Local impact investing gives foundations, anchor institutions, and mission-driven investors a new way to make a difference in communities. This work, however, requires balancing the potential for greater impact with additional costs and demand on staff to build and sustain a successful local impact investing program. At LOCUS Impact Investing, we believe that the fear of “biting off more than we can chew” keeps these institutions from deploying more impact investments, adopting more catalytic terms, and centering innovation and equity within investment strategies. But what support do these investors need to become “unstuck”? That question has driven LOCUS to rethink the way that our investment advisory work – namely, due diligence and underwriting and portfolio servicing – can enable impact in communities.

Investing when others will not – perhaps due to the “messiness” of the capital stack or the perceived riskiness of the deal – is essential for bringing catalytic capital to bear to address community challenges and seize opportunities. However, a willingness to tolerate more mess and risk does not eliminate the responsibility to assess investments, the process known as due diligence. At LOCUS, our due diligence and underwriting practice helps our partners to determine not just whether to invest in an opportunity, but at what terms. Since 2020, LOCUS has worked with the Community Foundation of Louisville to deploy dollars out of the CFL Impact Capital fund. Our partnership has allowed LOCUS to immerse ourselves in Louisville community and economic development ecosystem. Our work with CFL has been centered around two goals: 1) bringing a racial equity lens to the due diligence process, and 2) building the capacity of grassroots investees.

Local impact investing requires that institutions perform ongoing activities to maintain and safeguard their investments. For many foundations and mission-driven investors, there is little interest in developing or maintaining the internal capacity to manage growing, complex local investing portfolios. That’s where LOCUS comes in as a “back-office” partner. The Baltimore Community Foundation became a local impact investor in 2018 when the foundation decided to commit up to 4% of their endowment to Invest for More. Their investments have grown to more than $4.5 million in a range of projects from affordable housing to green spaces to small businesses. In 2020, the foundation approached LOCUS for help servicing this growing portfolio so that they could focus on institutionalizing this new way of doing for the foundation and growing the impact of their work over time.