Portland, OR faces significant challenges with regard to wealth inequality. In Multnomah County, Oregon, which includes Portland, 28 percent of households are asset poor, meaning they would be unable to meet basic needs for three months without regular income. The figure is even higher - 40 percent - for households of color. Recognizing the scale of local wealth disparities, Mercy Corps, a leading global humanitarian organization, began dedicating resources to develop a new model for community wealth building.
The Community Investment Trust (CIT) is a commercial real estate investment product designed to meet the needs of low- and moderate-income households. In 2017, Mercy Corps led the creation of the first CIT: the East Portland CIT Corporation (EPCIT). EPCIT allows residents in four surrounding zip codes to purchase low-cost, loss-protected shares in Plaza 122, a commercial property in East Portland.
Before becoming a CIT investor, community members complete a proprietary financial action course, “Moving From Owing to Owning,” focused on budgeting, goal setting, and investing. Over time, community investors build wealth through annual dividends and the appreciation of their shares. The appreciation occurs as EPCIT pays down its mortgage on Plaza 122 and the property’s value increases.
Keys to EPCIT’s success included its diverse mix of small business and nonprofit tenants; its ability to leverage external expertise in areas like banking, law, and economic development; its commitment to community engagement; and the careful design of the CIT model.
Obstacles to the project’s success include building trust with community members; addressing doubts from experts and institutional actors; and the use of a complex financial product, which can limit its options when searching for a banking partner.
“When the opportunity came up to buy my first (and dream) house, the now over $4,700 value of my investment [in the CIT] made a real difference towards the down payment. I look forward to reinvesting in the CIT in the future and 100% recommend others to join the CIT since it is very helpful for my Community.”
Fabiola, East Portland CIT Corporation Investor
“Working for the bank I wasn’t able to give back. [I was] always told ‘you’re spending too much time with customers… But the CIT allowed me the opportunity to reach into my soul and actually help other people learn about money.”
Jenni, East Portland CIT Corporation Board Member and Investor
“It has been a wonderful way to feel connected to my community and a great way to save money.”
Beverly, East Portland CIT Corporation Investor
Results and Accomplishments
Between 2017 and 2024, the value of shares in the East Portland CIT (EPCIT) nearly doubled, from $10 to $19.65.
Ninety percent of 2022 EPCIT investors resubscribed to invest again in 2023, indicating a high level of satisfaction.
Between 2017 and 2022, the annual dividends for investors averaged a 7.6 percent return.
Building wealth for low- and moderate-income households: The Community Investment Trust (CIT) is a real estate investment model designed to help low- and moderate-income households build wealth. Since 2017, 328 investors have joined the East Portland CIT (EPCIT), receiving annual dividends that have averaged a 7.6 percent return. Over the same period, 80 investors have withdrawn over $146,000 for a range of uses, including down payments on homes, college tuition, small business development, and emergency expenses.
Providing practical financial education: Before investing in the EPCIT, community members participate in a financial action course called, “Moving From Owing to Owning.” After taking the course, over 85 percent of investors reported using these new skills to meet their financial goals. Over the EPCIT’s lifespan, an average 88 percent of investors have resubscribed each year, indicating the value they see in the model.
Revitalizing a commercial property for the community: When Mercy Corps first purchased the investment property at the heart of the EPCIT, known as Plaza 122, it was in foreclosure and had significant deferred maintenance needs. Since, the EPCIT has upgraded the property and reduced the vacancy rate from 33 percent to under 10 percent.
Expanding the model across the country: As a result of the EPCIT’s early success, it has received significant coverage in both popular media and from policy research organizations, including NPR, the Urban Institute, and the Brookings Institution. Communities around the country have taken notice, with 19 groups exploring the replication of this model in their areas. In 2022, the JPMorgan Chase awarded $1.75 million to the CIT and eight cities to support them in developing localized implementation plans.
What was the challenge?
Economic growth not shared across the city: During the 2010s, Portland saw significant wage growth. Unfortunately, disparities between both racial and ethnic groups and renters and homeowners persisted. By 2020, renters in Portland still earned less than half of homeowners. Similarly, while incomes increased significantly for white households, they grew only minimally for Black and Asian households.
High rates of asset poverty: Unfortunately, similar trends held true for household wealth in the Portland area. Across Multnomah County, which includes Portland, 40 percent of households of color were considered asset poor in 2019, compared to 24 percent of white households. With little wealth, asset poor households have limited financial security, and often struggle to pay for their basic needs when they experience a loss or significant reduction in income.
Limited investment options for low-asset households: As in other communities around the country, wealth building opportunities were limited for low-asset households in Portland. This was especially the case in real estate, which often requires a significant up-front investment. However, Mercy Corps’ Community Investment Trust (CIT) team knew from its past work on wealth building that many low-asset households wanted to invest in real estate.
What was the solution?
A new investment model: The Community Investment Trust (CIT) is a real estate investment model created by a team within Mercy Corps to meet the needs of low- and moderate-income households. The CIT offers community members the opportunity to purchase low-cost, loss-protected shares of a property, as long as they live in a surrounding zip code. These investments are liquid, so community members can access them at any time.
Creating an investment opportunity in East Portland: In 2014, Mercy Corps purchased Plaza 122, a commercial retail property. Since then, 328 households have invested in the East Portland CIT Corporation (EPCIT), all through monthly investments of between $10 and $100. As the EPCIT has paid down its mortgage, and the value of the property has increased, investors have received both short and long-term returns through annual dividends and the appreciation of share prices.
Providing a financial action course: Before investing in the EPCIT, community members must take a peer-led financial action course called, “Moving from Owing to Owning.” Facilitated by trained community investors, the course focuses on goal setting, budgeting, understanding the basics of investing and risk tolerance, community building and networking, and investors’ relationship to a CIT. After completing this 6-8 hours course, community members are offered the opportunity to invest in the EPCIT.
Promoting equitable community development: After purchasing Plaza 122, the EPCIT addressed deferred maintenance on the property and began improving visual aspects of the property. With the support of professional property managers, the EPCIT stabilized leases for existing tenants and began identifying new tenants.
What were the key components of the program’s design?
Taking a place-based approach: The East Portland Community Investment Trust Corporation (EPCIT) is a place-based wealth building strategy, available only to the residents of four neighboring zip codes. These zip codes were selected to create a catchment area that included a large number of renters and other low-asset households, who were the target populations for this project. The proximity between the investors and the investment property benefits the EPCIT, as investors can regularly visit Plaza 122, increasing their understanding of and trust in the model. Community investors can also more easily participate in EPCIT-sponsored events and become customers and clients at Plaza 122’s small business and non-profit tenants.
Securing a direct pay letter of credit: Access to a direct pay letter of credit is central to the success of the CIT model. The letter of credit enables the EPCIT to receive an exemption from state and federal securities registration requirements, which makes the project financially feasible. The letter of credit also enables the EPCIT to issue shares that are both liquid and loss-protected, two key features that make it attractive to low- and moderate-income households.
Offering small-dollar investments: When Mercy Corps surveyed households about why they rarely or never invested, the households pointed to the lack of financial products for those with little to invest at any given time. By offering residents the opportunity to invest for as little as $10 per month, the CIT model creates an opportunity for low-wealth households to invest in real estate, a type of investment that typically has a high barrier to entry. One reason these small-dollar investments are feasible is the CIT’s custom-built investment platform, which allows the EPCIT to efficiently manage community members’ investments, re-subscriptions, and tax documentation.
Investor-led financial literacy training: Before becoming investors, all community members take part in the EPCIT’s financial action course, “From Owing to Owning.” Each course is facilitated by a trained community leader, who is compensated for their time. To become a facilitator, an investor must complete a 6-8 hour “Train the Trainer” course to prepare them to educate potential investors on how to make informed decisions about their personal finances. As community investors themselves, these facilitators are well-positioned to build trust with potential investors.
Who were the key stakeholders?
Mercy Corps: Mercy Corps, an international humanitarian and development organization based in Portland, incubated the CIT model. Leveraging internal expertise on asset development for low-income households, and after extensive community engagement, the organization sponsored the implementation of the first CIT, the East Portland CIT (EPCIT).
Orrick, Herrington & Sutcliffe: Orrick is a public finance law firm with an office in Portland specializing in municipal bonds and public finance law. During the incubation period for the CIT model, Orrick began providing pro bono legal assistance to the CIT team. Their work was central to identifying a federal securities exemption in Section 3(a)(2) of the Securities Act of 1933 that made the CIT model suitable for unaccredited low- and moderate-income investors.
Education and service program partners: Throughout the incubation and implementation stages, Mercy Corps and the EPCIT have leveraged the support of student interns from Reed College, Willamette University’s Atkinson Graduate School of Management, and Portland State University’s School of Business. Students at Portland State have conducted impact evaluations of the EPCIT’s work in 2021 and 2023. AmeriCorps members also provided EPCIT with increased capacity to conduct outreach and track the program’s impact.
Community-based organizations: When the EPCIT began operating, it partnered closely with other community-based organizations, like houses of worship, neighborhood groups, and affordable housing providers. Organizations that support small businesses and local immigrant communities, like the Division Midway Alliance and Rosewood Initiatives, were especially strong partners. These partners played a key role in connecting the EPCIT to the residents who would later become its first investors.
Plaza 122 tenants: The commercial and retail tenants at Plaza 122 have become key supporters and contributors toward the EPCIT. Over time, the EPCIT demonstrated the viability of its model to the original tenants, and it brought on new small business and nonprofit tenants who had interest in the model. Several of these tenants have become EPCIT investors or instructors in its “Moving from Owing to Owning” course.
East Portland residents: While designing the CIT model, Mercy Corps conducted surveys and listening sessions with area residents. Concerns that residents raised, like the need to quickly access invested funds, later informed key elements of the CIT’s design. Once the EPCIT launched, over 300 residents became investors, with several also serving in other leadership roles for the CIT (e.g., as class facilitators and on an advisory board).
What factors drove success?
Developing a diverse mix of tenants: The EPCIT intentionally sought new tenants that would diversify the tenant mix in Plaza 122. With both small business and nonprofit tenants, Plaza 122 houses a variety of services and functions for the community, from hair care to community health, accounting, tax preparation, and transportation services. This diverse tenant mix attracts a broader swath of the community, increasing residents’ familiarity with the CIT, and has made Plaza 122 more resilient to economic shocks, such as during the COVID-19 pandemic.
Leveraging external expertise and capacity: Early in designing the CIT model, the CIT team identified the need to secure additional expertise in areas like real estate, finance and banking, and securities law. With limited financial resources available, the ability of the CIT team, and later the EPCIT, to recruit volunteers and pro-bono experts in these areas proved key to incubating and implementing the CIT model.
Robust community engagement: The EPCIT recruited a strong set of initial investors through its outreach activities and relationships with community-based organizations. These early investors proved critical, as many of them became advocates for the EPCIT in their respective communities, which drove much of the project’s early growth.
A product that matches investors’ needs: When designing the CIT model, Mercy Corps surveyed renters and low-income residents about their investment goals and habits. These data demonstrated community members’ interest in investing in real estate, but identified cost and knowledge about investments as key barriers. By offering a low-cost, loss-protected, liquid security paired with a financial action course, the CIT met the needs of its target investors, making it popular among the socioeconomically diverse residents of East Portland.
What were the major obstacles?
Building trust with community members: From the start, the CIT model was designed for groups that have disproportionately less wealth, such as renters, recent immigrants, and people with disabilities. Early on, some members of these communities expressed skepticism toward the CIT model, which had not been implemented elsewhere. However, Mercy Corps’ positive reputation, and the EPCIT’s success recruiting community members as advocates, enabled the project to gradually build trust with area residents.
Doubt from experts and institutional actors: As the CIT team at Mercy Corps began speaking with public officials and experts in law, banking, and real estate finance, many expressed doubt that low-income residents would invest in the CIT. Others highlighted various legal and regulatory barriers a CIT would face, which the CIT had yet to resolve. Similarly, as Mercy Corps sought initial funding from private foundations, none were willing to commit to a complicated and untested model.
Using a niche financial product: To sell an investment, state and federal law requires that it be evaluated and registered by a government agency, a process that would have been financially unworkable for the CIT model. The EPCIT received an exemption from this requirement, as it guarantees the securities it issues through a direct pay letter of credit with a bank. However, the letter of credit is a rarely used community development financial product, which has limited the EPCIT’s options when searching for a banking partner. Despite this challenge, the EPCIT partnered with Northwest Bank, which was willing to issue a letter of credit under conventional loan-to-value and debt services covenants.
A leader in domestic economic development work at Mercy Corps launches the Renter Equity Project, which would later become its Community Investment Trust initiative. Early on, Mercy Corps begins a human-centered design process and outreach to gain insights from target communities to inform the direction of the project.
Mercy Corps’ CIT team begins searching for a commercial property. The team leverages an internally-developed property assessment tool to score potential properties along a series of criteria relevant to project success. These included proximity to community-based organizations, the visibility of the structure, and its potential for supporting diverse tenant uses.
Mercy Corps establishes a Limited Liability Company (LLC), in which it was the sole member, to purchase Plaza 122, a commercial property in East Portland. Mercy Corps would subsequently transfer its membership in the LLC to the East Portland CIT Corporation.
After purchasing Plaza 122, the Mercy Corps’ CIT team begins addressing deferred maintenance and initiating renovations necessary to attract more tenants. The team also begins outreach as it searches for additional tenants.
Mercy Corps’ CIT team launches “Moving from Owing to Owning,” a financial action course for community members in East Portland. The course focuses on goal setting, budgeting, investing, and investors’ relationship to the CIT.
The East Portland CIT Corporation (EPCIT) is formed, with community investors as its shareholders. EPCIT is led by an investor-appointed board of directors. The initial board members have expertise in the areas of law, real estate, community development, economics, and more.
Two years after launch, EPCIT surpasses 100 net investors. The growth is driven by EPCIT’s strong relationships with community leaders, who help build trust between EPCIT and local residents.
The first impact report on the community investment trust model is released. Among other results, the report finds that the CIT investors are largely from marginalized communities and that the investors are experiencing increased financial well-being.
JPMorgan Chase awards $1.75 million to the CIT and eight cities to support the development of localized implementation plans for new CITs.
Five years after launch, EPCIT surpassed 300 net investors, whose households include over 800 additional residents. Over this period, community members invested over $672,000 in the CIT.
The second impact report on the East Portland CIT Corporation is released. The study assesses the impact of social identity on investors’ preferred investment types, as well as investors’ sense that they have the knowledge necessary to pursue their preferred investments.
During the Summer of 2023, six community investors began a course covering aspects of fiduciary responsibility, such as how to read financial statements and an appraisal. EPCIT expects two of these community investors to join its board of directors in 2024.
How were community members engaged?
Assessing the target audience’s needs: As Mercy Corps’ CIT team designed the CIT model, it surveyed renters and low-income residents in Portland about their financial goals and experiences with investing. These data, combined with feedback received through dozens of community outreach events, demonstrated a need for a real estate investment product that was low-cost, loss-protected, and accessible in the case of an emergency. These principals directly informed the design of the CIT model.
Networking with residents: As the EPCIT launched, the staff mapped out key community-based organizations, such as schools, houses of worship, affordable housing complexes, among others. The EPCIT team then began attending events with these groups to build awareness about the CIT model, gather feedback, and build relationships with community leaders. This outreach revealed the importance of transparency in how the EPCIT is governed as a key community concern.
Identifying community advocates: Early on, the EPCIT leveraged its existing relationships with community leaders to recruit them as initial investors. As these leaders became familiar with the model, they became advocates for others in their communities to invest in the EPCIT. Leveraging their personal relationships with community members, these champions were among the EPCIT’s most effective means for building trust with residents.
Incorporating community investors into decision-making: Beginning in the Summer of 2023, the EPCIT launched its “Owning to Governing” course to prepare six of its investors for leadership roles in the CIT. In 2024, two of these investors will join the EPCIT’s Board of Directors and the four others will join a new community advisory committee, deepening the role of community investors in EPCIT decision-making.
How did racial equity considerations factor in?
Creating an equitable wealth-building opportunity: The EPCIT creates an opportunity for low- and moderate-income households to invest in commercial real estate, which is typically only available to higher-income and/or high-wealth households. By providing lower-income households with access to the high rates of return that commercial real estate can generate, the EPCIT created an opportunity for wealth building that previously did not exist.
Accessible financial literacy curriculum: In order to invest in the EPCIT, community members must complete the Moving from Owing to Owning financial action course. The EPCIT has taken multiple steps to ensure that the course is accessible and inclusive to all residents. Most notably, the course materials have been translated into eight languages, and the EPCIT hires facilitators to deliver the course in multiple languages. To further lower barriers to participation, the EPCIT provides assistance with child care and meal and transportation costs for course participants.
What were the key activities leading up to and following launch?
Identifying a property: Mercy Corps’ CIT team searched for a property that would be financially feasible to purchase, but would also maximize financial returns for investors and social returns for the surrounding community. To systematize the search, the team developed a property assessment tool to evaluate commercial properties as they arrived on the market. Ultimately, they identified Plaza 122, which scored highly for its proximity to community-based organizations, the high visibility of the structure, and its potential for supporting diverse tenant uses.
Securing financing purchasing the property: To purchase Plaza 122, the CIT team needed to supplement the commitments it had received from impact investors and local philanthropy with a commercial bank loan. While some banks were skeptical of backing an untested model, Beneficial State Bank provided Mercy Corps with its first loan, seeing the CIT as an opportunity to advance its commitment to community development.
Retaining and recruiting tenants: Once Mercy Corps purchased Plaza 122, it turned its focus to strengthening the tenant base in the building. By bringing on a professional property management company, the CIT team assuaged the concerns of the building’s existing tenants, whose first priority was ensuring the property was run well. From there, the CIT team leveraged its relationships with community members to identify and secure new tenants.
Preparing for investors: Leased up with new tenants, Plaza 122’s financial position was strengthened, making it attractive to more commercial banks. This allowed the EPCIT to refinance its mortgage through Northwest Bank, which offered a direct pay letter of credit, which is the aspect of the CIT model that enables it to be a liquid, but loss-protected investment. Finally, the EPCIT identified a transfer agency, which provided an online platform to easily and efficiently manage small investment accounts.
Building a base of community investors: Ready for investors, the EPCIT began conducting outreach to recruit community members for its Owing to Owning course, a prerequisite for investing in a CIT. As East Portland is home to several large immigrant communities, the EPCIT focused its engagement on these groups. The relationships that the CIT team had previously developed with community leaders proved vital, as many of them became investors and later encouraged others to do the same.
How was the approach funded?
Securing initial funding for the project: Mercy Corps’ CIT team spent $1.4M to purchase, renovate, and attract new tenants to Plaza 122. At launch, approximately $500,000 of this cost was covered by loans from Mercy Corps and two impact investors. This was supplemented by a two-year, $900,000 interest-only mortgage from Beneficial State Bank.
Shifting to community ownership: As community members invest in the EPCIT, they are paying down the initial equity raised to purchase, renovate, and attract tenants to Plaza 122. This process is called, “equity shift,” whereby investors come to own an increasing share of the property, allowing them to benefit financially from Plaza 122’s revenue and appreciation. By 2023, the EPCIT was raising approximately $15,000 per month from investor contributions, allowing it to retire $230,000 of loans from impact investors.
Funding operational support: At the outset, Mercy Corps assigned an employee to the CIT project team part-time. Over time, the CIT team has grown to four full-time staff, largely as the result of increased funding from corporate, philanthropic, and individual donors. Most recently, the CIT team secured a $1.75 million, multi-year grant from JPMorgan Chase to support the replication of the CIT model in additional cities.
How was the approach measured and refined?
Measuring impact on community investors: The CIT’s primary objective is to serve as a vehicle for low-asset households to build wealth. As such, the EPCIT uses administrative and survey data to track the size of annual dividends issued to investors, changes in share price, and the amounts and purposes for which investors cash out their shares. The annual re-subscription rate, which measures the proportion of investors who affirmatively renew their CIT investment each year, also serves as a key proxy for investor satisfaction.
Assessing progress on commercial and community impact: The EPCIT also aims to promote positive social and economic outcomes for its tenants and the surrounding community. To assess its impact in these domains, the CIT partnered with Portland State University to conduct a survey of Plaza 122 tenants and community members. The study found that tenants reported high levels of satisfaction with the EPCIT and that investors reported feeling more involved and connected to the community.
Managing the growth of the CIT: As more equity in Plaza 122 shifts from the EPCIT to its investors, the amount of money the EPCIT’s letter of credit needs to protect increases. Unfortunately, the EPCIT’s banking partner has been unwilling to further increase the size of the letter of credit, as doing so would represent additional contingent risk. As such, the CIT team has begun exploring whether to place a cap on the amount of money an individual can invest in the EPCIT, as well as ways to support investors in identifying additional investment opportunities beyond the CIT.
Increasing the role of investors in organizational governance: At its core, the CIT model is about promoting community ownership of commercial property. As such, over time, the EPCIT plans to increase the role that community investors play in organizational decision-making. In the Summer of 2023, it began training six investors on aspects of fiduciary responsibility, such as how to read financial statements or an audit. By the middle of 2024, the two best-prepared investors will be appointed to the EPCIT’s Board of Directors, and the remaining four will serve on a community advisory committee.
Replicating the model in other communities: Recognizing the positive results shown by the EPCIT, over 135 local governments and community-based organizations from around the country have inquired about replicating the model in their communities. As of 2023, 19 local teams have completed a feasibility study and four are well on their way to launching their own CITs. To support these communities in launching their own CITs, the CIT team has hired a Community of Practice Manager.
Assess the need
Implementing wealth building interventions can improve outcomes predictive of upward mobility. These outcomes, identified by the Urban Institute, include financial security and wealth-building opportunities. City and county leaders can assess local conditions for each of these outcomes using the metrics on the Economic Mobility Catalog’s wealth building page. All cities and counties with populations over 75,000 can also receive a customized data sheet with these metrics here.
Implementing a CIT requires collaboration between multiple community-based organizations. When launching a CIT effort, lead organizations should develop partnerships with city and county governments, housing agencies, religious organizations, economic development agencies, and other similar organizations.
Additionally, community engagement plays a key role when implementing and operating a CIT. To reach community members in a prospective CIT’s catchment area, working group partners should map schools, churches, community spaces, parks, affordable housing complexes, libraries, and other community spaces. This map can support the working group as it conducts surveys or outreach events.
Make the case
Since the CIT model represents a significant departure from traditional wealth building strategies, local leaders may encounter opposition to investing in such programs. To help persuade skeptics of the model’s value, local leaders should familiarize themselves with the evidence behind CITs and the results they have generated. Identifying peer cities that are preparing to launch a CIT, like those listed below, can also help build public support.
- Albany, NY
- Omaha, NE
- Dallas, TX
Results for America would like to thank the following individuals for their support in writing this case study: John Haines, Executive Director - CIT, Mercy Corps; Helen Dally, Community of Practice Manager, Mercy Corps; Olena Borova, Implementation Manager, Mercy Corps; Sven Gatchev, Director of Operations, Mercy Corps; Julia Freybote, Associate Professor, Portland State University; Steven White, Senior Associate, Orrick; and Michael Schrader, Partner, Orrick.
This case study was written by Cole Ware and Ross Tilchin.