Community Investment Funds, or CIFs, are locally sourced and controlled pools of capital contributed to by individual investors within a specific geography or community. Enjoying an increased popularity across Canada and internationally in recent years as financing tools for community economic development, CIFs enable local people to direct their investments into local projects. A CIF relies on a legal and organizational structure to guide its activities and can be incorporated as a corporation or a co-operative enterprise. The CIF’s elected Board of Directors then evaluates opportunities and makes the decision to invest in local environmentally responsible and socially innovative businesses, co-operatives, community enterprises, renewable energy projects, or affordable housing developments.
In terms of renewable energy investments carried out by CIFs, Nova Scotia has been leading the way among Canadian jurisdictions, without much activity in the rest of the country. The factors that set Nova Scotia apart from other jurisdictions with CIF programs will be explained below. Internationally, CIFs can take the legal forms of development trusts or community trusts, and are increasingly investing in renewable energy, especially in the United Kingdom.
Although CIFs can exist with or without supporting policy, an enabling policy framework that includes investor tax credits and a simplified regulatory environment are important factors in their proliferation and success. Currently, four Canadian provinces (Nova Scotia, Prince Edward Island, New Brunswick, and Manitoba) have established Community Investment Fund programs or enabling legislation. While the specifications of CIF programs vary, income tax credits at the provincial level and RRSP-eligibility for investments are the most significant and commonly applied policy tools.
The most noteworthy CIF legislation in Canada is Nova Scotia’s Community Economic Development Investment Fund (CEDIF) program, which is the pioneering CIF legislation in Canada and the program after which other provinces’ programs are modelled. By combining tax credits and RRSP-eligibility for investments with preferential securities regulations and the support of a network of Business Service Centres, the CEDIF program reduced the legal, financial and knowledge barriers that many community initiatives face in raising capital. As of May 2014, CEDIFs had raised over $66 million from individual Nova Scotia investors.
Outside of Nova Scotia, CIFs are supported by the Community Economic Development Business (CEDB) program in Prince Edward Island; The New Brunswick Small Business Investor Tax Credit in New Brunswick; and the Community Enterprise Development (CED) Tax Credit in Manitoba. The Alberta Community and Co-operative Association’s (ACCA) Unleashing Local Capital program suggests that CFIs can also be established and successful without an enabling policy environment.
The involvement of CIFs in renewable energy investments is also most prevalent in Nova Scotia. Besides having the most established CIF program in Canada, Nova Scotia was also home to the Community Feed-in Tariff (COMFIT) Program, launched in September 2011 and terminated in August 2015. COMFIT was designed to encourage community-based, local renewable energy projects by guaranteeing a rate per kilowatt-hour for the energy the project feeds into the province’s distribution electrical grid for a 20-year term. As of March 2, 2015, the COMFIT program awarded contracts to 10 CEDIFs for a total generation capacity of 115 MW. Listed below are some of these projects:
|Fundy Tidal Inc.||Nova Scotia, Canada||Tidal|
|Wind4All||Nova Scotia, Canada||Wind|
|Watts Wind Energy Inc.||Nova Scotia, Canada||Wind|
|Chebucto Pockwock Lake Wind Field Ltd.||Nova Scotia, Canada||Wind|
The application of CFIs as tools for renewable energy project financing has been limited outside of Nova Scotia, mostly due to the lack of supporting legislation for community-owned renewable energy such as the COMFIT. The New Brunswick Department of Energy and Mines, however, is currently reviewing NB Power’s Locally-owned Renewable Energy Projects that are Small Scale (LORESS) program, which suggests 80 MW of capacity allocated for community-owned renewable energy projects.