Place-based Investing: Creating Sustainable Returns and Strong Communities
This toolkit was created by Dave Zuckerman and Katie Parker of The Democracy Collaborative, with contributions from Joshua Humphreys and Ophir Bruck of the Croatan Institute.
Nationally, health systems have an estimated $400 billion in investment assets. Redirecting even a small portion of these resources to place-based investments would shift billions of dollars toward addressing economic and environmental disparities in local communities. It would allow institutions to more effectively improve community health and well-being, even as they continue to earn a healthy rate of return. This toolkit outlines a range of strategies for how health systems are using their investment assets to help address the resource gaps that keep communities from achieving better health and well-being.
As we learn more about what families and children need to lead healthy lives, it is clear that adverse social, economic, and environmental factors, coupled with racial disparities, prevent communities from building a culture of health. The good news is that hospitals and health systems are recognizing that they have significant, untapped assets at their disposal to help address these challenges: their investment portfolios. Through place-based investing, institutions can leverage these resources to improve their communities’ overall health and well-being. This toolkit will help you get started.
Case Studies
Dignity Health
Bon Secours Health System
Gundersen Health System
ProMedica
St. Joseph Health
Trinity Health
Key Strategies
Place-based investing
Place-based investors often find that the community interventions and supports needed—and the investment required to make them sustainable—are not a good fit for the highly compartmentalized and specialized offerings of the mainstream financial system, and may therefore require more patient capital and new approaches to investment analysis and capital deployment. An integrated capital stack might include investments across a range of asset classes, including cash and cash equivalents, fixed income, private equity, private debt, and real assets, as well as grants and human and social capital, such as access to mentors, learning circles, and technical assistance.
Diving In
Quick Practice Upgrades
- Foster relationships between community outreach and investment staff
- Move cash assets into local banks and credit unions
- Engage key nonprofit partners
- Join impact investment networks
Simple Policy Measures
- Build a relationship with a CDFI
- Allocate assets from investment portfolio for place-based investments
- Connect capacity building with direct lending
- Switch to an impact investment advisor
Readiness Checklist
The Big Questions
What area do you want to impact?
What does “community” mean to your institution?
Which community needs and institutional priorities could be met by realigning your investments?
Learn how to ask — and answer — the big questions
Laying the Foundations
Tracking Dollars
Deciding Your Approach
Managing your Place-based Investment Portfolio
Allocating Assets
Creating Forms and Templates
Moving to Impact
Measuring Performance and Impact
The Returns on Investment
Overcoming Barriers
- Place-based investments are not creating sufficient impact…
- Not familiar with CDFIs or other financial intermediaries that serve the geography of our patients, or none exist….
- Lack of internal capacity to monitor individual, direct loans to borrowers, or make direct investments in other asset classes….
- Governance and leadership unwilling to settle for a rate of return less than the historical average of the investment portfolio…
