First-in-the-nation diversified community investment fund launches in Rhode Island with $3.5 million direct public offering
Any Rhode Islander can participate in this initiative, which will invest
in neighborhoods limited by access to traditional funding
PROVIDENCE ⸺ The Rhode Island Community Investment Cooperative has launched a direct public offering for the Local Return Diversified Community Investment Fund (DCIF), nation’s first DCIF and Rhode Island’s first-ever community investment fund, which will invest in local real estate projects and related ventures that create or preserve local ownership and economic activity.
The Cooperative aims to stimulate revitalization in neighborhoods that have been historically excluded from traditional financial investment. With a $3.5 million fundraising target, it will invest in locally-owned, community-driven real estate projects and small businesses. The fund will provide “possibility capital” ⸺ catalytic dollars which enable progress for vital projects that do not receive financing from traditional sources.
The Cooperative was established by members of the board of directors of Local Return, a 501(c)3 organization created in 2021 by community and economic development practitioners with the mission of building community wealth in Rhode Island through community investment and ownership. The founders, Josh Daly, Jessica David, Raul Figueroa, and Lisa Raiola, bring decades of experience in community entrepreneurship and investments.
“We’ve seen where traditional investment models fall short of meaningful, lasting improvements for the people most directly impacted,” said Co-Founder Jessica David. “Our usual methods of investing leave out a lot of people and places, and sometimes they do more harm than good. Rhode Island needs a different kind of financial vehicle, one with a long-term outlook that prioritizes local control, inclusivity, and shared risks and rewards. That’s why we’ve spent hundreds of hours over the past three years making the Rhode Island Community Investment Cooperative a reality.”
Statistics show that where we live has a significant impact on our life opportunities and outcomes, influencing employment, educational attainment, life expectancy, income, and much more. The Cooperative seeks to reduce persistent social and economic inequities across Rhode Island.
To do so, the Cooperative anticipates making loans and equity investments between $15,000 and $500,000 into real estate projects or related ventures that create or preserve local ownership, and generate neighborhood benefits, from a community asset. These investments could take the form of helping small-scale, first-time resident real estate developers finance their first project, assisting small businesses in controlling their real estate, promoting shared ownership models, or supporting nonprofit-driven community development projects.
Projects in census tracts with poverty rates over 20% and diversity rates over 20% will be prioritized. The projects must maintain or create local ownership and/or governance, demonstrate in some way that they have substantial support of neighbors, and align with at least one of the Cooperative’s Impact Themes.
An investment committee made up primarily of residents in prioritized neighborhoods will review all applications. “This is a different kind of investing,” said Co-Founder Josh Daly. “We’re assessing projects based on the character and credibility of the people behind it and the quality of the project. Traditional lending methods, focused heavily on credit scores and collateral, exclude a lot of people who have great ideas, track records of resilience, and deep connections to their communities.”
That commitment to inclusivity is mirrored in the design of the DCIF itself. This diversified, locally-managed, pooled fund provides a local impact investment opportunity for both accredited and non-accredited investors. The fund was carefully and intentionally designed so that any community member has the opportunity to build wealth for themselves and the community.
“Everyone can be part of this fund, not just the wealthy,” said Co-Founder Raul Figueroa. “Too often, average Rhode Islanders are excluded from investments into their own communities. And yet we know our neighborhoods best. We want a stake in our own future.”
Investors can purchase one of three types of preferred stock:
- Neighbor Members can purchase Series A Preferred Stock for a minimum investment of $500. This option is open to Rhode Islanders who have low incomes (defined as below 80% area median income for the state of Rhode Island, as published annually by the United States Department of Housing and Urban Development).
- Community Members purchase Series B Preferred Stock with a minimum investment of $2,500. This is available to all Rhode Island residents.
- Sponsor Members purchase Series C Preferred Stock for a minimum of $5,000 for individuals and $25,000 for institutions. This is open to accredited investors who are Rhode Island residents. (Accredited investors who are not currently Rhode Island residents can purchase Series C stock through a 506c private offering.)
Preferred shareholders will be entitled to receive dividends when and if determined by the Cooperative’s Board of Directors. Series A shareholders receive 100% of any declared dividend, Series B 85%, and Series C 70%. “The greatest return goes to those who are taking the greatest risk,” said Figueroa. “Even if the total dollars of their investment are not as high as other investors, it represents a more significant investment on their part. They are literally putting their money where their lives are.”
The fund also centers power and accountability within the community through democratic governance. Each investor into the fund becomes a member of the Cooperative and has one share of Common Stock, entitling them to one vote.
“Community-based governance was important to us,” said Co-Founder Lisa Raiola. “The people who have invested⸺including the people who live in our communities and will see the most direct impact of our investments⸺will have a say in how the fund is led.”
A board will be elected from among the fund’s investors. At launch, David serves as the Cooperative’s President and CEO, while Daly is the Chief Financial Officer.
The Rhode Island Foundation and Bank Newport provided early-stage funding that allowed Local Return to hire PathLight Law and Capital Innovation Lab as advisors. Local Return also participated in the National Coalition for Community Capital’s (NC3) Community Capital Accelerator Program.
“In this challenging and divided time we find ourselves in, it’s exciting to see visionaries instead looking for ways to empower and bring us together,” said NC3 Chair Chris Miller. “NC3 is proud and honored to have worked with the team at Local Return, who have designed a community investment fund that will build and support important local real estate and business projects. Data from related investment crowdfunding campaigns shows remarkable benefits when community members pool capital, including demonstrably more equitable investment of capital, diversity which reflects the community, and more properly capitalized and resilient new businesses and projects.”
The Cooperative expects to begin deploying funds after it raises its first $1 million. Interested parties can sign up at the Cooperative’s website to be notified when the application portal is open.
Prospective investors can learn more at RIcommunityinvestment.com or view the direct public offering.
