Ups and downs of community investment

 Judith Bird

One of the unique things about EIG has been its commitment from the very start to have 40% of its portfolio devoted to supporting small businesses and individuals who do not have access to credit from mainstream financial institutions, aka “community investments”. The concept has been somewhat expanded over the years to include small-scale projects beneficial to society and/or to the environment, often funded by community bonds. 

While finding appropriate investments in this category is not without its challenges, EIG continues to maintain this approach as a goal more than twenty years after it was included in our 4-point mission statement.

The most recent addition to our community investment portfolio came about with the issue of community bonds by Earth Day Canada / Jour de la Terre Canada to support its project EcoCharge / RechargÉco, a network of fast charging stations for electric vehicles, located at partner IGA sites throughout Quebec and New Brunswick. A proposal to invest was approved by EIG members and purchase of the bonds was finalized in December 2021, albeit for a lesser amount ($15K) than was originally proposed ($30K) after some concerns were expressed about the risks involved.

The main challenges EIG experiences in maintaining its goal of 40% community investment are two-fold:

• While there are many more impact investment options out there these days, they are very largely geared to “accredited investors”, who must meet very specific criteria: net assets > $5M; annual income > $200K; financial assets > $1M. EIG is not an accredited investor.

• At the same time, a trend has developed whereby organizations in which EIG had community investments are turning to other financing models, resulting in mandatory redemption of EIG's investments. Within the last year, this has happened with: CoPower (taken over by the more mainstream Vancity Community Investment Bank, offering much more limited investment options); Ecotrust Canada (now functioning on a donations-only basis).

We have also seen reduction to zero of income from two international community investments (La Siembra and Oikocredit) as difficult times, particularly though the pandemic, have meant that they have been unable to issue dividends as before. Our approach up to now has been to retain these investments, in light of the benefits of their social impact, while hoping they will become revenue-generating again in the future. 

It should be noted that community investments are not generally guaranteed and inevitably involve a certain amount of risk (although they've had a stabilizing effect when equities have plummeted, as was observed in the 2008 stock market crash). Moreover, interest rates tend to be quite low. EIG members have generally accepted these factors for the sake of the benefits the investments afford to society.

EIG’s Community Investment Committee (CIC) continues to search for suitable opportunities to support local communities in Quebec, in Canada and internationally. In the meantime, excess cash will be invested by the Equities Trading Committee in approved companies on the stock market. Anyone with awareness of any organization(s) looking for community investment support is encouraged to contact EIG (eig.gie.montreal@gmail.com) or put a note in the Comments. The committee welcomes all suggestions and/or offers to help in the search.

For more about all of EIG’s community investments, check out the Community Investment - Current Portfolio page on the EIG website (Portefeuille actuel d'investissements communautaires en français).