Opportunity Finance Network

NPR on Poverty

Focus on IDAs. National Public Radio ran a compelling story about Individual Development Accounts this morning. For more, check the NPR site set up for its series on poverty and solutions. Also, go to the CFED web site for more on IDAs.

Honor for First State CLF Leader

Financial Services Champion. Van Hampton, Executive Director of the First State Community Loan Fund will be recognized as the "Financial Services Champion" by the Delaware Economic Development Office in conjunction with the U.S. Small Business Administration. Van will receive his award at the 2006 Delaware Small Business Week Awards Dinner on Wednesday, May 24th, in Dover.

Different Kinds of Annual Events

Thinking Outward. Some annual gatherings are taking on new, externally focused roles. PeopleFund, formerly Austin CDC, annually hosts an economic summit to focus civic discussion on their markets and their work. Last year, The Reinvestment Fund launched an Economic Markets, Public Purpose annual series of lectures as part of its annual meeting. This year's lecture by Alice M. Rivlin, Senior Fellow at The Brookings Institution, will take place on Thursday, June 8th, in Philadelphia.

Have you used your annual gatherings for civic purposes? Please let me know (mpinsky@opportunityfinance.net).

10 Years of Impact

Clearinghouse CDFI. You can learn a lot about an organization's sense of itself from the tone of its annual meetings. I got to a lot of them, so I should know. Clearinghouse CDFI's 10th Annual Meeting, "10 Years of Impact," which I attended in Anaheim, CA, this past Tuesday, gave the impression of a very strong organization that is just starting to realize how good a job they are doing.

The meeting featured compelling presentation by three Clearinghouse CDFI borrowers. The presentations scratched the surface of the organization's $100+ million financing last year.

Stop Gap is a nonprofit that Clearinghouse CDFI helped to buy a building, giving it a permanent and stable home and saving it $20,000 per year in expenses. The financing story could not begin to capture the power of the financing itself, however. Stop Gap uses drama and drama therapy to address difficult issues such as HIV/AIDS, drug and alcohol abuse, homelessness, and spousal abuse. They appear in schools, at other nonprofit support organizations, in civic settings, and elsewhere. Stop Gap delivers more than 1,000 "appearances" each year in and around Orange County. We had the painful but moving experience of watching two monologues--one by a woman acting as a homeless and mentally ill woman and another by a woman acting as victim of spousal abuse--that conveyed the power of their work.

A second borrower, John Nese, owns and operates a small retail business in the Highland Park neighborhood, Los Angeles's original close-in suburb that now has been absorbed by the city. Although Nese's family had run the business as an Italian deli since 1897, he could not get bank financing to purchase the store after his father died in 2005 because the banks concluded his cash flow was insufficient. Fortunately, one of the bankers who turned John down sits on Clearinghouse CDFI's board.

Compelling in that irresistible way that so many small business owners are, John explained how his business was not just important to his family or his community but to scores of communities across the nation. A few years back, John had transformed his store from a deli to a specialty outlet for small "soda pop" producers--he carries several hundred types of sodas produced by small business nationwide. His success has led to job growth in places as diverse as Natrona, Pennsylvania, and Brooklyn, New York--not to mention Highland Park. After John's presentation, Clearinghouse CDFI CEO Doug Bystry asked me, "How do you measure the impact of that?"

The third borrower was the Harbor City Boys & Girls Club, represented by a group of six kids. The Harbor City Boys & Girls Club built a model club with financing from Clearinghouse CDFI in Harbor City, a small community just southeast of Torrance in Los Angeles. The kids were terrific, as kids usually are, but the thing that made a lasting impression on me was that the two adult staff chaperoning the kids had come up through the Club. The sense of community was palpable.

Clearinghouse CDFI today is a $145 million CDFI based on a for-profit loan fund model that deserves more attention than it has received. Later this year, Opportunity Finance Network will profile Clearinghouse's model in a Spotlight on Innovation report, part of a new series we are launching to help practitioners learn in-depth about important innovations in the field.

If you can't wait, you might want to check out Clearinghouse CDFI's web site. 

Visiting Southern California

Celebrating "10 Years of Impact." Tomorrow night I am flying to Los Angeles for some meetings and to speak at Clearinghouse CDFI's 10th anniversary celebration and shareholders' meeting. Clearinghouse, which in its first ten years has provided housing, business, and community facilities financing "from LA south," recently made a strategic decision to expand statewide. It is an ambitious strategy from an ambitious organization that has proved itself.

Many of you know Doug Bystry, the CEO at Clearinghouse, and will, I hope, get to know him better. He is a creative, dedicated leader.

In my comments, I am going to discuss the loan commitment Opportunity Finance Network recently made to Clearinghouse CDFI and our reasons for doing it. Based on what we learned about Clearinghouse in our underwriting, we have selected it as one of three CDFIs we will report on this year in a new "Spotlight on Innovation" series. What is most significant about Clearinghouse CDFI is that it is structured as a for-profit loan fund with a unique capitalization structure. I was publicly skeptical of the model a decade ago but I am a big fan now. We want to explain the model and what about it works so well so that others can learn from it.

Alexander Hamilton's Legacy

Who is Hamilton's Heir? Alexander Hamilton is well known as the brains behind our nation's financial system, although that was just one of his remarkable accomplishments (chronicled thoroughly and most recently in Ron Chernow's biography). Now, according to a front-page story in today's Wall Street Journal, former Treasury Secretary Bob Rubin and current Treasury Secretary John Snow are fighting a war of words over who can claim to be heir to Hamilton's legacy. Because the fight turns on an how you interpret Hamilton's view of the balance of government and private industry, you can be sure that the argument will not go away.

Underneath the disagreement, however, is news that Rubin is leading an effort housed at the Brookings Institution to promote "an economic strategy to advance opportunity, prosperity, and growth."

The Hamilton Project, as it is known, has a lot in common with a policy effort we have launched with CFED called "Into the Economic Mainstream." In May we will be releasing a summary of a bipartisan meeting we held in March that included a wide range of voices. At our 2006 Opportunity Finance Conference this Fall in Washington, DC, we will present an "Opportunity Agenda for Inclusive Prosperity." The Opportunity Finance Network's Policy Committee is working on that agenda for Board discussion.

If you want to get more involved in our policy discussion, we would love to hear from you. Please contact Cheryl Neas on our policy staff to learn more.

What's In a Word?

The Meaning of "Opportunity." When we changed our name last year to Opportunity Finance Network, I made a case for the power of the word "opportunity" in my speech at our conference last Fall in Los Angeles. In my view, "opportunity" underlies "community development" both historically and philosophically, as I tried to reason in LA. Since the conference, though, I am constantly on the search for more visceral and succinct ways of communicating the power of "opportunity," and I heard a great one last week from Nancy Andrews, President & CEO of the Low Income Investment Fund. "Isn't our work all about improving people's life chances?" she asked in a meeting. That worked for me.

AEO CEO Search

Calling All Leaders. The Association for Enterprise Opportunity (AEO), which represents microenterprise organizations across the U.S., has launched a search for a new CEO. AEO is a partner to Opportunity Finance Network on policy, in the CDFI Coalition, and through the CDFI Data Project. In informal ways, too, we work closely together. The entire field will be well-served by a strong new CEO at AEO. To learn more, contact David Erickson-Pearson, the search consultant AEO has hired, at epdavid@earthlink.net.

Conference Keynote Announcement!

Fed Chairman Bernanke to Speak. When I first joined the Federal Reserve's Consumer Advisory Council in 2003 I met a thoughtful, inquisitive guy named Ben Bernanke. Only later did I learn that he was, at the time, a Governor of the Board of the Federal Reserve System. In my three years on the Council, I got to know him well enough to know that he finds what we do important and intriguing. In his new role, Chairman Bernanke's interest in our work can only be a good thing. So we invited him to deliver the keynote address at  The 2006 Opportunity Finance Conference, and I am delighted that he agreed. We have asked him to talk about our role in creating economic opportunity and inclusive growth.

Chairman Bernanke will speak following lunch on Wednesday, November 1, 2006.

Immigration Politics

How's it Playing? The justice issues in the current immigration policy debate are complex. The response in the past week has been dramatic with marches and protests, heated debates on network and cable news shows, and a steady flow of watercooler conversations. Organizers of the protest are planning a day of economic boycotts on May 1st that are likely to turn up the heat further. So who gains? And who loses? Analysts are asking whether we are seeing the birth of a new civil rights generation. In Washington, DC, political analysts are thinking--this week--that the Republicans may be more at risk than the Democrats. But there are an array of immigration-related issues that divde Democrats, as well. Not to be lost in the mix, Senator Ted Kennedy's efforts to broker a compromise are upsetting Democrats. (I admit that I thought Sen. Kennedy might be on to something when he told The New York Times,)

"We are the land of opportunity," he said. "Our streets may not be paved with gold, but they are paved with the promise that men and women who live here — even strangers and newcomers — can rise as fast, as far as their skills will allow."

(There's something about that word--opportunity.)