What is the status of your divestment campaigns?

Which pools of money are you asking universities to reinvest?

Why 10%?

Who should decide what our universities reinvest in?

Is what you’re asking for the same as
impact investing?

Impact investing refers to a range of investments that have both a financial return as well as an environmental or social return. It includes both investments that require competitive market rate returns while others will accept lower returns for greater impact. When we call for community reinvestment, we are asking for impact first investments. This means the societal benefit should always be the top priority with financial returns being a secondary objective. We are also asking for investments to be restricted to our community, in this case the province of BC. As such, some impact investments are considered community investments, while others are not. We use the term community impact investing because both community and impact are crucial.

Isn’t this a capitalist solution to our societal problems which were themselves created by capitalism?

The goal of reinvestment is to shift the conversation about what type of returns our money should be making and for whom. We believe an investment should mean investing in building stronger, healthier, more equitable communities, not merely investing in financial growth for those who already possess capital.

In calling for community reinvestment, we are calling for non-extractive finance. This means social purpose must be prioritized over financial return, and organizations should have enough money left over after paying interest to grow their organization and build wealth in their community. In doing so, we can shift economic power towards local and democratic organizations like cooperatives, credit unions and community land trusts which will support the transition towards a just and regenerative economy.

We understand reinvestment is not the ultimate solution to the deeply systemic issues of our time. We also need large scale policy changes and regulation, along with wealth redistribution, reparations and respect for Indigenous rights and title. Like divestment, this is just one piece of the puzzle towards building a just and sustainable future.

We encourage you to check out Regenerative Finance’s Regenerative Economy Values and Resource Generation’s Transformative Investment Principles.

What is the expected return for community reinvestments?

There is a wide range of risk/return profiles within the realm of community investment, allowing for strong diversification. Each product has its own advantages and limitations; when put together these different products can complement one another to meet overall objectives. Impact GICs, for example, produce secure cash flows with low returns and little risk. Social impact ventures, on the other hand, usually offer high returns but with higher risk, low liquidity and a longer time horizon. Meanwhile, community bonds often offer low-medium returns, stable cash flows, variable levels of risk and lower liquidity. Although some community impact investments offer competitive returns, generally speaking, the returns are lower than market rate due to being non-extractive and impact first.

From Bridges Ventures (2012):

If community investments offer lower returns, how can this be compatible with our universities’ fiduciary duties?

And won’t this cause our universities to lose money available for university activities?

While returns for community investments may be lower than traditional investments, they are comparable to existing portions of university investments such as fixed income and money market products.

Further, community investments offer financial benefits such as portfolio diversification which supports risk mitigation, thus aligning with fiduciary duty. Community impact investments have low correlation with traditional asset classes and can hedge against systemic risks in the economy, such as climate change and other ESG risks.

Community impact investments may be considered counter-cyclical, experiencing stronger demand during economic downturns than the rest of the market due to their role in providing for critical societal needs in the real economy. These investments provide stability during market crises, hedging against downturns. For example, during the 2008 Great Recession, social investments in many cases reported consistent positive returns whereas traditional investments saw double digit losses. Similarly, credit unions fared better than traditional banks during the 2008 financial crisis, due to safer lending practices, driven by their non profit-maximizing objectives.

Community impact investments often have greater perceived risk than their real risk simply due to being unconventional investments. Traditional investors are known to herd towards “conforming assets,” viewing new investments as risky even if they are not. This can steer investment decisions away from beneficiaries’ best interests. Given the poor track record of traditional short-term oriented investment metrics in protecting investors from the 2008 crisis, new metrics are needed oriented toward long-term value creation and contribution to the real economy. These new metrics will recognize the positive contribution of community impact investments to the financial wellbeing of a portfolio.

A prudent approach to community investment requires integration into the portfolio-wide investing strategy, adjusting other investments as needed to accommodate the risk and return profiles of new investments. The prudent investor standard applies to the portfolio as a whole. This means certain investments may carry greater risk or offer lower financial returns, provided that the portfolio as a whole is appropriately balanced and diversified. By finding the right balance of risk/return profiles and asset classes across the whole portfolio, an integrated portfolio approach can improve total risk-adjusted returns.