SoLa Impact announced the launch of its $1 billion “Black Impact Fund” to invest exclusively in Black and Brown communities in major urban markets.
The fund will consist of a $500 million Opportunity Zone fund and a side-by-side, $500 million non-Opportunity Zone fund.
“After a decade of successfully investing in Los Angeles’ African-American and Latinx communities, we have learned a great deal about how to deliver near-term and long-term dividends for both the investors and the community,” Martin Muoto, CEO of SoLa Impact and founder of the Black Impact Fund, said in a statement. “Ultimately, it is about creating shared prosperity and racial equity. In light of all the country is going through, it is clear the size and scope of the problem requires a bold and ambitious response. The time to act is now.”
In the Black Impact Fund, 13% percent of all asset appreciation and fees earned will go toward funding an affiliated, not-for-profit—The Black Impact Community Fund. SoLa says The Black Impact Community Fund will be able to leverage the for-profit fund’s size, operating efficiency and purchasing power to build “for-sale” housing for community members to purchase at cost. The community fund will also partner with faith-based organizations, local governments and other non-profits to better utilize surplus land and underutilized lots for affordable housing or related projects prioritized by community stakeholders.
SoLa Impact’s fund launch follows similar offerings this year. In September, for example, the Oakland Black Business Fund launched a new investment platform to support Black-owned businesses. The platform will invest $1 billion in Black entrepreneurs and a $10 million relief fund to help Bay-area companies that have been impacted by the coronavirus pandemic.
In June, Morgan Stanley, TruFund Financial Services and the Ford Foundation launched the Impact Developers Fund. The $26 million fund will provide capital to what the trio calls “emerging impact businesses” that lack access to adequate, affordable capital. These companies include minority and women-owned real estate development companies that build, own and operate affordable housing and provide value-adding social services to residents.
These funds often serve a specific purpose for institutions that seek to check off an ESG box from their mandates. Increasingly, though, the evidence is clear that these funds also deliver superior returns.
Preqin, for instance, just reported that the majority of investment managers believe that ESG provides higher returns. ESG investing has gone from being a niche market to the mainstream and has reached critical mass as of late 2020,” says Dave Lowery, Preqin head of research insights. “Industry professionals already see the relationship between positive impact and investment performance.”