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Community Capital vs Traditional Investing: The Pathways to Local Prosperity

Written by Team Worthy | June 27, 2024

In today's investment landscape, distinguishing between community capital and traditional investing is crucial for unlocking local prosperity. While traditional investing prioritizes global financial returns, community capital focuses on local economies and social impact. By understanding these distinctions, investors can leverage community capital to foster sustainable development and empower local communities effectively while still benefiting from strong returns.

The Rise of Community Capital

Community capital is gaining momentum as an investment trend that champions local communities and businesses. With increasing awareness of how investments can shape local economies, there is a growing preference for community capital to foster local prosperity. 

This shift is driven by a commitment to creating a sustainable and inclusive economy. Community capital investments prioritize projects that deliver positive social or environmental impacts alongside financial returns. This approach enables investors to align their financial decisions with their values and actively contribute to their community's welfare.

"Community capital investments prioritize projects that deliver positive social or environmental impacts alongside financial returns"

Thanks to technological advancements, it's now easier than ever to access investment platforms that offer these types of opportunities. These innovations let individuals directly invest in local businesses and community projects, skipping traditional financial institutions. This democratization of investment gets more people involved in their communities' growth and development!


Benefits of Community Investing

Community investing offers a range of benefits for both investors and the neighborhoods they support. Here are some key advantages of community investing:

  • Economic Impact: By investing in local businesses and projects, individuals can directly contribute to the economic growth and development of their communities. This can lead to job creation, improved infrastructure, and increased economic opportunities for local residents. 
  • Social and Environmental Impact: Community capital investments often prioritize projects that have a positive social or environmental impact. This allows investors to align their financial goals with their values and contribute to the well-being of their communities.
  • Financial Returns: While community investing focuses on more than just financial returns, it is still possible to generate strong returns from these investments.
  • Increased Local Control: Community investing allows individuals to have a direct say in how their investments are used and to support projects that align with their priorities. This increased local control can lead to more accountable and transparent investment practices.

Challenges and Opportunities for Local Prosperity

Community investing offers benefits that can boost local prosperity. Even though there may be fewer choices compared to traditional investments, this can actually make it easier to focus on high-impact projects that match your values. Plus, spreading the word about community investing helps fill in knowledge gaps and creates a supportive environment where local initiatives can really take off.

"[Community] capital represents the "glue" that holds a community together and whose presence can spur the type of economic growth that brings benefits to the entire community" - Purdue Edu.

Scaling community capital projects opens up chances to get creative and adapt successful local models for bigger impact, possibly transforming entire regions. Building strong collaborations and partnerships within the community is key—it allows everyone to pool their resources and expertise, boosting efforts to grow the economy and empower local areas. By jumping on these opportunities, community investing can truly become a powerful driver for sustainable development and local prosperity.

Tips for Individuals Interested in Supporting Local Prosperity

If you are interested in supporting local prosperity through community investing, here are some tips to get started:

  • Research: Take the time to research different community capital opportunities and online funding platforms that support them. Look for projects that align with your values and have a positive impact.
  • Diversify: Consider diversifying your community capital investments to spread risk and maximize impact. Look for a mix of projects in different sectors (real estate, businesses, energy, etc) and locations.
  • Engage with the Community: Get involved in local initiatives and organizations that are working towards local prosperity. By engaging with the community, you can gain a deeper understanding of the challenges and opportunities for investment.
  • Seek Professional Advice: Consider consulting with a financial advisor or investment professional who specializes in community capital. They can provide guidance and help you make informed investment decisions.

Worthy Bonds is a great example of successful community investing

Worthy (worthybonds.com) sells bonds that support local residential real estate projects. Sales from the $10 bonds are aggregated and then lent to developers as a short term loan. Since the interest rate on these loans exceeds the bond yield (currently _xx% until _expdate), Worthy bonds earn their bondholders a highly competitive return while also supporting local community growth. Click here to learn more about Worthy.