New Hampshire Community Loan Fund began one of the strongest CDFI individual investor programs in the country by simply offering donors the option to make loans, starting in the 1990s. They demonstrate that direct local relationships can overcome many of the barriers identified by the Triple Bottom Line Collaborative. NH Community Loan Fund’s investors feel that they can see tangible results from their investment in the loan fund’s work with manufactured housing (see “Manufacturing Solutions,” www.nhi.org/go/ROCUSA) and farm-to-food lending.
Product details: NH Community Loan Fund offers a credit-enhanced fixed-income note, minimum investment $1,000, at interest rates from 1 to 5 percent depending on the term. Investors can ladder notes for varying durations, and they like having funds allocated in an uncorrelated economic sector (i.e. one where returns don’t necessarily move in tandem). As a nonprofit, NH Community Loan Fund is exempt from federal registration and oversight. However, the fund complies with varying requirements for non-registered offerings in the six states in which they have investors. The product is explained on the loan fund’s website; however each investor is qualified to invest via a phone conversation.
Costs: In 2011, NH Community Loan Fund had one-time legal costs to perform a securities “scrub” on its offering and program procedures. Otherwise the fund’s ongoing operating costs include staffing at about two full-time employees. All investor administration is performed in-house.
Results: Individual investors are critical for NH Community Loan Fund to meet the surging demand it is experiencing for manufactured housing and farm-related loans in New Hampshire. Total capital from individuals now stands at $12.6 million, with an average investment of $23,000. With a renewal rate of 84 percent, the average investment term is 50 months, a good match with the loan fund’s loan terms. (None of these figures include foundation investors.) The main investor groups are the fund’s individual donor base and socially responsible wealth advisor firms in the New England area. For more: www.nhi.org/go/NHCommLoanFund