Social Impact Investing
Social Impact Investing
Social Impact Investing
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Cash<br />
Shorebank Deposit Program<br />
financial First Investor<br />
Investor<br />
Multiple Investors<br />
Profile: TIAA-CREF<br />
Cash<br />
~2.5% return<br />
<strong>Impact</strong> Investment<br />
Vehicle<br />
Shorebank<br />
Area of <strong>Impact</strong><br />
Community Banking<br />
Geography<br />
United States<br />
Multiple Investors<br />
Shorebank’s investor group consists of a varied group including financial institutions, corporations, foundations and<br />
high net worth individuals<br />
TIAA-CREF (http://www.tiaa-cref.org)<br />
TIAA-CREF (Teachers Insurance and Annuity Association - College Retirement Equities Fund) is one of the largest<br />
financial services companies in the United States, with ~$400B in assets under management<br />
Community Bank Deposit Program<br />
••<br />
TIAA-CREF manages the largest, comprehensively screened social investment vehicle for individuals in the US<br />
with ~$9.6B of assets under management (2007), representing ~2.4% of total assets under management<br />
••<br />
This investment is part of the firm’s Community Bank Deposit Program under TIAA-CREF’s <strong>Social</strong>ly Responsible<br />
<strong>Investing</strong> initiative<br />
••<br />
The motivation for the ShoreBank investment was that returns include a premium to 1 year treasury bond while<br />
the investment simultaneously yields a social return<br />
••<br />
In addition to the investment in ShoreBank, TIAA-CREF has also invested $27MM in six other community banks in<br />
the US<br />
ShoreBank (http://www.shorebankcorp.org)<br />
••<br />
In 2007, TIAA-CREF invested $22MM into ShoreBank of Chicago and ShoreBank Pacific of Ilwave, WA<br />
••<br />
ShoreBank is considered the first and largest community development bank (CDB) in the US with $2.1B in assets<br />
--<br />
Most CDBs in the US have special designations as to the social purposes their loans will be used for with<br />
80% of the lending being done in underserved communities<br />
--<br />
Loans are made to residential real estate (e.g. affordable housing), small businesses and conservation<br />
projects<br />
--<br />
$445MM in total of mission investments were made in 2006<br />
••<br />
ShoreBank utilises CDARS (Certificate of Deposit Account Registry Service) to place its funds into insured certificates<br />
of deposit issued by banks in the network, allowing investments of up to $50MM to be insured by the<br />
Federal Deposit Insurance Corporation (FDIC), whose normal limit is $100K<br />
••<br />
TIAA-CREF is in the process of identifying additional banks through which they can expand their overall investment<br />
in this program<br />
<strong>Impact</strong><br />
social/environmental impact<br />
••<br />
ShoreBank Corporation measures its success by the amount it invests<br />
to create economic prosperity and a healthy environment, as well as by<br />
its financial performance<br />
••<br />
Cumulatively, ShoreBank has financed over $3.7 billion in missionrelated<br />
investments, with over $371 million in new mission loans in<br />
2008. These include:<br />
--<br />
conservation loans<br />
--<br />
community development loans<br />
--<br />
loans that achieved both<br />
••<br />
Globally, ShoreBank International has provided management advisory<br />
services to the financial sector in over 60 developing countries and has<br />
lent $914 million<br />
financial impact<br />
••<br />
Financial return is that of a 1-year treasury bond plus a premium<br />
--<br />
The current rate is ~2.5% to TIAA-CREF’s CBD Program<br />
••<br />
Deposits are made for one year with the option of annual<br />
renewals<br />
••<br />
The investment horizon is much shorter and the risk level is<br />
much lower than TIAA-CREF’s typical investments<br />
17
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