Today is the age of social responsibility stated by Bahaa Abdul Hussein. We need to make a positive impact on the world in all that we do. When we invest money, we must ensure that the investments have a positive impact and create social good. Such socially responsible investing is known as community investing. Let’s review how community investing can lead to social good.
What is Community Investing?
Community investing refers to making investments to create a positive impact on the community while ensuring that investors get returns. It is a form of socially responsible investing that benefits local communities. The objective is to focus on areas that have been left out and ensure development (economic, social, and environmental).
Community investing would look at the following areas:
- Ensure affordable housing in local communities.
- Create job opportunities.
- Offer educational and healthcare services.
- Provide child care services.
- Financial counselling services.
The ultimate aim is to help individuals and businesses who otherwise find it difficult to get financing. Community investing helps in tackling serious challenges like inequality, poverty, and even climate change. The long-term aim is social good.
How does community invest work?
There are different ways in which community investing works:
- CDB or Community Development Bank
A community development bank is a bank that specifically serves local communities. It focuses on lending to individuals and businesses with low to moderate incomes. These banks play a key role in offering capital to local businesses and individuals.
- NGO or Non-Governmental Organizations
NGOs play a key role in community investing. They offer a range of services that include identifying investment areas and connecting investors to loan seekers. They can also offer services like capacity building and technical support. NGOs are formed by members of local communities and can thus ensure community investing achieves its goals.
- Socially responsible Investment Firms
Investment firms that are committed to socially responsible investments can play an important role in community investing. They can offer products that cater to investors who are keen on helping local communities. They can thus ensure investments are made that promote social good in local communities.
- Government agencies
Agencies of the government can also help in community investing. They can encourage such investments through incentives or tax credits. Govt. agencies can collaborate with CDBs and NGOs to ensure the impact of community investing is maximized.
Investors who are socially responsible can look at community investing as an option to ensure social good. They can get returns while contributing to the society.
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