In a Nutshell: Like any great American city, Chicago is defined by its people. Chicagoans are committed to supporting the fabric of the city by starting businesses that spur growth and provide meaningful employment. One initiative leading the way is Benefit Chicago, a collaboration innovating the way impact investments support social enterprises. In two short years, Benefit Chicago has raised $83 million toward its goal of $100 million and continues to work with its partners to support the businesses and people of Chicago.
Today’s 24-hour news cycle tends to lead to a certain measure of disillusionment. Turmoil takes so many forms all over the world and is so prevalent, that the good nature of humankind often goes unnoticed.
Take Chicago, for example. Many people might immediately think about the way in which Chicago’s crime rate is portrayed. And, sure, like every large American city, the Midwestern metropolis has concerns in that realm. But the Windy City has much more happening than you’re likely to hear about if you live outside the area.
Make no mistake: human beings are doing good to help each other all over the world. And in Chicago, organizations are working together and actively bringing positive change to their communities by supporting local businesses with impact investments. These investment loans strengthen the communities in which they’re located by stimulating economic growth, and most importantly, creating jobs.
At the center of strengthening Chicago communities is Benefit Chicago, a collaborative initiative that connects impact investors with local businesses who need their support to grow.
“We’re an impact investment fund that bridges the gap between local, social enterprises and the capital they need to support their businesses,” said William W. Towns, Executive Director for Benefit Chicago. “We connect socially minded investors, who believe in their city and in their community, to invest in social enterprises that are creating impact throughout the region.”
To clarify, Benefit Chicago provides loans and investments, not grants. It targets mission-oriented investors looking to invest in established, local businesses which meet certain criteria (more on that later).
The initiative got its start and continues to get support from three well-established foundations that have helped to hone its mission and garner the resources necessary to meet its goals. The Chicago Community Trust, the John D. and Catherine T. MacArthur Foundation, and Calvert Impact Capital have all played pivotal roles in the mission.
“Anytime you’re taking on an initiative of this size and charting entirely new territory, it’s incredibly important that you have a strong foundation,” Towns said. “I could not be more fortunate to have three leading organizations in the space of community support and development, impact investing, and financial instruments to help us meet our goals.”
Partnerships with Established Philanthropic Organizations Power Informed Investments
The aforementioned three organizations collaborated their efforts and philanthropic expertise to create Benefit Chicago. These organizations have nearly 200 years of collective experience within the social sector of Chicago and possess an intimate understanding of the needs of each community.
“Each partner plays a unique role. There is not a lot of overlap of resources, and I think that’s really what makes this collaboration very powerful,” Towns said. “The MacArthur Foundation has 30-plus years of impact-investing experience, and leads our underwriting, which shows a strong statement in the belief in the work we’re doing.”
The MacArthur Foundation has dedicated $500 million of its assets solely to impact investing. Meanwhile, The Chicago Community Trust has been working in partnership with local organizations to improve the quality of life in the region for more than 100 years.
“The Trust’s long history here in the region and its intimate understanding of what’s happening on the ground provides a tremendous amount of support for Benefit Chicago,” Towns said. “Plus, we’re housed here at the Trust, and its back-office support allows us to not have to worry about the logistics of running things in the background. And, of course, the Trust also plays an important role in talking to their donors about the opportunity to invest locally.”
Playing its part, Calvert Impact Capital helps to move capital into communities in need all over the world. Its Community Investment Note is a fixed-income product that helps fund mission-driven organizations and enables investors to direct their funds.
“Calvert’s Investment Note is the glue that holds everything together,” Towns said. “Each of these partners is necessary to make this system work.”
Investments in Community Businesses Yield Real Results
While still relatively new, Benefit Chicago has already invested in six local businesses. Towns told us any one of them serves as an example of the initiative’s goals.
One example is Sweet Beginnings, LLC, a for-profit subsidiary of North Lawndale Employment Network, that offers transitional jobs to area residents facing barriers to employment. The company makes the beelove® family of products made with raw honey from local apiaries located across the region.
“We were able to make an investment in Sweet Beginnings of $500,000, really transforming this organization,” Towns said. “Founding CEO, Brenda Palms Barber, noticed that in her community of North Lawndale, there was a tremendous amount of returning citizens looking for work. Brenda created Sweet Beginnings as a mechanism to give these individuals a fresh start. They’re able to build up their resumé and believe in themselves again. This has dramatically reduced recidivism rates of those working with her versus those who are not.”
Another example of Benefit Chicago’s efforts to help communities is AutonomyWorks, a digital marketing campaign management service. AutonomyWorks is a company that provides meaningful employment for adults with autism. It contracts with national and international companies that need detail-oriented employees to help support their online marketing efforts.
“David Friedman, CEO of AutonomyWorks, whose son has autism, realized that adults with autism have skills that can be transferable into the marketing and analytics field,” Towns said. “His associates are incredibly proud of the work they’re doing, and of themselves. It is a powerful and meaningful way to look at business and the impact it can have on a community.”
Simplifying the Process for Investors and Businesses
Something that differentiates Benefit Chicago from similar funds, is that instead of solely investing in nonprofits, it focuses its efforts on social enterprises — these can be nonprofit or for-profit organizations that address a basic unmet need or solve a social problem through a market-driven approach.
Benefit Chicago aims to invest in the most impactful areas possible and has some criteria businesses must meet to qualify. First, brand-new businesses are not eligible. The initiative requires that a business be in operation for at least three years. This timeframe proves the organization applying for funding has a solid business plan in place and will likely benefit from the investment. It also has a minimum investment of $500,000 and three additional criteria.
“We look to see that the business is focused on wealth building; we really want to see the owners grow assets and revenues. It is critical for our communities to have thriving businesses,” Towns said. “Secondly, we look for job creation; we want businesses looking to grow and hire more people, which, again, benefits the community as a whole. Finally, we look at enhancing job readiness; workforce development and training are incredibly valuable and important to our community.”
Benefit Chicago’s Award-Winning Efforts are Rapidly Helping Underserved Chicago Communities
Benefit Chicago’s actions within the community are already proving to be highly effective. Hundreds of other organizations are working to make the Chicago region a more equitable, prosperous place, and Benefit Chicago has been recognized above the fold for its efforts.
In October of 2017, Benefit Chicago received the Innovation Award for Collaboration. Out of 530 nominees, the organization was chosen for the influential role it plays in improving the lives of Chicagoans. This recognition helps to create greater awareness of the businesses Benefit Chicago helps and those people on the front lines of social change and economic improvement.
“We believe in people creating change within their communities,” Towns said. “Through our investments, we are supporting businesses that are contributing to their communities in extraordinary ways. Our hope is that these investments will help transform these communities beyond the impact of the business.”
Benefit Chicago also does a great deal to inspire investment within the region. After all, these growing Chicago-area businesses are creating jobs and bringing more money into the local economy, and it starts at home.
“We’re creating a model where individuals can support their community through investment,” Towns said. “We’re creating a framework that others can follow that allows this kind of market to thrive. Through that work and that investment, communities prosper and create impact.”