Community-Development Nonprofit Set to Issue $100 Million in Bonds

The Local Initiatives Support Corporation has set its sights on a new source of capital.

The nonprofit, better known as LISC, is issuing $100 million in bonds to accelerate its work financing economic development in struggling communities across the country.

It’s not unusual for nonprofit hospitals or universities to issue bonds, but this is believed to be the first time a community-development financial institution has done so.

LISC finances construction of affordable housing, mixed-use developments, clinics, child-care facilities, charter schools, and other projects in distressed areas. It relies primarily on funds invested by financial institutions to fulfill their obligations under the federal Community Reinvestment Act to meet the credit needs of low- and moderate-income neighborhoods.

That capital is usually short-term and comes with restrictions on where the money can be used; for example, a bank in the Washington, D.C., area might make a $1 million investment contingent on the money staying in its home region. By contrast, the money LISC raises via the bonds will be long-term and without such limitations.

“This will be flexible money that we can deploy throughout our footprint without being constrained by the individual preferences of $1 million here, $5 million there,” says Elise Balboni, the organization’s senior vice president of lending. “This is $100 million where we can invest at the term we’d like, the geography we’d like.”

LISC says the bonds are a way for impact investors to put their money to work revitalizing neighborhoods. It hopes that in time other groups financing community development will issue bonds to tap into a new source of funding.

“I love the bond market,” Ms. Balboni says. “Having access to the magnitude of capital that’s available from the public capital markets to meet community-development needs is really, really exciting.”