At the National Coalition for Community Capital (NC3), we’re excited about the continued growth of both the investment crowdfunding field and the broader community capital movement; and we’re inspired by the thousands of innovative entrepreneurs, investors, and community champions around the country who have been leveraging emerging capital formation opportunities to democratize the economy and build healthier local economies. We’re also encouraged by the willingness of regulators and legislators to listen to stakeholder input and expand opportunities for innovators to pool community capital. And we’re hopeful that exciting new pathways may be opening soon for community champions looking to take the community capital movement to the next level – and invigorate their local capital ecosystems with new forms of Community Investment Funds (CIFs).
It seems that even the most mainstream economic thinkers these days are calling out the inequities of the U.S. economy and talking about the need for solutions. Earlier today, in fact, Federal Reserve chair Jerome Powell told House lawmakers that “we need to achieve more inclusive prosperity,” and he noted the need for policy reform. Fortunately, Mr. Powell, we’ve got some suggestions! And we’re happy to say that in this era of extreme political division, we think our suggestions have the potential to solve some of the structural problems in our economy in a bipartisan way that appeals both to those calling for equitable capital market access and inclusive prosperity and to those calling for the reduction of regulatory burdens and government spending.
Specifically, while we welcome the SEC’s recent modernization of the rules governing direct investments and while we hope that innovation and participation in the the direct investment marketplace continue to grow, we hope to also see new rules and regs emerge that allow for new forms of Community Investment Funds that build on the amazing work that CDFI leaders have done in recent decades and expand opportunities for both entrepreneurs and investors. For we see the introduction of new forms of CIFs as a great way to increase deal flow, blend capital from diverse stakeholder groups, engage investors in appropriate ways, and deploy capital effectively.
To that end, we’ve been advocating for regulatory and legislative reforms that would effectively update the 1940 Investment Company Act by establishing better pathways for pooling community capital in community-oriented funds that are cost-effective to set up; that provide local control and professional management; that allow for flexibility in making investments; and that share profits with investors in ways that promote lasting wealth-building. You can read our online petition here. And you can read some of NC3 board member and Cutting Edge Counsel Managing Partner Brian Beckon’s musings on the subject here.
At the same time, with the recognition that new capital formation opportunities don’t result in new capital formation activity until innovators take advantage of them, as a follow up to our publication Community Investment Funds: A How-To Guide for Building Local Wealth, Equity, and Justice, which we released last year, we’ve been building tools to help community champions and aspiring fund developers through the process of developing innovative funds. And we’re looking forward to releasing those tools soon!
Of course, as a coalition that believes in the power of collaboration, we hope to get as many folks involved in the process of advancing the CIF field as possible, so we’re planning to convene stakeholders in an online forum / webinar in mid-July. Whether you’re interested in the details of the policy reform aspects or looking to connect with other CIF innovators and learn about ways to get support for your CIF vision, we hope you’ll join us! The date and time and other details will be shared through the NC3 newsletter (which you can sign up for here) as soon as they’ve been determined. And as always, we hope you’ll never hesitate to reach out to us at [email protected] with thoughts and questions!