Hawaiʻi Community Foundation doubles investment fund to support housing, food systems

The Hawai‘i Community Foundation is doubling the size of its Social Impact Investment Fund to $20 million, a move intended to increase accessible capital for affordable housing, food systems and small business lending across the state, including Maui County.

The foundation’s Board of Governors recently approved allocating an additional $10 million from the organization’s endowment to the fund.

Launched in 2019, the fund operates differently than traditional philanthropic grants. Instead of one-time donations, the foundation provides low-interest loans to Community Development Financial Institutions and other intermediaries. These organizations then lend that capital to local projects, such as affordable housing developers or agricultural operations.

According to the foundation, the model allows dollars to be repaid and reinvested into subsequent projects.

Michelle Ka‘uhane, the foundation’s chief operating officer and executive vice president, noted that while grants provide immediate support for services, the investment fund targets initiatives capable of generating financial returns.

“Grantmaking remains a vital tool, and with the addition of impact investing to our toolbox, we have two different strategic approaches to meet Hawai‘i’s challenges,” Ka‘uhane said. “Grants remain essential for critical services and programs. But for initiatives that can generate returns, like small business loans or affordable housing development, impact investing allows us to stretch every dollar further and create sustainable, long-term solutions.”

How the fund operates

Community Development Financial Institutions serve as a bridge between traditional commercial banks and microlenders. They often provide financing to borrowers who might not qualify for conventional bank loans.

Since its inception, the Social Impact Investment Fund has deployed $7.5 million. The loans typically carry terms of five to 10 years with interest rates between 1 and 2%.

The foundation reports a 0% default rate to date. Additionally, assets under management by the participating financial institutions have grown from $18 million to $87 million.

Impact on local food systems

One of the beneficiaries of the fund is the Hawai‘i ‘Ulu Cooperative, which works to strengthen the state’s food security.

Dana Shapiro, chief executive officer of the Hawai‘i ‘Ulu Cooperative, said the capital has allowed the organization to scale up significantly.

“HCF’s Social Impact Investment Fund has provided flexible, mission-aligned capital that’s helped the Hawai‘i ‘Ulu Cooperative scale our operations,” Shapiro said. “The funding has enabled us to expand from 500,000 pounds to a projected 2 million pounds of Hawai‘i-grown staple crops annually, invest in upgrades at our two Hawai‘i Island facilities, and build aggregation and processing capacity on O‘ahu, Maui, and Kaua‘i, ultimately strengthening Hawai‘i’s food security and supporting farmers across the pae ‘āina.”

Participating organizations

The fund currently supports nine local partners, several of which operate active programs in Maui County: Council for Native Hawaiian Advancement, Feed the Hunger Fund, Hawai‘i Habitat for Humanity, Hawai‘i Community Lending, Hawai‘i Community Reinvestment Corporation, HHOC Mortgage, Hawai‘i Investment Ready, Hawai‘i ‘Ulu Cooperative, and the Rural Community Assistance Corporation.

Mary Spadaro, co-founder of Slow Money Hawai‘i, said the expansion allows donors to participate in a cycle where money circulates back into the local economy.

“I’m thrilled to see the Hawai‘i Community Foundation leading in this space and making impact investing part of its investment strategy,” Spadaro said. “It’s exciting that donors can participate too, directing charitable dollars into local businesses that repay and reinvest in Hawai‘i’s future. This is a powerful tool for growing our local economy and creating a more resilient Hawai‘i.”

The fund is part of the foundation’s CHANGE Framework, specifically targeting the “Community-Centered Economy” sector. This approach also encompasses the House Maui Initiative and the ALICE (Asset Limited, Income Constrained, Employed) Initiative.