Community Development as a Form of Social Investment

Social Investment Forum Foundation, The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions, April 2007 (found at http://www.socialinvest.org/pdf/research/Mission%20in%20Marketplace%20-%20Resource%20Guide.pdf).


This piece on social investment in general presents some interesting and relevant ideas with regard to development, specifically, although indirectly, real estate investment. Although the piece focuses largely on wholly philanthropic projects and foundations, the discussion of the fundamental themes of eco-friendly investing, sustainable development and development of underprivileged communities are highly relevant for our purposes.

Perhaps most relevant, the section entitled “Community Investing: Uplifting Low-Income Communities” proposes a community investing loan system resembling the micro-finance approach which has proven highly successful in the realm of global development. Although this proposal does not translate directly to the Downtown Berkeley scenario, it could be applied. For example, if we are concerned that the retail spaces will not be community-member run, one potential approach could be financial reforms designed to bring community members into the fold as retailers.

Also, by the very nature of the piece, namely its focus on the public interest sector and nonprofit sources of community and other development, it raises a key question which we have not yet thoroughly addressed – is private development (in any form and by any developer) appropriate, or should instead Downtown Berkeley be developed under a public or Foundation program. Of course, practical considerations would likely prevent such public programs as Downtown Berkeley is hardly perceived to be as in need of such public aid and attention as other areas of the country and the world.

In addition, I think this piece raises an interesting issue with regard to private developers specifically. In one of our sessions with Patrick Kennedy, one of my classmates asked about the effect of the sometimes costly and/or profit reducing socio- and eco- friendly policies where the developer is a public company; are they somehow liable to their shareholders for not placing profit first? The Mission in the Marketplace speaks directly to this very issue making the argument that investment in projects which are ecologically sustainable and socially conscious are financially sound and thus serve the fiduciary duty between company and investor.