Overcoming Barriers

Promising solutions to common challenges

 

Challenge Solution
We cannot commit resources to hire a full-time employee to manage a place-based investment portfolio. Leverage strength of different internal departments, such as investment, treasury, legal, community outreach, community benefit, and sustainability.

 

Examples: St. Joseph Health, Bon Secours Health System, Trinity Health, Catholic Health Initiatives

We lack internal capacity to monitor individual, direct loans to borrowers, or make direct investments in other asset classes. Utilize financial intermediaries, such as community development financial institutions (CDFIs) and investment managers to invest in local community economic development.

 

Examples: Bon Secours Health SystemTrinity Health, Catholic Health Initiatives

We have limited resources and/or knowledge to create the applications, forms, and other analysis tools for a place-based investment program. Consult Laying the Foundations section of this toolkit, and reach out to institutional contacts identified in that section for additional templates, guides, and advice. Models exist!

 

Examples: Dignity Health, St. Joseph HealthBon Secours Health SystemTrinity Health, Catholic Health Initiatives

We are not familiar with CDFIs or other financial intermediaries that serve the geography of our patients, or none exist. Review resources that help identify CDFIs that serve your geography, including CDFI Fund, Opportunity Finance Network, National Federation of Community Development Credit Unions, National Community Investment Fund, Community Development Venture Capital Alliance, and others.

 

If there are none, explore how your institution could engage in direct investment and bring together stakeholders for a project, or think about how to fill that access-to-capital gap over the long term. Engage in a conversation with a national CDFI and with investment managers to see if they are willing to target investments in your geography.

 

Examples: Dignity Health, St. Joseph Health

Financial intermediaries in our service areas are 1) not targeted enough with our dollars, 2) cannot link investments to health sufficiently, and/or 3) their loans have interest rates that are too high. Focus on institutional direct lending as a place-based investment portfolio strategy, and seek to align lending with specific community benefit priorities and support.

 

Examples: Dignity Health, St. Joseph Health, Trinity Health

Financial intermediaries or particular place-based investment strategies we have considered lack a robust track record. Consider loosening diligence requirements for place-based investment intermediaries; think of place-based investment intermediaries in the context of an emerging manager program, or create such a program if one does not exist.

 

We are unsure about how to design and fund a place-based investment program. Consult Laying the Foundations section of this toolkit and reach out to institutional contacts identified in that section for additional templates, guides, and advice.

 

Examples: Dignity Health, St. Joseph HealthBon Secours Health SystemTrinity Health, Catholic Health Initiatives

We do no not have a long-term investment portfolio. Place operating accounts and short-term cash holdings with community banks and credit unions and partner with a local conversion health foundation, or other community or placed-based foundation, to encourage them to leverage their assets for impact to address community health needs.

 

Example: ProMedica

Our governance and leadership are unwilling to settle for a rate of return less than the historical average of the investment portfolio. Focus on market-rate return projects that also create positive local impact and address social, economic, and environmental issues in a non-predatory manner, such as local renewable energy production or investments to help create and retain local businesses.

 

Example: Gundersen Health System

Our place-based investments are not creating sufficient impact. Partner with local philanthropy, government, and other nonprofit and public anchor institutions to scale local impact.

 

Example: Dignity Health

We’ve had difficulty maintaining ongoing, additional due diligence for direct borrowers. Require that most direct loan recipients have a health system staff person on the organization’s board, strengthening relationships between the system and investees, which can encourage further collaboration and partnership.

 

Example: St. Joseph Health

Our annual funding allocation for place-based investment or community benefit is inconsistent. Establish fixed investment portfolio allocation, operating revenue or expense formula for place-based investment and/or community benefit strategies.

 

Examples: Dignity Health, St. Joseph HealthBon Secours Health SystemTrinity Health, Catholic Health Initiatives, Mercy Health, Dartmouth-Hitchcock Health, Nationwide Children’s Hospital

We are not sure what skills are required to manage a place-based investment portfolio. Consult peer institutions who have hired dedicated place-based investment or environmental, social, and governance (ESG) investment professionals and inquire about ideal skill sets; search for someone with knowledge and experience in investment, ESG, community health and economic development, and relationship building.

 

Example: Dignity Health