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Investor FAQs
Before I invest in WACIF, please tell me...
- What is the minimum investment amount?
- What is the minimum term of investment?
- What is the interest rate on my investment?
- Why are these rates so low?
- Are the low interest earnings tax deductible?
- Is the interest paid to the investor taxable?
- If an investor chooses to donate their earned investment interest to WACIF, is the contribution deductible?
- When would I receive interest payments?
- Describe your investors
- What is the dollar amount of WACIF's current investor base?
- Tell me about your lending activity.
- Who are your borrowers?
- What if I invest money for three years and after 12 months I need some or all the money returned for personal reasons?
- What precautions does WACIF take to protect its investors?
- Has WACIF ever lost any money?
- How are loan decisions made?
What is the minimum investment amount?
We encourage a minimum investment of $1,000. Currently, our investment ranges from $1,000 to $700,000.
What is the minimum term of investment?
The minimum term of investment is 12 months. Committments made to WACIF by its investors range from 12 months to 10 years. Longer terms allow WACIF to use the funds in more than one project, resulting in a greater social impact from the investors.
What is the interest rate on my investment?
WACIF pays 0% to 4% interest to its investors. The investor sets the rate. Currently the average rate in our portfolio is 2.83%. WACIF's ideal rate of interest is 1.5%.
Why are these rates so low?
A below market rate of interest to investors enables WACIF to loan money to borrowers at very favorable rates. WACIF earns "spread" on the difference between the rate paid to investors and the rate earned from loans. The spread helps pay for the cost of administering WACIF's investment fund.
Are the low interest earnings tax deductible?
No. The IRS does not allow a low interest deduction.
Is the interest paid to the investor taxable?
Yes. Each year, you will receive a 1099 statement from WACIF, which will report interrst earned on your account. Interest earnings must be reported to the IRS.
If an investor chooses to donate their earned investment interest to WACIF, is the contribution deductible?
Yes, if interest earned is contributed to the organization. A contribution letter to the investor will be provided to the IRS.
When would I receive interest payments?
Most investor accounts receive interest annually. Many investors choose to roll accrued interest into principal on an annual basis or to contribute the earned interest income to WACIF to further support our operations. We can also structure payments to meet the investor's needs. For example, some of our institutional investors request interest payments on a quarterly of semi- annual basis.
Describe WACIF's investors
Currently WACIF has xxx individual investors and xxx institutional investors. The average investment is $10,300. The average institutional investment is $10,300.00. The average institutional investment is $250,000. Click here for a list of our current investors.
What is the dollar amount of WACIF's current investor base?
WACIF's current investor portfolio totals $3.9 million.
Tell me about your lending activity.
WACIF has committed or funded 178 loans totaling $11.5 million, leveraging $100 million in public and private resources resulting in the development and/ or preservation of more than 1,442 units of affordable housing for loa and moderate income renters and first time homebuyers. WACIF investments have alos helped create more than 21 community based facilities and transitonal housing for mentally challenged individuals, the homeless, and people living with AIDS. Over the past two years, WACIF' investments have also assisted more than 21 small businesses.
Who are your borrowers?
WACIF's target market as approved by the US Treasury Department under our designation as a Community Development Financial Institute is non profit community development and social service organizations serving communities in the District of Columbia, Prince George's and Montgomery County Maryland, Baltimore, Maryland and Northern Virginia.
Among our borrowers are:
- Community development corporations (CDCs), community housing development organizations (CHDOs), nonprofit housing developers and faith based organizations. These organizations provide affordable housing and/ or essential social services for familities in need. They also help to preserve neighbourhoods and build communities.
- WACIF assists tenant groups by providing earnest money deposit loans to help them buy and renovate the buildings they occupy.
- WACIF also makes short term microloans to small, neighbourhood based businesses and our target market.
What if I invest money for three years and after 12 months I need some or all the money returned for personal reasons?
WACIF would of course work with you to return your investment. We manage our loans and investments to ensure that we can meet our obligations to investors at all times through our liquidity reserve. Unusual circumstances will be reviewed on a case-by-case basis. Unlike other financial institutions, we do not charge penalties.
What precautions does WACIF take to protect its investors?
- We throughly screen and monitor borrowers
- We do not make loans exceeding 15% of available capital (15% liquidity reserve)
- We require our Loan Committe and Board of Directors vote on lending decisions
- We have a loan loss reserve/ permanent capital base
- Our loans are approved according to our credit policy guidelines, many are secured by real estate or third party guarantees.
Has WACIF ever lost any money?
No, the fund has been in operation since 1988 (incorporated in 1987), and there has been no investor losses.
How are loan decisions made?
Our rigious loan review process is a major reason for our success. WACIF puts capital to use while remaining accountable to investors.
Upon receiving applications, potential borrowers meet with the Executive Director and Loan Officer.
After an extensive underwriting or review of each loan request, a credit memo is prepared for each loan. The loan is then submitted to our Loan Committee, consisting of Board Members and staff, which reviews, evaluates, sometimes revises, and ultimately approves the loan request based on the capacity of the borrower.
This monitoring process is ongoing, both by staff and the Loan Committee It does not end until the loan is repaid.
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Funded in part through a cooperative agreement with the U.S. Small Business Administration.
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