ImpactPHL Perspectives, Volume 3: Scaling Capital for Impact Through Fixed Income Investments

About ImpactPHL Perspectives:

If you are curious about pursuing financial returns while influencing the positive growth of Greater Philadelphia and the world at large, then welcome to the conversation. ImpactPHL Perspectives is a multi-part series which explores the many facets of the impact economy in Greater Philadelphia from the perspectives of its doers, movers, shakers, and agents of change. Each volume is written directly by a leader in this space, to discuss best practices and share lessons learned, while challenging our assumptions about the returns - financial and societal - on engagement in the impact economy. For more of ImpactPHL Perspectives, check out the ImpactPHL Blog.

Don Hinkle-Brown, CEO

Don Hinkle-Brown, CEO

By Don Hinkle-Brown and Andy Rachlin, Reinvestment Fund

Andy Rachlin, Managing Director

Andy Rachlin, Managing Director

Reinvestment Fund has been reimagining how to finance community assets since our founding in Philadelphia 32 years ago. We started with a Pennsylvania promissory note program, our first fixed income investment product, which drew our earliest investors—individuals and faith-based institutions—who pooled their savings and worked with us to manage them in a way that delivered both social and financial returns. Today, we are a large and successful community development financial institution (CDFI) with 865 investors and $1 billion in managed assets. With investments across the country and a growing need across low-income communities to connect to economic vibrancy, we continue to explore new ways to scale the capital for our impact and the impact of our capital. 

A $50 million bond to connect mainstream capital to low-income communities

Last May, we announced our latest innovation to increase access to critical resources and opportunities in struggling communities. We issued a $50 million public bond offering to help us further our mission to build wealth and opportunity for low-income places and people. Our bonds were an unsubsidized market transaction, rated AA- by S&P. This bond issue represents one of the first examples of connecting CDFIs to mainstream capital markets. Demand for these general obligation bonds far exceeded our expectations—leading our offering to be well oversubscribed. It was a testament to the demand among institutional investors for viable options to channel their capital towards impact, while also receiving market-rate returns. The proceeds of these bonds support small businesses, grocery stores, childcare centers and affordable housing in struggling communities here in Philadelphia and beyond. These new community resources offer important opportunities to children and families, and will create jobs that strengthen local economies—ensuring that the capital we deploy has profoundly positive ripple effects for generations to come. 

An opportunity to diversify and increase financial tools across the impact investment landscape

The high demand for our bond also demonstrates a strong interest in fixed income investment products among certain impact investors, and is an important market signal indicating a need to diversify existing impact-investing options. This diversification is especially vital as impact investing becomes a well-known field that appeals to a more varied array of investors. There has been tremendous growth in this field since the 1970s when CDFIs began to deploy patient capital to invest in underserved communities with the expectation of both social and financial returns over time. Despite this growth, today’s impact investors still rely on a relatively narrow selection of financial tools. For a number of reasons, venture capital and private equity investment approaches dominate much of the impact investment space. Comparatively, in the larger world of capital markets, venture capital and private equity represent a small segment among the many possible approaches to capital deployment. If impact investing is to continue to scale, it must begin to mirror the breadth of the capital markets and offer investors opportunities across a wide range of products with varying risk-adjusted returns, cash flows, and tenors—just as the main capital market does.  

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Our general bond issue was a first step toward expanding the financial tools—and therefore the amount of capital—available to structure impact investments. Fixed income products such as these bonds have greater potential to scale than venture capital or private equity.  The oversubscription of our bond is a keystone in the bridge connecting impact investing to the immense potential of capital markets.

The successful bond issuance also contradicted a widely held belief that investments mandated through the Community Reinvestment Act gave CDFIs access to capital at concessionary rates. Absent market data and market executions, too many CDFIs and their investors presumed that mere access to capital was a subsidy, and that CDFI cost of debt capital was below market rates. Our bond received rates that were the same or better than those from CRA lenders, disproving this perception. This pricing also counters the too-common presumption that “impact” deals are necessarily riskier than “regular” deals.

Fostering an impact investing ecosystem in Philadelphia and beyond

We are particularly excited to be pioneering this new approach in Philadelphia, our home and a region where we have channeled over $112 million in impact investments in the last three years alone. We are also proud to be part of a region where ImpactPHL and other leaders are fomenting a movement to develop a more diverse and connected impact investing ecosystem. We hope that our bond issuance builds momentum for this movement by lending further credence to ImpactPHL’s motivating belief that “investors, corporations, and institutions can do well while simultaneously doing good.”   


Innovations that create new pathways for capital are critical to the sustainability and scalability of impact investing. However, it is also essential that we pay attention to building investable opportunities.  Demand for impact capital is not wholly self-generating and requires capable organizations that can identify social or environmental needs and design business models to address those needs in a way that creates an investable proposition.  Seeding and growing investable opportunities is vital to the ongoing growth of the impact investment industry and will require strong partnerships with both the philanthropic and public sectors.  Effectively developing programs that address social and environmental needs to create thriving, healthy communities is even harder than building new capital products. It is essential that we on the investment side also support such efforts wherever we can.

As an impact intermediary, our role is to find a balance between nurturing demand for impact investment and stoking the supply. The ultimate goal of any innovation we foster, including this significant step to connect CDFIs to capital markets, must always be to support partners working on viable, impactful projects in underserved communities. Expanding the impact investing toolkit to include fixed income investment products is directly in service of this goal. Right now, CDFIs in the US manage approximately $108 billion in assets. By gaining access to the $39 trillion US bond market, we can open up a source of flexible and efficient capital at a scale previously unfathomable for social impact. 

Over the last six years, we have invested $900 million in projects that help neighborhoods become stronger, healthier, and more resilient—nearly matching our $1 billion of investments over our entire first 25 years. This year, at Reinvestment Fund, we expect to finance $150 million in projects that will bring affordable homes, access to health care and nutritious food, high-quality educational options and jobs opportunities to struggling communities. Building a bridge to the capital markets dramatically increases our potential—and the potential of the entire social sector—to make a positive, enduring impact for communities across the country. Our general bond issue is an early and exciting milestone in this journey. We look forward to many more.

Donald Hinkle-Brown, President and CEO, leads a staff of 80 highly skilled financial experts, research analysts, and other professionals at Reinvestment Fund, a catalyst for change in low-income communities. He is widely recognized as an expert in mission investing and capacity building. He currently serves on the Community Advisory Council for the Federal Reserve Board. Closer to home, he also serves as board member to Reinvestment Fund affiliate PolicyMap.

Andy Rachlin serves as Managing Director for Lending and Investment, overseeing business development, underwriting, and transaction structuring across the asset classes with a particular focus on short and medium-term debt instruments. He also takes an active role in new product development. Before coming to Reinvestment Fund in 2012, Mr. Rachlin held roles as Interim Chief of Staff for the School District of Philadelphia and Deputy Chief of Staff for Economic Development for the City of Philadelphia.