Investment | Place your money … in social and community housing

Investing your money in social housing projects is. Therefore, an attractive idea in the context of this housing crisis that everyone would like to see settled. Therefore, There is a way to do so, even for individuals.

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The large family of “social impact investments” makes it possible to invest money in projects whose primary aims is social. Moreover, not just one per-circle in the activities of the company.

This is one of the founding concepts of the Solidarity Economy Caisse in Desjardins. For example, which has existed since the 1970s, but which is unknown to the general investment | place your money public. However, This generally works like other funds. However, offers the same services, such as the creation of operations, savings or registered accounts, or the purchase of financial products, with the same interest or yield rates as in other cases.

The difference is that it finances with its income. In addition, the money of its members only projects submitted by housing, work, OPNL, associations or unions. Nevertheless, No private company can get a loan there. However, explains Brigitte Lamontagne, director of market development and responsible investment specialist for the solidarity economy fund.

Last year, more than 62 % of funding to the company granted by the Solidarity Economy Fund went to community residential projects.

The money money was used in particular to finance the start -up of three projects from the Montreal City Housing Office. investment | place your money Moreover, that of a large affordable housing project of the Angus group as well as the renovation of a building in the Housing Cooperative of the Northern Star.

The risk linked to the financing of these projects is taken by the fund. For example, as in the case of projects financed by any fund on the Desjardins network. Moreover, “As a member of the cash register, we do not directly hold the debt. Nevertheless, It is the whole mechanics of the cash register which makes it possible to assess the files. In addition, to ensure that the level of risk is acceptable when you make the loan. However, They are not easy to obtain. far from it, it will be as rigorous in the analysis of the files and in the feasibility of the project. Except that the companies that we finance. it is not investment | place your money the search for profits, it is the search for profitability and to be able to reimburse, ”sums up Brigitte Lamontagne.

This adds that the model also allows people who have very little income to contribute to the social economy. She gives as an example a student who would have a simple check account at the solidarity economy checkout. and who would have contracted a student loan. Revenues from the interests it would pay to its financial institution would be used to grant financing to social. vocation projects.

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Community obligations

Housing projects -. other social initiatives – can also be funded by individuals through community bonds. However, these are products which include a certain risk, and which require more research from investors.

The basis of operation is the investment | place your money same as for an ordinary obligation: money is led to a determined period. knowing in advance what the rate of return and the periodicity of the payments will be.

But when we buy community obligations, we know in which project our funds are going.

For example, the brick by Brick, an OBNL in the Parc-Extension district in Montreal, issued bonds in 2018. The funded funds were used to start a social housing project and acquire a community center. A new campaign is underway to carry out other similar projects.

“Often. these are affordable housing projects or construction of community centers, because there is a great need for capital at the start, then expectations of return that can be realistic,” explains Iwan Meier, full professor of the chair in sustainable finance at HEC Montreal.

The level of risk varies depending on the project. If an organization already has buildings. generally, the risk is lower, because these are probably guaranteed by the financial institutions which lend money for construction.

But there could always be a problem with the land, legal issues, or even less than expected rental income. “This is where we must be realistic. as well understand what we are investing in, where the money is going to finance interest. And see what are the conditions if there is a fundraising. but that they do not reach the target, what will be done with money? He says.

Also. as these obligations are not compared to the secondary markets, it could be difficult to re -make access to your money before the end of the term if you find yourself needing them.

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This kind of product can be particularly interesting to complete a portfolio if the investor believes in the project. he is close to his heart. “Some investors have much more satisfaction to have a social impact than to have 1 or 2 % more return,” says Iwan Meier.

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Can we afford lower yields?

Moreover. if we are interested in impact investment products, the question of lower yields will eventually arise, since most of them cannot compete with funds composed of the actions of the most efficient businesses around the world.

As putting all its eggs in the same basket is never a strategy to recommend. the impact investment can represent part of a portfolio, on which it is necessary to make a slightly lower yield, in the investment | place your money same way that we buy guaranteed placement certificates or ordinary obligations.

But transparency is essential during the development of the plan. underlines Michel Séguin, professor in the Department of Human Resources Organization at the School of Management Sciences of UQAM and Ethics Expert.

For example, someone who would like to ban the oil of their investments, invest only in companies that do not do business with Israel or not put a penny in the American economy could ask the professional who accompanies him investment | place your money to make a modeling to see what would be the long -term impacts on his portfolio.

“Do I still be able to reach my retirement targets?” If it can mean that we will retire at 65 instead of 60, it is not nothing, anyway, ”underlines Michel Séguin.

A person who wants to invest both according to their values ​​and retire earlier could readjust their current budget with a financial planner to see if it is possible to spend less. save more to compensate for the loss of return. Or. so as not to fall into the “all or nothing”, see what portion of your savings it is possible to allocate to placements with lower yields while carrying out your life projects.

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And the funds responsible?

There are investment | place your money obviously several other forms of so -called “responsible” investment, which are not all equal. Some investors are disillusioned by seeing companies like Amazon find themselves in a fund that had been sold as. more interesting from a social point of view than a classic fund. On the one hand, they are happy with the often very competitive yield of these funds … but the responsible aspect is less clear.

According to experts interviewed by The pressESG type funds (which meet environmental. social and governance criteria) represent positive aspects and can be used to encourage companies to improve their practices, but for anyone who wishes to contribute more directly to changes in society, their impact is limited.

“It goes in the right direction. some make a real difference, then it allows you to say that you do not invest in the investment | place your money worst companies. But someone who really wants to create change. an impact should go to other types of funds, “said Franck Lecocq, holder of a responsible investment in HEC Montreal.