Community capital is investment sourced from a broad spectrum of a community, including both wealthy and non-wealthy investors. While typically defined by geography (like a city or county), it can also be based on a common interest (like education or biodynamics).
Why is Community Capital Better for My Venture?
Better terms: Your community invests in you to help you succeed, not just to maximize their profit.
Deeper connection with your community: Your investors can be great ambassadors, and sometimes customers.
Why is Community Capital Better for My Community?
Keep wealth circulating in your community: Through a cycle of investment, growth, returns, and reinvestment, you can help your community build wealth sustainably.
Democratize the economy: You can level the playing field for wealthy and non-wealthy investors alike, and help narrow the wealth gap.
How Can I Raise Community Capital?
Directly, using a direct public offering. This approach offers maximum control over the terms. And engaging your community directly has non-financial benefits.
Indirectly, from a community investment fund, which raises community capital and invests in community ventures. For entrepreneurs, this approach can be easier and quicker. For investors, it offers diversification and efficiency.
What Types of Community Investment Funds Are There?
Charitable loan funds: Some (though not all) nonprofit lenders raise community capital via direct public offerings. Examples include NCCLF and RSF Social Finance.
Diversified business funds: This type of fund supplements another primary business and makes equity or other types of investments, while sharing profits with investors.
Real estate funds: While not a source of funding for ventures, a fund that deploys community capital into real estate can be a key revitalization tool.