MetLife Puts Higher Stake in Local Economies.
The program has financed health services, land preservation, the arts and affordable housing. It also has financed business development, but the company had prohibited community-development corporations and other recipients from devoting more than 10% of a MetLife contribution to commercial ventures for neighborhood economic development.
That is changing. MetLife now plans to allow community-development groups to spend up to 20% of a contribution on business development. MetLife executives say it's a change that will benefit its recipients, their communities--and the company.
Although commercial ventures can generate more of a return, MetLife had placed the 10% restrictions because it was more interested in providing quality-of-life improvements than financing often-risky business investments, company executives said.
After all, the Social Investment Program was not designed to maximize profits. MetLife's return for such deals was primarily the goodwill value of establishing the company's reputation as a good corporate citizen.
"The benefit is not direct," said Dennis White, director of social programs for MetLife, "and we're not seeking big profits because we're trying to make a difference. But it helps the company's image. We raise our profile with nonprofit leaders and with government and other businesses."
MetLife is confident about expanding its commitment to community business development in part because its social investments to date have generated better-than-expected returns.
For example, MetLife had invested ample sums through the National Community Development Initiative--funds dedicated to organizations such as the Local Initiative Support Corp. and the Enterprise Foundation. Those investments yielded a return of 5%.
MetLife's social-investment record has been broad. For example, the company recently made a $3 million loan to the Community Reinvestment Fund, a private nonprofit organization that purchases loans from development groups. The fund sells those in the form of bonds.
The company has invested some of its social-program money in its own back yard. For example, it provided $7.5 million to the New York City-based Common Ground Community Housing Finance Development Corp. over the past four years. The group restored the Times Square Hotel, rebuilding a 600-unit structure. From that base, Common Ground provides housing, medical services, counseling and job training.
MetLife also helped finance the restoration of the Prince George Hotel, located near its headquarters. A $5 million loan created 416 efficiency apartments for the homeless, people with AIDS and low-income working people. Common Ground also will provide counseling and medical services at the site.
The company also purchased $2 million in mortgage notes from Habitat for Humanity to help the organization build additional affordable housing, and it is placing $5 million in a limited partnership that invests in affordable housing developed by nonprofit community-development corporations nationwide.
"What we're seeing throughout the nation are examples of companies joining with often underserved communities to forge strong win-win working relationships," said Michele Kahane, a program officer in the Economic Development unit of the New York City-based Ford Foundation. Kahane is overseeing implementation of the Foundation's Corporate Involvement Initiative, which is designed to promote profitable corporate investment in low-income communities.
"Community investment is making it possible for companies to develop new markets and increase revenues, all while helping build wealth where it previously did not exist," she said.
MetLife has reaped more than the below-market interest rates it charges for such investments. The company vies for corporate contracts as well as individual policies with other life insurance giants, and its reputation is a competitive factor. MetLife's contributions sometimes generate news coverage. Nonprofits also cite MetLife's involvement when publicizing successful projects.
The newly announced expanded commitment to business development reflects a shift in focus on the part of the nonprofits with which MetLife has been working. MetLife helped fund projects that created supermarkets and retail jobs in some underserved inner-city communities.
It was the success of such projects that prompted the insurance company to allow community-development corporations to spend more on business development.
"Nonprofits have already proved themselves in housing," White said. "It's not much of a risk to give them a chance to continue to succeed in economic development."
George White is a free-lance writer based in Los Angeles.
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|Title Annotation:||Social Investment Program|
|Comment:||MetLife Puts Higher Stake in Local Economies.(Social Investment Program )|
|Article Type:||Brief Article|
|Date:||Oct 1, 2000|
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