confusion in understanding the sector. I think we have provided metrics for organizations of what's important to the investors. We've helped CDFIs learn to talk about themselves. As they gain comfort, investors will be able to directly. Convenience is a big reason to go through us. We go through the paperwork and administrative work. We're one out to many and that's a huge reason to go through us.

Linnie: People go through us not only for convenience but also due diligence. If someone is an active investor, I might suggest they can go directly but if they want to diversify they want someone to do the due diligence with the institution.

Ron: I'm on the board of National Community Capital and they've developed something called CARS. They want to add to the definition of the asset class is the impact to public policy. That service to Calvert, Trillium and others might expand to the ability to sell the asset class.

Elizabeth: CARS is an important metric when you're not rated so that places like Schwab will list these. It is wonderful to have something that can get the brokers excited about what we offer.

Tim: What are the challenges to community development investing? Especially with investments that are not liquid.

Ron: We can take a lot of different capital with different rates and terms. We've directed over $1.1B of capital to sustainable farming and fishing, day care and such. We preserve capital but it depends on what instrument we're offering. We love 30 year maturities. We're very flexible and can match the use of your funds. The money is more liquid than you might think.

Julie: Our term mismatch is not good. We're counting on our equity to get us through that. There are people who don't mind us having their money for a long time but they do want to know they can get it out when they need it. It's hard for us because we could not handle a run on the bank. We don't have someone like the Federal Reserve Bank behind us. We did meet a guy who talked about our illiquidity as an advantage. I need to find him and get him to write it down to inspire others.

Tim: What do you feel most pushback on?

Julie: I want to make a comment about family foundations. That's where a lot of the new money is. They're cash cows for lawyers. I wish Linnie could manage that.

Ron: One thing that's puzzling me since I came is that there are challenges to our field: illiquidity, accessing private market capital, and having impact. What we don't understand is subsidy. It's a huge issue in this country. Public policy is using it and when it comes down to our field we don't see it as a way to go. Market efficiency is also driven by subsidy. This is the biggest challenge. At the end of the day we have money for the transaction but what gets us there has huge costs. You cannot build an affordable house in the state of Maine without subsidy.

Linnie: Liquidity is a problem. To get to the next level we need to be able to have it. Part of the reason Schwab doesn't hold paper for Trillium is that they can't price it. It's a big issue if we're going to be players in the market the way it's still set up.

Elizabeth: When I work with consultants, they don't like anything past 2 or 3 years. In reality when I look at the reinvestment rate, the money doesn't leave. They feel so strongly about being able to have the money for the 'just in case'. I would like to a community cash fund so we could not affect the CDFI.

Linnie: We also use it as a monitoring tool. It's not prudent for us to have a 20-year note with 0%. We wouldn't stay in touch with the organization enough. We recently had a client who had a 5-year note when the client needed to take the money out and we just found another client who was interested in investing there.

David: We're less reliant on IPO markets. Our return characteristics have less volatility than traditional venture capital. We need to think about how we market our investments.

Tim: What are you excited about for the future?

David: How to connect Trillium and SRI is the most exciting to me.

Linnie: I'd like to figure a way to have a marketplace where community investing is a mechanism where it makes it easier for the community investors. We're trying to retrofit to the market. We should create something that serves the people that the marketplace would at some point accept. CARS is a part of what might be possible.

Elizabeth: I think a rating system is important. Ways to scale are critical. Mechanics need to continue to be made easier. Academic research needs to continue and have something specific for the CDFIs. Opportunity Finance Network has done some very important work.

Ron: The CDFI and CDC needs to break through as a new asset class. We started out by getting the local farm industry improved so we could make it possible for people to get local food. The decline of the family farm has been reversed in Maine. We are at the place from our work where we can act locally and think globally.

Julie: Volume is key. We have 15% marketshare in replacing predatory practices. How do we get people who have never heard about us to invest in them. By talking to people about what we're doing and asking them "have you hugged your money today?" and get them to understand what they're money is doing. How many elevators can I ride? If we can answer why we're not putting our money into community development, we'll know how to get more money.

Town Meeting

Tim: Let's make it into a Town Meeting. Let's here your comments.

Amy: The importance of each individual cannot be underestimated. I had the humiliating experience of speaking after Tim Smith and Chuck Matthei.

Q: If there is a way on how to make what we do more attractive to banks, I would love hear about it. Banks will always go for the higher return and less risk. I also think the importance of public subsidies cannot be overemphasized.

Ron: There is no intention on my part that the banks aren't doing everything they possibly can. CRA is continuously under siege. Trillium has built into their business model policy that deals with human rights. Maybe other companies have done this too. There is a lot of traditional underwriting going on and they're coming at it from a highly collatorized perspective. How much sub-debt can you get out of the socially responsible investment.

We need to get more explicit about subsidy. We have to watch our language it's not just because it costs more to do business with us but what we're trying to do.

Q: In terms of the What happens if we wear both hats of being CDFIs and asking for charitable contributions?

Julie: We worked very hard for the first 15 years proving that we can pay them back. But people are aging and we need to think about charitable giving. Harvard has an army out there making this happen. How do we put our bucket out? We don't do anything very proactively in getting people to do this, but maybe we could.

Elizabeth: We never put our bucket very actively either. We put out a letter asking if people would donate their interest and we got an overwhelming response and in fact got checks back too.

Q: Do you think we're blurring the lines here?

Julie: I think we have to be incredibly clear about why people are giving us money. I am Attila the Hun about this point. And I think for the sake of industry we need to be upfront about it.

Comment: With banks that normally don't get to participate in CRA they get excited about it. There is an appetite there. At DeutscheBank we're lucky because we have a pool of PRI funds. We can layer up to have a much more substantial pool to make the investments. We have to find ways around using the capital in enhancing our own credit.

Linne: One thing that is happening around NCAA, the confusion between philanthropy and investing is a tight wire. Sometimes you don't get access to the people you want to do. Trillium is an investment organization that is to help people help themselves. From the larger market standpoint, CDFIs want to look like an investment vehicle. It's not philanthropy. There is a whole industry around that that could have this same meeting. We don't want to be confused with that. Some of the religious organizations don't understand the concept of loans. They want to give.

Amy: It depends on who you work with. People turn to me for advice and I am generally am the executor. I ask them if they want to give the loans they've made to nonprofits and they always say yes. Social investors care about a broader range of issues.

Tim: That's it. Thanks to the panel and to all of you for participating.

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