Birth of a Loan Fund

In the summer of 1986, Vermont faced a housing crisis.

“There was the beginning of a recognition that many people couldn’t afford to buy the houses that they lived in, and that it was getting worse,” recalls Jim Libby, general counsel for the Vermont Housing & Conservation Board (VHCB) and a founding member of VCLF’s Board of Directors.

“It was the mid-1980s, so federal loan programs were being slashed, and there was this feeling – ‘The federal government’s not going to step in and do the right thing here. If we want to get anything done, we’re going to have to do it ourselves.’”

Vermonters stick to our roots and our values, but we also embrace innovation, new ways to make life better. Perhaps not surprisingly then, a small group of central Vermonters began to think about a new approach to community development.  “When we were first talking about it, it was just the idea of raising and lending money locally, using our money in our community,” remembers Larry Mires, now VHCB’s administrative officer.

The idea was, and remains, a progressive one: capital could be raised through investments from community members who wanted to put their money to work in the community. That capital could then be loaned out to citizens and projects serving Vermont. As loans were paid back, the capital could be loaned out again, as long as investors wanted to keep their money in the Loan Fund. More than a one-time grant or appropriation, these dollars would have impact in our communities over and over again.

Investors might still choose to earn a little interest, but financial return was only one consideration. “We weren’t proselytizing,” Mires (who became a founding VCLF Board member) chuckles now, “but we were telling people that the return on their investment isn’t just financial, it’s community.

It was a novel concept, but Vermonters jumped at it. Within the first year they had invested $309,000. Our first loan -- $5,075, to the Brattleboro Area Community Land Trust – allowed that organization to make a deposit on land purchased for affordable housing. It was quickly paid back, and lent out again, this time to the Central Vermont Community Land Trust for a project in Montpelier. By 1990, more than $1 million had been lent to 26 projects throughout the state.

It worked! Our assumptions about Vermonters’ desire to do more with their money were correct. We could raise capital from these like-minded community partners, invest that money back into the community to serve our lower-income friends and neighbors, have it repaid, re-lend it, and so on, in perpetuity. Investors trusted us with their money, and trusted the expertise we displayed in directing their money into the community.

Since those first days for the Loan Fund 20 years ago, the scope of our lending has expanded to include community facilities, nonprofits, child care, and other local businesses; and our technical assistance program ensures that our borrowers have the tools they need to succeed. The Loan Fund itself, now with approximately $21 million under management, has continued to grow, thanks to our investors’ vision of a stronger, more inclusive Vermont.

Still, 20 years later, the core purpose of the Vermont Community Loan Fund remains the same: We’re at work in the community, for the community, and we are supported by the community.