Several recent regulatory changes have made it possible for new players to become involved in “impact investing.” From regulatory changes at the U.S. Department of Labor (DOL) that allow retirement funds to invest for environmental and social impact to an Internal Revenue Service (IRS) announcement on private foundation investments to changes at the Securities and Exchange Commission (SEC) that allow small businesses to solicit funding in new ways, recent developments are opening up new potential sources of capital for community and economic development.
Read the full article by Noelle St.Clair Baldini, Community Engagement Associate, The Federal Reserve Bank of Philadelphia.
Conclusion
The community development industry has historically been financed by Community Reinvestment Act–driven bank capital, philanthropy, and government funding. However, new regulatory changes may enable the field to diversify its capitalization strategy by tapping into the growing trend of impact investing. Though it may be too early to tell what effect these changes will ultimately have on investment behavior, enabling policy updates from the DOL, IRS, and SEC present new opportunities for community and economic development stakeholders to rethink their capital-raising strategy by engaging with new partners in innovative ways.
