Invest Appalachia (IA), a regional social investment fund built by and for the people of Appalachia, has a clear goal: To accelerate and expand community investment across Central Appalachia. To do so, IA builds on the region’s existing strengths, working side-by-side with partners who are rooted in place and understand their communities.
After six years of collaborative stakeholder design, Invest Appalachia is now a fully operational platform positioned to do just that. In November 2022, the Invest Appalachia Fund (IA Fund) secured $19 million of new investment capital in its first close. The IA Fund will provide capital to community economic development projects, including small businesses, real estate, housing, nonprofit enterprises, and community infrastructure.
Locus was selected as the IA Fund’s Investment Manager in early 2021 and has worked alongside Invest Appalachia to develop the fund. The process – which included complex financial modeling and legal structuring and the creation of robust investment policies and procedures, among other things – also relied heavily on the input of Central Appalachia’s existing community development finance ecosystem.
About 60 Community Development Financial Institutions (CDFIs) of varied sizes and focuses exist within Invest Appalachia’s six-state footprint, creating vast opportunities for partnership. But getting buy-in for something big, new, and different can be challenging, so helping partners engage with and shape IA’s model was critical.
“The first question CDFI partners asked was the same question that investors asked,” Locus Senior Associate, Investment Advisory Jeremiah Houle said. “Why do you exist? What makes you unique? So, we put a lot of effort into making sure there was some real substance behind the answer to that question.”
To put some meat on the bone, Locus Impact Investing surveyed a large sample of the region’s CDFIs. It then facilitated a series of smaller stakeholder working groups with heavy representation from those CDFIs. Throughout that process, Locus and Invest Appalachia found that developing and discussing mock case studies with detailed, realistic financial scenarios was crucial to communicating and highlighting Invest Appalachia’s value proposition to the region’s existing community finance actors.
“We need an economy where everyone can see a place for themselves, and Invest Appalachia will help move the region in that direction. Invest Appalachia is rooted in place and designed to meet the needs of Appalachia’s underserved communities. This deeply collaborative model puts impact and community interests first while also providing a large-scale opportunity for national impact investors,” said Andrew Crosson, CEO of Invest Appalachia. Crosson also emphasized the intentional partnership-based approach of IA: “Invest Appalachia’s investment dollars are important, but I believe the focus on values, ecosystem capacity, and partnerships is the real key to creating a more equitable and resilient future for the region.”
Invest Appalachia targets high-impact projects that require flexible, collaborative solutions. As an integrated capital platform that includes a limited liability company pooled investment vehicle as well as a 501(c)3 public charity, Invest Appalachia blends flexible financing from the IA Fund with risk-absorbing philanthropic dollars from its “Catalytic Capital” pool. Invest Appalachia’s initial investments and pipeline include:
- Acquisition and development of a property downtown in a small town by a BIPOC-led community development corporation in partnership with a local CDFI
- Flexible support for long-term flood recovery and resilience in Eastern Kentucky, including new housing and small business lending
- Energy-efficient equipment and rooftop solar for a rural grocery store, co-financed with a partner CDFI and supported by a loan guarantee from IA’s Catalytic Capital pool
- A small-dollar consumer lending CDFI providing an alternative to predatory lending for low-income and flood-impacted families in Eastern Kentucky, combining a loan from the IA Fund with a Loan Loss Reserve grant to mitigate risk and help the lender reach hard-to-serve clients
- For a region historically lacking access to capital and equitable opportunity, this blended capital approach reduces systemic barriers for underserved entrepreneurs and projects. It ensures that, across Central Appalachia, every community has the investment they need to thrive.
Disclaimer: Interests in the IA Fund are only offered to eligible investors through the IA Fund’s offering documents. This is not an offer or a solicitation of an offer to buy IA Fund interests. Persons must be “accredited investors” to invest in the IA Fund, which may not be suitable for all investors.
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