Rebuilding Better Together: VCIB
Celebrating International Cooperatives Day: Coops play a central role in revitalizing the economy as we make our way past this pandemic.
For non-profits, businesses, and social enterprises, the COVID-19 pandemic has not been easy. For many charities, the needs of their clients increased dramatically, owing to job losses, housing insecurity, and health concerns. And for social enterprises and businesses, the tune was the same—supply chains were disrupted, shoppers needed to buy curbside, and in some cases, whole business units were rendered obsolete.
In response, the team at Vancity Community Investment Bank (VCIB), Canada’s first values-driven bank, shifted into high gear. They worked with existing clients like the Parkdale Neighborhood Land Trust (PNLT), to help them access new affordable housing, and they created new products, like the Unity GIC, to help clients maximize their interest rates without sacrificing their values.
While the speed of innovation was new, the orientation toward the work was the same, drawing inspiration from the co-op roots of VCIB’s parent company, Vancity Credit Union, to drive positive change in local communities across the country.
Building Community Wealth with PNLT
For the Parkdale Neighborhood Land Trust, COVID-19 was a huge blow. The mission of the grassroots community non-profit is to acquire properties in the racially diverse Parkdale neighborhood and offer them as long-term affordable housing held in trust by the community. But acquiring properties during the pandemic was not easy.
“One of the shocking things about the pandemic is that asset owners have only been lightly affected— asset prices have often gone up,” said Lars Boggild, senior manager of banking and investments at VCIB. “For a community land trust that is focused on acquiring property that can be held perpetually in community hands, and for community benefit, PNLT is faced with a challenging position. The market is rising in a way that affordable housing seems forever out of reach.”
With the urgency of this new reality in mind, VCIB and PNLT were able to draw strength from their existing partnership. In October 2020, several months before the pandemic hit, the pair created the Preserve and Protect Guarantee Program, a bridge financing tool that offers PNLT access to quick capital, enabling them to move nimbly on the acquisition of local buildings. These funds allow PNLT a “bridge” until they are able to access longer-term financing from groups like the Canadian Mortgage and Housing Corporation.
On April 16, 2021, at the start of the third wave of the pandemic, this tool enabled PNLT to secure a second residential building—36 units of affordable housing to be preserved for working-class residents of the southwestern Toronto community.
Supporting Mission-Aligned Investments for Values-Aligned Partners
In addition to supporting charities like PNLT through the pandemic, VCIB also launched a new term deposit, the Unity GIC, to help mission-aligned partners get the most out of their savings.
“There are organizations, particularly in the social sector, that have resources but are still worried about the uncertainty of the future,” said Boggild. “They need every dollar to stretch as far as possible, and if they are investing, they need the best bang for their buck.”
The Unity GIC is a “premium-rate” product, said Boggild, offering investors 3% interest for a 1-year fixed term. It is also mission-driven, investing only in values-aligned non-profits and businesses who needed capital to sustain their organizations through the pandemic.
One investee, for instance, was Carmina de Young Inc., a leader in sustainable Canadian fashion. During the pandemic, the company received a loan from VCIB to increase their production of personal protective equipment (PPE) to support healthcare professionals during the pandemic.
“With the Unity GIC, we really tried to create an instrument that offers non-concessionary rates that are as good, or better, compared to conventional banks’. What is more, it creates an investment that is aligned with people's values,” said Boggild.
Building Sustainably Toward the Future
In the coming months, PNLT will seek long-term financing to support the acquisition of the property they acquired in April. Once successful, they will be on the lookout for their next property, endeavouring to preserve additional homes for working class residents of the Parkdale community.
At VCIB, things are similarly forward-looking. Several months ago, the Unity GIC sold out, demonstrating the strong demand from non-profits, social enterprises and businesses to partner with the values-driven lender in using finance as a tool to build a sustainable future.