Mercy Corps Community Investment Trust

Published by ORFL on

In 2021 ORFL decided to supported Mercy Corps Community Investment Trust (CIT). This is a new initiative that has only been piloted in Portland OR but worked well. The project aims to invest in loss-protected commercial real estate at an accessible price point and put the control of the estate back in the hands of the local people. The aim is to empower communities most affected by systemic racism to create a more equitable future.

Mercy Corps will work with local organizations to purchase commercial retail property in neighbourhoods most impacted by systemic racism. The organisations will then use common corporate structures and inclusive banking practices to offer low-cost, loss protected shares to residents in the surrounding zip codes (local community). Step one of the program for the local community is to take a free financial education course which connects them to investing through their CIT property for just $10-$100/month. The aim of the project is for communities of colour to buy back their local block and build wealth where they live. The local block will also be rented out to local businesses.

This program was tested in East Portland. Commercial retail property Plaza 122 was purchased. 350 investor families went through the free financial education course and of them, 205 invested in CIT. It has provided the local families with long-term investment opportunities in their neighbourhood and yielded 9.3% dividend and share price increase from $10 to $17.05. Plaza 122 is now 95% leased to minority-owned businesses and organizations. Since the March 2020 pandemic CIT has gained 50 new local investors and the commercial space has not lost tenants, proving resilience of the model. Other positive outcomes of this project were that 96% of investors reported using financial planning techniques to stay on track towards their financial goals and 33% of investors reported an improved credit score.

This pilot was successful and gained recognition from leading think tanks and publications in the USA. Due to its success, Mercy Corps decided to plan a roll out of the program across 100 US cities in the next 10 years. Our donation will be going towards supporting this role out. The role out will have 3 phases; build a Network Community of Practice, expand the network and finally Strengthen the Network. CIT aims to impact 1 million people and set off a ripple effect towards closing the racial wealth gap.