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Last Updated: Friday - 09/24/2010

Week of November 29, 2004

God's Bank backs high risks

Canadian Alternative Investment Coooperative grants low-interest loans to non-profit ventures

By RAMON GONZALEZ
WCR Staff Writer
Edmonton

Call it God's Bank, if you want. The fact is that the Canadian Alternative Investment Cooperative (CAIC), an investment firm formed in the 1980s by a group of religious communities, has gained a reputation over the years for lending money at low interest to non-profit groups considered high risk by the big banks.

"We do consider ourselves a lender of last resort," explained Valerie Lemieux, outreach coordinator for the Toronto-based CAIC.

"Essentially the groups that come to us have generally being turned down by conventional financing, or they might be able to get financing from a bank but maybe the terms are such that it is really not a viable solution."

Part of the CAIC's mandate is to support affordable housing and social housing, but it also supports a variety of other projects. Through its social mortgage fund, CAIC has invested in mortgages on properties purchased by non-profit organizations to fulfill their mandate.

Shelters, soup kitchens

In addition to housing cooperatives, CAIC's list of borrowers include youth group homes, homeless shelters and soup kitchens.

In 1995, CAIC loaned money to the Edmonton-based Bishop Savaryn Out-of-School Care Society to provide daycare for low-income and middle class parents in the inner city.

Two other Edmonton groups that have approached CAIC after being turned down by conventional banking institutions are the Inn Roads Housing Cooperative and the Prostitution Awareness and Action Foundation.

"We want to provide support to groups that are providing services that have a social benefit to the community."

- Valerie Lemieux

Inn Roads got its start in 1985 thanks to a CAIC financed mortgage and it recently got a second mortgage from the investment cooperative to repair the five houses it owns.

The Prostitution Awareness Foundation has just received a $177,000 mortgage to buy and repair the building where it used to rent space.

By providing a mortgage to Inn Roads, CAIC is fulfilling its mandate to provide affordable housing to low-income families in inner city neighbourhoods, Lemieux said.

By providing a mortgage to the Prostitution Awareness Foundation, CAIC is helping the organization acquire a stable base of operation and a future asset.

"We would not support a for-profit commercial venture; that's not our focus," Lemieux said. "We want to provide support to groups that are providing services that have a social benefit to the community."

CAIC was established in the early 1980s by a number of Catholic religious communities who pooled their resources to make investments that support positive social change and promote alternative economic structures.

CAIC has since grown to 48 members, including members of the United Church and the Quakers. A board of directors that is elected annually from among representatives of the religious communities runs the operation.

An advisory committee is made up of members of the business community and two part-time contract workers who provide office and financial management support it.

Looking for business

"We are a $7-million fund and currently we have less than half (that amount) actually out working," Lemieux noted. "So we are trying to increase that; we want more money out working in communities."

Last year CAIC made about 13 loans worth over $1 million. It has made about 50 loans over the past 20 years.

CAIC has loans in its loan portfolio as low as three per cent and as high as eight per cent.

"We have a rate of interest rates that are charged depending upon what the perceived risk is and also what the lending rate is at a conventional lending institution," Lemieux said.

The rate of return for the religious communities was 4.8 per cent last year; on average it is between three and four per cent. In her 13 years with CAIC, Lemieux hasn't seen more than a couple of bad loans, which she considers an excellent record.

No fly-by night organizations

"We have been pretty lucky," she said. "We have a very good default rate. We've never actually had to call a loan and I think generally groups want to work with us to resolve any financial difficulties that they might have."

Loretto Sister Monica Spearin, chair of CAIC's board of directors, said CAIC is careful when lending money.

"We want to make sure that projects are viable, that we are not putting money into something that's not going to work," she said from her Toronto residence.

"We help organizations that want to do something very good, that when they go to the bank to ask for a loan they usually get rejected. But we also look behind it a bit; we look to see what this project is going to do. We look to see who is on the board. We don't put money into fly-by-night organizations."

CAIC can be contacted by writing at 146 Laird Drive, Suite 111, Toronto, Ont. M4G 3V7, or by phoning toll-free 1-866-241-2242.

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