Across the country, lower-income Americans face common barriers to building savings and investments, from insufficient experience with money management to a lack of financial products suited to their means and desires. These conditions prevent an ever-growing number of families from building financial resilience—according to the 2017 book “The Financial Diaries,” 40 million Americans have less than $400 in savings. These Americans are vulnerable to even small financial setbacks. Additionally, renters and minority populations make up a disproportionate share of asset-poor households, and their numbers are rising due to the intransigent challenges of intergenerational poverty, an eroding middle class and a growing racial wealth divide.
With the situation growing here in Portland and the nation, Mercy Corps took action. The nongovernmental aid organization sought to use human-centered design principles to understand the motivations of low-income and renter populations and the obstacles that hinder them from taking personal financial action, such as long-term investing, that could improve their lives.
The CIT solution
From that research, a product called the Community Investment Trust (CIT) emerged. Headed by the Mercy Corps Global Innovations Team, the CIT is an innovative financial inclusion tool designed to provide a low-dollar investment opportunity in a neighborhood commercial property exclusively to local residents. Investors make low-dollar ($10-$100) monthly investments and earn short and long-term returns through an annual dividend and share price change annually.
The first CIT project, the East Portland CIT Corporation, has given 300 to 500 families a long-term investment opportunity in a commercial-retail building. (The property is Plaza 22, with 27 business and nonprofit tenants that reflect the diversity of the neighborhood.) Through this project, the CIT declared a 9.6 percent dividend in its first year, and the share price will increase, based upon Mercy Corps’ annual appraisal, from $10 to $14.57 on January 1, 2019.
The Community Investment Trust has been effective because it’s both a wealth-building path and a community economic development strategy. The Mercy Corps Global Innovations Team foresees the CIT having success on a national level, and the organization intends to touch 1 million first-time, low-income investors nationwide in five years.
Learn more about the CIT on its website. Weinstein PR was proud to help Mercy Corps and the CIT with media and influencer relations around the launch and first dividend payment by the CIT, as well as the creation of an infographic to explain how the tool works.