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Scan of the Community Investment
Sector
in Canada
Coro Strandberg
Strandberg Consulting
Brenda Plant
Brenda Plant Consulting
September 2004
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Appendix B: Sensitivity Analysis
The following are two related but different
analyses, proposed by the U.S. SRI industry, which attempt to demonstrate
that, on the one hand (Table A), below-market CI investments (this
paper would use the term near market) by and large have a negligible
impact on overall portfolio returns, and, on the other hand (Table
B), community investing can leverage higher social returns than
can simple charitable donations.
| A) SENSITIVITY ANALYSIS ON ANNUAL RETURN |
| |
Principal |
Annual Return* |
Appreciation |
| 1) 95% 60/40 Equity/bond investment* |
$95,000 |
8.52% |
$8,094 |
| 5% Traditional cash component** |
$5,000 |
4.18% |
$209 |
| 100% Balanced portfolio |
$100,000 |
8.30% |
$8,303 |
| |
|
|
|
| 2) 95% 60/40 Equity/bond Investment* |
$95,000 |
8.52% |
$8,094 |
| 4% Community invest. cash component** |
$4,000 |
4.18% |
$167 |
| 1% Below-market community investment*** |
$1,000 |
2.00% |
$20 |
| 100% Portfolio with community investment |
$100,000 |
8.28% |
$8,281 |
*Based on the average return for the 20 years ending 12/31/02
of 60% S&P 500 equity and 40% Lehman’s bond indices.
**Based on the average return for the 10 years ending 12/31/02
of the Lipper Money Market Fund Index.
***This example uses below-market community investment with
an average 2% dollar weighted return. |
Source: Calvert Social Investment Foundation.
| B) THE IMPACT OF COMMUNITY INVESTING VERSUS
CHARITY |
| When an individual makes a $20 donation: |
When an individual invests $1,000 in a community
investment at 3%: |
| The individual gives $20 |
The individual’s interest earnings may be reduced by
$20, compared with a 5% T-bill investment |
| And only $20 goes to work helping people |
While the entire $1,000 goes to work helping people help themselves |
Source: Calvert Social Investment Foundation.
|
