Impact Investing

Investing with IMPACT

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How do local communities thrive and grow? Mostly, it seems, when locals put their hearts where their houses are. “The buy-local campaign is now about 20 years old. It’s mature and has been really effective. What I see growing in popularity now is the invest-local movement. It’s the next expression of those same values.” Brian Smith, Founding Partner and Chief Executive Officer of Rhiza Capital is passionate about making an impact and working with businesses to facilitate change environmentally, ecologically and socially.

Rhiza Capital, headquartered in Sechelt, connects local impact investors to local impact businesses, recognizing that modern investors want to use their capital more thoughtfully than ever before. Through Rhiza, progressive investors have access local and social ventures that generate a measurable, beneficial social or environmental impact alongside a financial return.

In 2018, Rhiza invested in Salish Soils, a Sechelt based company owned by a Sechelt band member. “Before Salish Soils took it over in 2010, the land was leased to a mining company for 20-30 years rendering it basically useless; you couldn’t grow anything there, especially food,” recalls Smith.  “Salish Soils takes backyard tree trimmings, yard waste, fish farm waste and food scraps to create a rich compost. They create soils for their customers - landscape gardeners and hobby gardeners - but they’re also rebuilding the usability and fertility of the land. The impacts are ecological, agricultural and social. Many of their employees are from the indigenous community. This business is a great example of a company making positive change within their community.”

Mesh Food Exchange is an online food-share marketplace and logistics platform that matches safe and nutritious unsold food to secondary markets in an automated and intelligent way. “Bakeries have day old bread, grocery stores have fruit and veg about to go off. Normally that goes to landfill, contributing to ecological damage,” explains Smith. “Mesh connects those products to people who can use them. It can be chefs cooking with it in their sauce, or charities and food banks feeding people who may not otherwise have food. They’re an online connection platform that allows for efficient connection of perfectly good food to people who need it. Another great example of impact being made at a local level with a global effect.” Investment recipients are generally found through Rhiza Chief Investment Officer Sean Melrose, but it’s also possible for local businesses and impact ventures to apply directly.

An advantage for investors of the IMPACTFUL Term Deposit, on which Rhiza has partnered with Sunshine Coast Credit Union, is that it’s very low risk. IMPACTFUL is a 5-year non-redeemable term deposit that earns a guaranteed 2% return per annum, with an opportunity to earn up to 4.25%. This product is a great ft for progressive investors who are interested in affecting social change while planning for their financial future.

There’s a broad spectrum of individuals and institutional investors that make Impactful investments possible. First, high net worth individuals with large investment portfolios break their investments up into different levels of risk and return. Many want their money to do something more impactful, more positive for the community than just making more money off more money. There’s a large impact investor market that are accredited investors who want to make a difference with their wealth, while increasing it.

Second, Institutional investors, community foundations, endowments and universities may wonder how to make a low-risk investment with their large amount of capital resources. An attractive option is an investment that will make a positive difference in the world that their members and beneficiaries will appreciate.

The last group of popular candidates for impactful investing is the millennials. Many of the millennial age group grew up in the time of buy local campaigns, environmental and social justice. They’ve seen damage from generations previous and have a real desire to use their money, even without massive portfolios, to effect positive change. Sectors such as sustainable agriculture, clean technology, microfinance, housing, healthcare, and education are top priorities for this demographic.

“I think institutional or millennial investors are a good fit for the IMPACTFUL term deposit,” shares Smith. “They can’t manage the risk threshold that high net worth investors might have. The fact that the IMPACTFUL investment guarantees the principal and still offers the potential for higher returns, plus the value of making a social or environmental impact is very attractive. We’re meeting a lot of younger investors who want to know where their funds are going. Another demographic we’re seeing interest from is seniors or later boomers who want a guaranteed product, no risk over 5 years and who are invested in their local community – that’s another good fit.”

With an IMPACTFUL term deposit, the synergies of the investors and investees don’t stop when the credit union has finished its paperwork. “The real 360 degrees happens when investors then support these local businesses,” explains Smith. “We publicize who our portfolio is made up of and make information available on the businesses we’re partnering with. When the investor is also a backyard gardener looking for soil or compost and can use Salish Soils, those are big wins for that social venture. The investor helps secure the return on their investment. It’s a win-win.”

The Sunshine Coast has a reputation for being very locally focused, and Smith is confident of IMPACTFUL’s success. “Once we get this product socialized in the investment space we’ll see traction. There’s no downside to it. As soon as people see the impact, with no risk, I think we’ll see a sea change in how investment capital is spent. If we’re going to move the dial on big issues like climate change and food security then we need to be investing in the right businesses with potential to have a scalable, meaningful impact” he continues. “For Coasters to invest local it’s not a huge leap of faith, it’s already ingrained in our values. I hope this opportunity gets people talking.”

Proportionately, the Sunshine Coast is moving as fast if not faster than other parts of the world in terms of social impact businesses and enterprises popping up and growing. “10% of the Impactful term deposit gets invested into Rhiza, who can invest anywhere in BC. So Rhiza isn’t just on the Sunshine Coast. We go to other parts of the province. We have a broader landscape where we can attract investments from and deploy capital to. We want to ensure we’re doing responsible investing on behalf of investors and that means finding the best ideas, not just working within a geographic context. We want to make sure we’re getting strong returns and good impact for our customers. First and foremost, we want to protect the investment capital for risk, return and impact.”

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