Community investing allows socially-conscious investors to put their money to work locally in the service of their values. It provides a means of creating solutions for many current social, economic, or natural problems by putting much-needed funding into the hands of those who are at the grass-roots level and thus able to make the most direct impact. From dilemmas such as inner-city poverty to third-world destitution, from saving a national park to saving the rain forests, community investing paves the way for conscientious individuals and companies to invest in dedicated and hardworking people who are actually bringing about the necessary and desired societal changes.

Community development financial institutions (or, CDFIs) are at the heart of this type of socially responsible investing. These institutions are the conduit by which investor funds are placed into the hands of the people operating on the ground to effect change. They provide a platform that fosters and encourages an attitude of self-help among community members to tackle and overcome their own common problems. Investing in CDFIs can bring about revitalization of local communities, help alleviate poverty, and empower individuals and families who've historically been on the fringes of economic improvement and growth.

CDFI entities include not only local community banks and credit unions, but also community loan funds and international microcredit programs. Through community banks and credit unions, virtually any investor can put his or her money to work to make a difference in the lives of local individuals. Most community banks target specific areas of need or service within their region of influence. Some specialize in women- or minority-owned businesses, while others may focus on low-income housing or nonprofit projects and organizations (such as providing initial loan funds for homeless shelters or health care facilities). Often, these borrowers would not be approved for more mainstream financing, making the funding from community institutions an even more critical pathway through which such programs and businesses can develop a foothold on the larger economic playing field.

Going a step further, community loan funds help to provide money directly to local disadvantaged or underserved individuals who may not qualify for or be able to afford loans from any commercial bank, including community institutions. These funds obtain their financial resources from investors who have an interest in their specific areas of focus.

The development and use in recent years of microcredit has had a dramatic impact on the economic development of individuals and small communities around the world. Microcredit investors provide small, low-interest loans to poor entrepreneurs who have little or no collateral, thereby boosting the prospect of growth and enrichment for local economies and communities throughout developing nations.

Although investing in loan funds or microcredit institutions usually entails a degree of sacrifice (many only accept investments at below-market interest rates), those with a special concern for the social problems that these entities seek to address will doubtless find the tradeoff not only acceptable, but even satisfying and fulfilling. Investors will have the gratification of knowing that they're helping to serve programs and individuals at the margins of the economy and of society, allowing them a sense of empowerment by unlocking and throwing open the doorway to full participation.

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