The Reinvestment Fund

Progress Trust Inc., Philadelphia, PA

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North Philadelphia’s Progress Plaza is the nation’s oldest African American–owned shopping center, built in 1968 by civil rights leader Reverend Leon Sullivan. But when its anchor tenant, a supermarket, moved out nine years ago, much of the center fell into disrepair.

Today, however, Progress Plaza has a bright future, thanks in part to The Reinvestment Fund (TRF).

TRF is a national leader in the financing of neighborhood revitalization. What began in 1985 as a small community development organization...
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TRF provided $10 million in financing from New Markets Tax Credits to help the owners of Progress Plaza renovate the center, demolish the old supermarket, and construct a new one in its place. TRF also helped to secure an experienced supermarket tenant, The Fresh Grocer, which is expected to provide more than 200 new jobs in its 46,000-square foot facility. Completion of the project is scheduled for 2008.

Among those on hand at a ceremony in August 2007 to present a $500,000 check to bring The Fresh Grocer to Progress Plaza was State Representative Dwight Evans, a member of the Pennsylvania House of Representatives. Evans is also a driving force behind TRF’s Fresh Food Financing Initiative, an innovative new capitalization program to increase the number of supermarkets in underserved communities across Pennsylvania.

“Anchoring Progress Plaza with The Fresh Grocer brings more than just a supermarket,” says Representative Evans. “It renews the vision of progress sparked here by Reverend Leon Sullivan 37 years ago. Reverend Sullivan was one of the first to see that economic development and social progress were two sides of the same coin. We’re here today to invest that coin, so the people here can enjoy the dividends of good jobs, healthy food, and a thriving community.”

National Housing Trust Community Development Fund

Aeon, Minneapolis, MN

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The interest in “green” homes and commercial properties has grown dramatically in recent years. And now, an innovative pilot project in Minnesota is looking at ways to apply the principles of sustainable design to the development of affordable, multi-family housing.

The project began in 2006 when Aeon, a nonprofit developer of affordable housing for the Twin Cities metro area, launched a partnership with the Green Institute and the Center for Sustainable Building Research at the University of Minnesota to explore the practical aspects of making existing and new multi-family housing sustainable. Their goal: to develop information that Aeon and other affordable housing developers could apply in their multi-family projects in the future.
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To that end, Aeon has purchased the Har Mar Apartments, a 120-unit community in Roseville built in 1968, and is working with its two partners to develop a plan to rehabilitate the property, creating a thoroughly sustainable product that will thrive for another century. Aeon expects to complete the rehabilitation in the summer of 2010.

For predevelopment financing, Aeon turned to the National Housing Trust Community Development Fund (NHT), Washington, DC, a national nonprofit dedicated to providing affordable housing developers with the crucial predevelopment and interim development financing that commercial lenders typically do not offer. NHT provided Aeon with a $110,000 predevelopment loan—at five percent interest—from its Green Affordable Housing Preservation Loan Fund, which was created to encourage nonprofit developers to incorporate green principles in projects for low-income families.

“It’s great that NHT has a program designed to promote sustainability,” says Maureen Michalski, Aeon Project Manager. “And it is very important for us to have the lower-interest financing that NHT offers. It really helps us cut down our holding costs while we’re applying for funding for the development. It just helps the bottom line.”

Housing Assistance Council

Proyecto Azteca, San Juan, TX

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Hector Armando Gurrola and his wife, Yolanda, lived in the colonias along the Texas-Mexico border in a dilapidated mobile home with no air conditioning or heating. But in 2005, their lives were transformed when they moved into a new home, thanks to Proyecto Azteca.

Proyecto Azteca is a small, rural nonprofit housing development organization located in the Lower Rio Grande Valley of Texas. Created in 1991 by the United Farm Workers and Texas Rural Legal Aid, Proyecto Azteca is dedicated to building decent, affordable housing for low-income colonia residents, especially farm workers.
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Proyecto Azteca’s housing program is designed to empower the low-income families it serves. The families receive materials, tools, and training and do almost all the construction work on their homes themselves (called sweat equity), which enables them to develop new job skills. Moreover, their mortgages are tailored to their circumstances. Typically, Proyecto Azteca’s loans cover the lots and homes, with zero interest and monthly payments of about $100.

Since 1996, Proyecto Azteca has received more than $1.196 million in predevelopment loans from the Housing Assistance Council (HAC), Washington, D.C. Founded in 1971, HAC is the only national intermediary focusing on the development of affordable housing in rural communities. It emphasizes local solutions, providing loans and technical assistance to enable local public, nonprofit, and private organizations to improve housing conditions in their own communities.

HAC’s financing has allowed Proyecto Azteca to build 127 homes. For people like Hector and Yolanda, it means being able to live in a safe, decent home—and so much more. “Those families now have better physical and emotional health, their children are doing better in school, and they are accruing wealth in the land and house that they were able to purchase with HAC’s assistance,” says Ann Cass, Executive Director of Proyecto Azteca. “How can all of that be measured? It is priceless.”

ShoreBank Corporation

Rudy Villareal, Chicago, IL

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Just two years after the City of Chicago employee and first-time homebuyer Rudy Villareal moved his family into their dream home on the city’s west side, he saw his dream turn into a nightmare: the interest rate on his mortgage was set to jump to 12 percent.

Realizing he could never afford such a steep increase in his monthly payment, Rudy was terrified that he might lose his home. Fortunately, his alderman advised him to speak to the people at ShoreBank.
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ShoreBank is the first and largest community development and environmental bank holding company in the nation. Since 1973, the organization has invested more than $3 billion in underserved communities and customers to help purchase and renovate more than 52,000 units of affordable housing and create more than 12,000 new jobs. Much of ShoreBank’s equity capital was provided by eight major banks that received Community Reinvestment Act credit for their investment.

ShoreBank was well aware that borrowers like Rudy Villareal were not rare. The bank had estimated that 10,000 homeowners in its service areas would be trapped in the subprime mortgage meltdown. In 2007, ShoreBank took action, launching its new Rescue Loan Program to assist homeowners at risk of foreclosure by refinancing their loans at more-favorable terms.

The Rescue Loan Program gave Mr. Villareal the breathing room he needed. ShoreBank offered him a 30-year, fixed-rate loan at 6.75 percent, which saved him hundreds of dollars each month while enabling him to continue building equity. “I’m just so relieved my family and I can keep the house we worked so hard to obtain,” Mr. Villareal said. “Finally, I have some peace of mind.”

Community Reinvestment Fund

JBS Hair, Minneapolis, MN

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Jacqueline Hamilton may have grown up knowing hard times, but she has never lost faith in the power of hard work.

Ms. Hamilton grew up in a public housing project in the North Side district of Minneapolis. When her mother became ill and her father left, Ms. Hamilton dropped out of high school to care for her mother and her siblings. In time, she earned her high school diploma. Ten years ago, she left her job at an office-cleaning company to pursue her dream of starting her own business—a company that creates handmade wigs from real human hair.
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In the beginning, Ms. Hamilton operated JBS Hair out of her duplex. There were times when she had to use her credit card to support the company, but after a couple of years, her business stabilized and she needed a proper retail space. “We had a lot of walk-in customers,” she recalls, “and some of them were kind of leery of coming up to a home.”

After several banks rejected her applications for a commercial mortgage, Ms. Hamilton was directed to a nonprofit business development agency that advises small businesses. There she learned about Community Reinvestment Fund, USA (CRF).

CRF is a nonprofit established in 1988 to provide capital to low- to moderate-income communities across the United States. The organization does so primarily by operating a secondary market—that is, a financial system by which the right to collect repayments is sold from one group to another—for economic development loans, as well as loans for affordable housing and community facilities.

CRF and the Minneapolis Community Planning and Economic Development Department provided Ms. Hamilton with an $82,000 loan through the New Markets Tax Credit, and Franklin Bank, a local community bank, supplied an additional $102,000 in financing. The money enabled Ms. Hamilton to purchase a North Side building with two retail spaces and a two-bedroom apartment upstairs.

Today JBS Hair and All-Wigs.com, Ms. Hamilton’s online business, are thriving. Many of her customers are cancer patients. She is aware that her success is an inspiration to her disadvantaged neighborhood. “It gives the community hope,” she says. “I grew up around here and people actually see me just take baby steps into growing. So it’s something they know they can do.”

Western Massachusetts Enterprise Fund Inc.

Hot Mama’s, Springfield, MA

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When Hot Mama’s, a company that makes salsa, hummus, and other gourmet food products, was founded in 1984, it was housed in a tiny, 500-square foot facility in Millers Falls, Mass. In 1991, Matt Morse bought the company, moved it to Amherst, and set out to grow the business while maintaining a commitment to using fresh, all natural ingredients, providing great customer service, and engaging in business practices that reflect integrity and respect for the environment.

A $10,000 microloan from the Western Massachusetts Enterprise Fund (WMEF) enabled Mr. Morse to buy a cooler and some other equipment for Hot Mama’s new Amherst home, and helped him to gain a stronger foothold in an emerging market. His success prompted him to return to WMEF for another loan of $15,000 that facilitated the second of what would be four expansions of his Amherst facility.
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Those two infusions of capital made Mr. Morse something he had never been: bankable. Indeed, in 1994, he received a loan from the Bank of Western Massachusetts, which he used to buy new equipment, but primarily to pay off his WMEF loans.

WMEF has been helping “unbankable” clients like Matt Morse since 1990. A leading microlender, the organization provides loans of $1,000 to $150,000 to finance start-ups, existing businesses, and nonprofits that may not qualify for traditional loans. WMEF serves the five counties of western Massachusetts and has provided financing to more than 250 small businesses and technical assistance to hundreds of entrepreneurs.

Today Hot Mama’s has built a loyal customer base in the natural and gourmet food categories, moved to even larger quarters in Northhampton, Massachusetts, and even established operations in Chicago. The company has 60 employees and enjoys annual sales of $6 million. But Matt Morse has not forgotten how his current success began. “They gave me the chance to take those first few steps and establish some credit,” he says of WMEF’s loan officers. “They enabled me to take the plunge and eventually be able to get bank financing.”

Partners for the Common Good

First Book, Washington, D.C.

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First Book is a nonprofit organization with a single mission: to introduce children from low-income families to the magic of reading by giving them the opportunity to read and to own their first new books. Founded in 1992, the organization has provided 50 million books to children in more than 3,000 communities nationwide.

In 2004, First Book launched First Book Marketplace, an online store that sells high-quality children’s books and educational materials at deeply discounted prices to organizations serving children from low-income families. Although Marketplace proved to be a success, its management realized that without an injection of capital, they would not be able to raise money quickly enough to buy the inventory they needed. They approached Partners for the Common Good (PCG) for a loan for working capital.
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Based in Washington, D.C., PCG is a nonprofit community development loan fund dedicated to promoting economic justice and social change by providing access to debt capital to community-based ventures that advance the common good. As a national wholesale participation lender, PCG partners with CDFIs across the nation to finance working capital, affordable housing, community facility, and commercial revitalization projects. The organization also provides loans to international microfinance and fair trade organizations based in the United States.

In 2007, PCG organized the syndication of a $1.5 million working capital loan for First Book among three lending partners: the Nonprofit Finance Fund, the Calvert Foundation, and PCG itself. First Book Marketplace used the loan to increase inventory and to hire new staff.

And it has made all the difference. In just two months, Marketplace increased its inventory from 100 titles to 400. “We now have over a million books in inventory and we’re really reaching kids in new and profound ways,” says Chandler Arnold, Executive Director of First Book Marketplace. “PCG really helped us take our organizational model to the next level.”

National Equity Fund

Langdon and Anne Simons, Senior Apartments Seattle, WA

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Plymouth Housing Group (PHG) was created in 1980 by members of the Plymouth Congregational Church to provide caring, safe, and affordable rental housing to low-income people living in downtown Seattle. Recognizing that many of the older tenants of its supportive housing developments would benefit from housing geared to their unique needs, PHG created the Langdon and Anne Simons Senior Apartments.

The new facility, which opened in January 2008, comprises 95 units of affordable housing, as well as commercial space on the ground floor. It is intended to serve homeless adults and military veterans aged 55 and older.
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National Equity Fund (NEF) provided $10 million of the $22 million needed for the project. A leading national syndicator of low-income housing tax credits, NEF was created in 1987 by the Local Initiatives Support Corporation (LISC) in the wake of the Tax Reform Act of 1986. NEF has invested $5.5 billion to support 1,500 projects, financed the development of 80,000 homes, and partnered with 550 nonprofit and for-profit developers.

In addition to providing affordable housing, the new Simons Senior Apartments offer full-time resource coordinators to help link tenants with PHG’s own support services, as well as with services from outside providers. Among the support services available are housing stabilization services, substance abuse treatment, and employment services.

For Richard Leyda, a 57-year old former Marine and Vietnam veteran who was one of the first residents of the Simons Senior Apartments, the new facility means the end of nearly two years of homelessness. He is looking forward to socializing in the resident lounge. “There’s going to be TV, and I want to watch it with somebody else,” he says. “This is the best place I’ve ever been in my life.”

Peoplefund

CGE Incorporated, Austin, TX

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For 15 years, Carlos Esteves managed construction projects for two companies in Austin’s semiconductor industry. When the industry faltered and he was laid off, he started his own general construction company, CGE Incorporated.

Although CGE soon attracted a lot of business, it faced a major challenge. Like any construction company, CGE needed funds to pay for materials and other up-front costs its jobs required. But as a new business, CGE had not established credit with its suppliers and could not get financing from a traditional lender. “We tried several banks, and they wouldn’t give us the time of day,” Mr. Esteves says.

But there was one lender in Austin that would listen to Mr. Esteves: PeopleFund....
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Launched in 1994, PeopleFund promotes lasting economic vitality in low-income and minority communities by providing financing and training to ventures that will create jobs and safe, affordable housing. Originally created to serve the city of Austin, the organization has expanded to reach a five-county region in central Texas. It has made more than 265 loans totaling almost $16 million to small businesses, schools, healthcare providers, and affordable housing developers.

PeopleFund gave Mr. Esteves a $40,000 loan for working capital and helped him to develop a business plan and organize the financial side of his business. “They helped me put everything in order,” Mr. Esteves says. “All the things you do when you start up a business and you want a loan, they walked me through.”

Today, thanks to PeopleFund’s financing and Mr. Esteves’ skill and hard work, CGE is thriving. In 2007, annual revenue reached $2.2 million, up from $70,000 in 2002. And Carlos has found that traditional lenders are more willing to listen to him. Indeed, after building up his business and establishing a strong credit record with his PeopleFund loan, he applied for—and received—a line of credit for CGE from a local bank.

ACCIÓN Texas

Sunfired Foods, Houston, TX

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As a child, Arga Bourgeois saw her father travel around Houston teaching people to improve their health by transforming their diets. Years later, inspired by his example, she used a $2,600 tax refund to open a health food store to serve Houston’s 3rd Ward, a neighborhood known for its high concentration of poverty.

At first, Sunfired Foods consisted of a single shelf of products, but Ms. Bourgeois had bigger things in mind. In 2005, after a year in business, she came to ACCIÓN Texas seeking a small loan and a chance to prove herself.
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One of the nation’s leading microlenders, San Antonio-based ACCIÓN Texas is dedicated to serving small business owners like Ms. Bourgeois. Since 1994, the organization has made more than 8,000 small business loans (in amounts averaging $7,900) to more than 4,500 borrowers who were unable to obtain financing from traditional sources.

With a $13,000 loan and technical assistance from ACCIÓN Texas, Ms. Bourgeois has transformed her business and her community. Today Sunfired Foods is a full-service health food store that offers classes in healthy living and a wide selection of herbs, vitamins, and foods not usually available in low-income neighborhoods. Her company employs six, including her father.

Ms. Bourgeois is grateful for the loan—and everything else— ACCIÓN Texas provided. “They didn’t just say, ‘Here you are; take it and you’re on your own,’” she says. “I also received education through them. It’s a lifetime of learning and resources, and that is what I appreciate most.”

Rural Enterprises of Oklahoma Inc.

Valley Forge and Manufacturing, Stigler, OK

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When David Thornton decided to start a steel and metal fabricating business in Stigler, population 2,731, he worked with the small business coordinator at the local vocational center to draw up a business plan and then approached the First National Bank of Stigler for financing. The bank was interested in Mr. Thornton’s plan but agreed to provide only a portion of the amount he needed. They recommended bringing another lender on board, Rural Enterprises of Oklahoma Inc. (REI).

REI has been working for the people and businesses of rural Oklahoma since 1982. The organization began as a small business lender but has since evolved into a multifaceted economic development organization serving the entire state through offices in Alva, Durant, Oklahoma City, and Tulsa. In addition to offering various business lending programs, REI manages business incubators in 10 communities and provides affordable housing opportunities for working families.
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Thanks to the partnership between REI and First National, Mr. Thornton secured the financing he needed and launched his new business, Valley Forge and Manufacturing. Although the company struggled for the first few years, REI and First National worked with Mr. Thornton to help him manage his loan payments. In time, Valley Forge was off and running. For the first eight months of 2006, the company’s revenue totaled $182,306. It has also had an impact on the local economy by providing four full-time jobs in the small community of Stigler.

Over the years, REI has provided $105,000 in financing to Valley Forge. Although Mr. Thornton certainly appreciates the financial assistance, he is equally grateful for the understanding and flexibility the two organizations have shown. “I would have filed bankruptcy after the first two years if it hadn’t been for them working with me,” he says. “They’re great people to work with.”

Pacific Community Ventures

Evergreen Lodge at Yosemite, Groveland, CA

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Since 1921, the historic Evergreen Lodge had been a popular hideaway on the edge of Yosemite National Park. But when Brian Anderluh, Dan Braun, and Lee Zimmerman decided to purchase the property in 2001, they had a new and inspired vision for the place. They wanted not only to renovate the lodge and add 50 new cabins and communal buildings but also to create an employment program to help at-risk youth.

Although many potential investors were skeptical of their vision, Pacific Community Ventures (PCV) was not one of them. Through its offices in San Francisco, Fresno, Los Angeles, and San Diego, PCV provides capital and advisory services to California businesses with the potential to bring significant economic gains to low- and moderate-income communities.
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PCV matched Evergreen’s new owners with a volunteer advisor, an experienced hotel development professional who helped them plan for the expansion. A year later, PCV became the lodge’s largest institutional investor, providing $1 million of the $3.5 million in equity investment raised for the expansion.

“PCV was absolutely instrumental in enabling this business,” says Evergreen co-owner Lee Zimmerman. “They were the one institutional player that really understood the opportunities we were creating and that was really committed to supporting businesses that were interested in working with low-income populations.”

Today, the Evergreen is clearly succeeding in its dual financial and social missions. The lodge has earned high praise from several leading travel publications, including Fodor”s and Frommer’s. Moreover, since 2002, 60 young people from the Bay Area have received job training, one-on-one counseling from a social worker, and recreational opportunities through its youth employment program. Currently, 10 percent to 20 percent of the lodge’s seasonal hourly employees—or about 15 youth per year—participate in the employment program.

Enterprise Corporation of the Delta

Clara’s Little Lambs, New Orleans, LA

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Sonjia Brown-Joseph and her mother, Clara Washington, spent almost 20 years developing Clara’s Little Lambs into one of the finest preschools in New Orleans. But in a few short hours in August 2005, Hurricane Katrina wrecked their building, leaving the future of the school in doubt.

Once she got over the initial shock, Ms. Brown-Joseph got busy. She contacted Dennis Manshack at the Enterprise Corporation of the Delta (ECD) and told him she needed financing so she could make repairs and pay her employees. “No problem,” Mr. Manshack said. “We can do this.”
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Even before Katrina, ECD had been accustomed to taking on big challenges. Since its founding in 1994, the organization has worked to break the cycle of poverty in the Delta regions of Arkansas, Louisiana, and Mississippi. Through its network of 10 offices, ECD offers loans for small businesses and community facilities, affordable mortgages, technical assistance programs, and through Hope Community Credit Union, an array of consumer financial services.

Although Ms. Brown-Joseph had also applied for an emergency bridge loan through a state-sponsored program to assist small businesses affected by Katrina, Mr. Manshack realized that the limited funds in the program would quickly be depleted, so he processed Ms. Brown-Joseph’s loan application immediately. Two weeks later, she had the money.

It was just one of many loans ECD made in the wake of hurricanes Katrina and Rita. As the primary financial institution serving low-wealth residents in areas devastated by the storms, ECD/HOPE has provided more than $10 million in financing to consumers, homeowners, and small businesses.

Just seven weeks after Katrina struck, Clara’s Little Lambs reopened with about 25 children attending. By 2006, enrollment was approaching 150, almost as many as before the hurricane. In the faces of those children, Ms. Brown-Joseph sees a bright future. “This city is coming back,” she says. “I really believe that.”

Boston Community Capital

SelecTech Inc., Avon, MA

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A few years after its launch in 1993, SelecTech Inc. made a significant change to its business model. The company was originally created to recycle plastics into numerous products, and it partnered with other firms that marketed the products for them. In time, however, SelecTech wanted more control over its business, so it decided it would focus on its most successful product—an interlocking floor tile made from recycled plastics—and take charge of every aspect of the manufacturing and selling.
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Although the growing company had a lot of orders, it didn’t have a lot of cash. SelecTech founder and CEO Thomas Ricciardelli approached several traditional venture capital firms in search of funds to buy materials for the orders his company was getting. “It was during the dot-com boom, and everybody was chasing after that,” he recalls. “A company that makes an actual product? Forget it. It just wasn’t in the cards.”

Mr. Ricciardelli got a much different reception when he finally came to Boston Community Capital (BCC).

Since 1985, BCC has committed more than $300 million to projects that contribute to the long-term economic and social health of communities throughout Massachusetts and the northeast. Among the many strategies the organization employs is investing equity dollars in businesses that create social and financial returns.

As a small business with both an environmentally progressive focus and a promising future, SelecTech was the kind of company that appealed to BCC. In 2001, the CDFI provided a $500,000 line of credit designed to let SelecTech borrow against purchase orders it had received from its customers. The financing enabled the company to continue growing while it waited for its customers to pay.

SelecTech’s new business model has clearly proven more enduring than those of many dot-coms that won the hearts of venture capitalists years ago. In 2007, the company’s revenues totaled $1.7 million. And well into 2008, the company was on pace to do $4 million. Still, Mr. Ricciardelli remembers when SelecTech’s future didn’t look so rosy, and he credits BCC for helping the company to weather the transition from a recycling company to a product company. “They definitely kept us alive when we were changing,” he says. &lduqo;We would have gone out of business if not for them. They have been crucial.”

IFF

Asian Human Services, Chicago, IL

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Established in 1978, Asian Human Services (AHS) is the Midwest’s largest Pan-Asian health and human services agency, providing a wide range of high-quality services in more than 28 languages to low-income Asian American, immigrant, and refugee communities in metropolitan Chicago. Among its most critical services is its adult education program, which provides English as a Second Language (ESL) classes and basic computer training.

For years, AHS has held its adult education classes in leased space on the second floor of a building that has no elevator. “It just breaks my heart every time I see another mother struggling with a baby and a stroller up that very steep, long flight of stairs to get to one of our classes,” says Marlene Hodges, Chief Financial Officer of AHS.
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All that is about to change, thanks in part to IFF, a Chicago community development financial institution formerly known as the Illinois Facilities Fund. IFF provides real estate consulting services and below-market-rate real estate and equipment loans for nonprofits serving low-income and special-needs communities.

IFF gave AHS a 15-year $600,000 loan to acquire its own building for its adult education program and provided extensive guidance to help AHS plan for the acquisition. The new facility, which opened in July 2008, is a short distance from the AHS Health Center. It has ample space for ESL classes and computer training, as well as a child care center for the children of parents attending classes. And AHS has made sure that all the facilities are on the ground floor.

Ms. Hodges is convinced the new facility would not have been possible without IFF. “They were our partners—and continue to be our partners—holding our hands every single step of the way,” she says. “Their focus is on helping nonprofits grow. I can’t imagine why a nonprofit wouldn’t go to them first, if they had the choice.”

The Reinvestment Fund

First Philadelphia Charter School for Literacy, Philadelphia, PA

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Conventional lenders have often regarded charter schools as an “emerging market,” so it was no surprise that First Philadelphia Charter School for Literacy faced an uphill battle when it needed financing. What was not surprising, however, was that The Reinvestment Fund (TRF) came to the rescue—not once but twice.
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A national leader in the financing of neighborhood revitalization, TRF has provided loans to charter schools since 1997. As of October 2007, the Philadelphia organization has provided $120 million in financing to 42 charter schools. Enrollment at TRF-financed charter schools tops 21,000.

When First Philadelphia received its charter approval in the summer of 2002 and had just six weeks to prepare for the new school year, TRF provided a short-term loan that enabled the school to cover its start-up costs and to lease temporary facilities at three separate locations in the neighborhood. In 2004, additional TRF financing—including a $4.76 million construction and long-term permanent loan and a $640,000 energy loan—enabled First Philadelphia to purchase an industrial warehouse and convert it into a state-of-the-art facility to house all its operations.

Today, First Philadelphia is a thriving school serving 750 students—90 percent of them from low-income families—as well as a community center for seniors and families. Its 67,000-square-foot facility includes 30 classrooms, a stage, three music practice rooms, a regulation gymnasium, and a literacy center with a bank of 25 computers. “Our ability to provide these educational opportunities for the children of Philadelphia is, in large part, the result of the leap of faith that The Reinvestment Fund took on our dream,” says First Philadelphia founder and board chair Gerald Santilli.

Primary Care Development Corporation

Joseph P. Addabbo Family Health Center, Queens, NY

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The Joseph P. Addabbo Family Health Center was established in 1987 to provide comprehensive health services to the poor and medically underserved residents of the Rockaway Peninsula in Queens, New York.

For years, the center had leased a 50-year old building that had never been renovated and had become inadequate for modern medicine. The site was surrounded by blocks of vacant lots intended for an urban renewal project that started with demolition in 1970 and went no further. But today the Addabbo Family Health Center has a new home, thanks in part to the Primary Care Development Corporation (PCDC).
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PCDC was founded in 1993 when the New York City government and private and philanthropic sectors came together to address the lack of primary and preventive healthcare in economically distressed communities. Through its Capital Access program, PCDC has arranged more than $178 million in capital financing for the construction, expansion, and renovation of 60 primary care centers throughout New York.

PCDC provided $1.4 million in preconstruction financing, $3.6 million in subordinated construction financing, and $4.4 million in permanent financing toward the construction of a new site for the Addabbo Family Health Center. Equally important, PCDC provided extensive assistance in planning the project.

The 22,400-square foot facility opened in May 2006 and has enabled the Addabbo Family Health Center to offer state-of-the-art primary and preventive medical care to its community. The center has 13 examining rooms—compared with four in the old facility—as well as rooms for staff meetings, community health education classes, and other activities the old facility could not accommodate. During the first year in its new home, the Addabbo Family Health Center saw a 25 percent increase in patient visits. “We are the largest primary care provider in what is really the poorest and sickest community in Queens,” says Dr. Peter Nelson, Executive Director of the center.

Dr. Nelson says that PCDC’s assistance was invaluable in what was Addabbo’s maiden attempt at building its own facility. “They were just an amazing asset to me, working through the whole process, providing a lot of consultation and hand holding,” he says. “I always tell them they’re the best organization in New York City, pound for pound.”

Unified Vailsburg Services Organization

Newark, NJ

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Although it is home to an apartment complex that houses 10,000 people, the Ivy Hill neighborhood of Newark’s Vailsburg section lacked even a single child care facility for its preschool children. That was a situation the Unified Vailsburg Services Organization (UVSO) was determined to change.

Founded in 1972, UVSO is a neighborhood-based human community development agency that provides a wide range of programs and services to build a stronger and more stable Vailsburg. When UVSO decided to build a new child care facility in Ivy Hill—and realized it would need a lender that would finance almost 100 percent of the project’s costs—it turned to three local CDFIs with a longtime commitment to economic development in Vailsburg.
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Since the early 1990s, the three CDFIs—Leviticus 25:23 Alternative Fund Inc., Local Support Initiatives Corporation, and New Jersey Community Capital—had financed several community development projects for UVSO, including a six-classroom child care facility in another part of Vailsburg. For the Ivy Hill project, the three partnered to provide $4.8 million in construction financing. Prudential is providing permanent financing.

With 14 classrooms for preschool and infant/toddler care, the new Ivy Hill facility is providing an invaluable service to the neighborhood—and enabling apartment owners to attract new tenants who need a preschool nearby. “Leviticus, New Jersey Community Capital, and Local Support Initiatives Corporation have been critical to UVSO’s success,” says Michael Farley, UVSO’s Executive Director. “They have opened doors and given UVSO momentum to complete these projects. If they had said no, if their risk tolerance was lower, I don’t know that we’d be in real estate development of any kind.”

Nonprofit Finance Fund

The Food Trust, Philadelphia, PA

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The Food Trust’s mission is to ensure that everyone has access to affordable, nutritious food. Founded in 1992, the Trust offers a wide range of programs to improve the health of children and adults, to promote good nutrition, increase access to nutritious foods, and advocate for better public policy.

In 2001, The Food Trust faced a challenge. Its largest income sources were government contracts, which did not fund the organization’s infrastructure costs and had prolonged payment schedules. In need of working capital to support its programs, the Trust approached the Nonprofit Finance Fund (NFF).
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NFF focuses exclusively on serving nonprofits. Since 1980, it has leveraged $1 billion in capital investment and provided more than $160 million in direct loans to thousands of organizations nationwide.

Aware of the financial constraints that nonprofits typically work under, NFF has provided The Food Trust with a line of credit for working capital since 2001. The Trust’s credit line, which today is $1.5 million, enables the organization to meet its cash flow needs and to continue delivering valuable programs.

“Since many of our funds are dispersed on a reimbursement basis, our line of credit with the Nonprofit Finance Fund enables us to operate all our programs at maximum capacity with confidence and without interruption,” says David Adler, Communications Director of The Food Trust. “Thanks to the NFF, we are able to provide nutrition education to over 50,000 low-income children, operate 26 farmers’ markets, and bring more stores selling healthy, fresh food to impoverished neighborhoods in the Philadelphia region.”

Forward Community Investments

Southwestern Wisconsin Community Action Program, Dodgeville, WI

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When a family resource center and a county job service in Dodgevillle, population 4,220, lost their leases, the Southwestern Wisconsin Community Action Program (SW CAP), a nonprofit antipoverty agency established in 1966, was determined to keep them in town.

SW CAP soon discovered that several other nonprofits in the area were also looking for new offices, so it leased an 8,856-square foot building in Dodgeville to create a facility specifically for Iowa County’s nonprofit agencies. The family resource center and the county job service, along with five other agencies, had a new home.
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In 2006, SW CAP decided to purchase the property, and for financing, they went to Forward Community Investments (FCI), a community development loan fund that provides financial and technical resources to organizations working to enhance the lives of low-income people and communities. In just 10 years, FCI has disbursed more than $4 million in financing to nonprofits throughout Wisconsin.

As a nonprofit funded by grants, SW CAP is the kind of prospective borrower that can unsettle traditional lenders. “They get a little nervous sometimes, because a grant can end,” says Wally Orzechowski, Executive Director of SW CAP. “For Forward Community Investments, it wasn’t a big culture shock. They understood how we work.”

FCI gave SW CAP a loan for $281,000, which enabled the organization to purchase and renovate the building. The six percent interest rate made the project that much more manageable for SW CAP and its tenants.

Today the building is home to seven nonprofits, including a free clinic, that provide essential services to the community. Having so many agencies in one location is proving to be a real advantage for everyone involved. “We share a lot of clients,” Mr. Orzechowski says of SW CAP and its tenants. “And the clients come to us with a multiplicity of issues and problems that are best handled by having multiple programs in one place. Our agencies can interact with each other and share resources, and our clients don’t have to go from place to place to place.”

Self-Help Credit Union

Carline Jules, Durham, NC

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Carline Jules immigrated to the United States from Haiti in 1981, and after earning her degree in business administration from the University of Maryland, she moved to North Carolina to work as a financial analyst.

But after a difficult divorce, Ms. Jules was unable to pay her bills. “I couldn’t get up, I was so depressed,” she says. “I didn’t care. I begged God to kill me.” When Ms. Jules finally lost her house, she and her young son, Jaden, began sleeping in her car....
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In time, Ms. Jules found a job at Duke University, started paying off her debts, and managed to rent a small apartment. But the apartment was in a bad neighborhood, and she didn’t want Jaden to grow up around the gang culture. A friend suggested she talk to Self-Help Credit Union about getting a home loan.

Founded in 1980, the nonprofit Center for Community Self-Help is dedicated to providing financing, technical support, and advocacy for people left out of the economic mainstream. Through its financing affiliate, Self-Help Credit Union (Self-Help), the organization has assisted female, rural, and minority borrowers nationwide to build wealth through ownership of homes or businesses.

When Ms. Jules went to Self-Help, she discovered that the credit union was willing to work with her, despite her past financial hardships. A few months later, she found her dream home among the houses Self-Help built in a newly rehabilitated neighborhood bordering Duke University. “I just stood there and said, ‘God, if you give me this house, I’ll find a way to do your work in it,’” she says.

Through a partnership with the city of Durham, Duke Energy, Duke University, and the North Carolina Housing Finance Agency, Self-Help provided a $120,000, five percent, fixed-rate, 30-year mortgage that enabled Ms. Jules and Jaden to move into that house.

And Ms. Jules has not forgotten the vow she made. Indeed, she sometimes sleeps on the floor in her new home because she offers her own bed to Duke University Hospital’s Host Homes program, which provides the families of out-of-town patients with a comfortable place to stay. “Trust me, it’s the least I can do,” Ms. Jules says. “It’s part of my bargain with God.”

Clearinghouse CDFI

Frank and Terri King Placentia, CA

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When Frank and Terri King lost their home in January 1998, their finances began to spiral downward. Unable to afford the high rents in Orange County, the couple and their four children moved in with Mr. King’s parents and started saving for another house.

That goal proved elusive. When their financial problems persisted, the Kings filed for bankruptcy. Even when they did manage to put away some money for a down payment, they could not get a decent loan from a traditional lender. “If we could qualify, it was at such a high interest rate that, with housing prices going up the way they were, there wouldn’t have been any way I could have afforded to get into a house,” Mr. King says.
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Mr. King and his family lived with his parents for eight years. But everything finally began to change when he saw a flyer for Clearinghouse CDFI and gave them a call.

Launched in 1997, Clearinghouse CDFI is a for-profit corporation committed to financing “unbankable” projects benefiting low-income families and underserved communities throughout the state. The organization provides direct loans for affordable housing, community development projects, small businesses, and other activities qualified under the Community Reinvestment Act. In 2006 alone, Clearinghouse CDFI funded 260 loans totaling $137 million.

The Kings were among the borrowers Clearinghouse CDFI financed in 2006. Clearinghouse gave them a $324,000 first mortgage at 5.125 percent. The CDFI also helped them to secure a Mortgage Assistance Program loan from Orange County to make the down payment.

When the Kings moved into their house in Placentia, they felt as though they had come home again. “It gave us a sense of completeness,” Mr. King says. “It had seemed like something was missing, then once we had our home, it was just overwhelming. My wife would cry at the drop of a hat, just thinking about having a home again.”

Housing Partnership Fund

Seven Courts Apartments Atlanta, GA

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After years of neglect, the Seven Courts Apartments in Atlanta are being transformed into a vital community resource, thanks to an inspired partnership between Progressive Redevelopment Inc. (PRI) and the Housing Partnership Fund (HPF).

The new vision for the property came from PRI, a leading nonprofit developer of affordable housing in Georgia. PRI’s plan was to rehabilitate the building and to reserve all 171 units for low-income tenants. Twenty-nine units—17 percent of the total—would be set aside for homeless families and others with special needs.
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Because of the complexities of the project’s construction financing, PRI needed bridge funds to acquire the Seven Courts Apartments and hold them until the construction financing was in place. PRI turned to HPF, a certified community development financial institution and a lending affiliate of the Housing Partnership Network, a peer network and business alliance of high capacity, entrepreneurial development nonprofits. HPF has provided financing to 32 members of the Housing Partnership Network, enabling them to build and acquire more than 12,000 affordable homes valued at nearly $1 billion.

HPF came through with a $1.75 million acquisition loan for PRI. “Without the acquisition loan, we would not have been able to develop this project,” says Richelle Patton, Vice President of Project Development at PRI. “We found the HPF loan staff to be easy to work with, supportive of our mission, and patient as our construction closing took longer than expected.”

The renovated Seven Courts Apartments opened in May 2008. In addition to developing and managing the property, PRI provides on-site support services through its resident services division, CaringWorks Inc. Among the services CaringWorks provides are individual case management, crisis intervention, and referrals to a wide variety of outside social service agencies—all designed to empower tenants and improve their quality of life.

New Hampshire Community Loan Fund

Lakes Region Cooperative Belmont, NH

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When the owners of the 111-site Lakes Region Cooperative manufactured housing park refused—for a second time—their tenants’ offer to purchase the property, the tenants in the co-op feared the worst. They suspected that the owners were about to sell the property to another buyer—a move that would certainly mean higher rents—and they turned to the New Hampshire Community Loan Fund (NHCLF) for help.

Since its founding in 1983, NHCLF has been guided by the belief that low-income people can achieve long-term economic stability if they are given access to capital resources and the knowledge to use them. The organization is a leading provider of financing for manufactured housing parks and has made more than 1,400 loans totaling more than $100 million to build housing, create jobs, and support essential services.
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The co-op later learned that the new buyer had promised to limit annual rent increases for current tenants to six percent per year for the first five years—a deal the buyers considered quite generous. During the eight years it has owned the property, the co-op has increased rents only once—by $20 per month. It has also managed to make several improvements, including replacing the well house, paving roads, and replacing septic systems.

“My favorite part of living here is the freedom of ownership,” says Lois Parris, Founding President of the Lakes Region Cooperative. “When we first bought the park, I remember my first feeling, that no one could take this away from us, not our homes, not our park. We owned it.”

Low Income Investment Fund

General Board of Pension and Health Benefits of the United Methodist Church Evanston, IL

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The General Board of Pension and Health Benefits is a nonprofit agency of the United Methodist Church that administers retirement, health, and welfare benefit programs for more than 74,000 clergy and lay employees of the church. The largest faith-based pension fund in the United States, the General Board manages and invests more than $16 billion in assets.

For more than a century, the General Board has been committed to stewardship. One way it demonstrates that commitment is through a $1.7 billion investment program that promotes affordable housing, community development, and expanded loan opportunities for low-income communities around the world, all while earning a market rate of return commensurate with risk.
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The General Board makes no direct loans through this investment program. Rather, it works through financial intermediaries that present loan participation opportunities for a variety of community development projects. One of those intermediaries is the Low Income Investment Fund (LIIF) based in San Francisco, California.

Over its 23-year history, LIIF has worked to strengthen communities by providing loans, grants, and technical assistance to community development organizations that serve low-income people and communities. The organization has provided more than $800 million in financing and technical assistance for projects in 26 states, leveraging additional private, public, and philanthropic investments of more than $5.3 billion.

In 1998, the General Board capped its participation in LIIF loans at $5 million. It raised the cap to $25 million in 2003 and then to $75 million in 2006. In late 2007, it raised the cap once again, to $200 million. The expansion of the relationship will allow LIIF to provide much-needed capital to its borrowers.

The relationship has clear benefits for the General Board as well. “We invest in projects that support the Church’s mission to make the world a better place, one community, one block, and sometimes one building at a time,” says David Zellner, the General Board’s chief investment officer. “The opportunities to make investments providing market-rate financial returns while making a positive social impact are among LIIF’s advantages to the General Board.”

Chicago Community Loan Fund

Logan Square Cooperative Chicago, IL

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In 2001, several long-time residents of northwest Chicago’s Logan Square neighborhood saw their community gentrifying and housing prices rapidly escalating beyond their reach. Although they all wanted to buy homes in the neighborhood, they also wanted to continue dedicating their lives to the not-so-lucrative social justice work to which they were committed. It seemed they could not do both.

But then they came up with a novel solution. They would form a housing cooperative, buy a building in the neighborhood, and live together as a community that reflected their social justice values. The Logan Square Cooperative was born.
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For financing, the new co-op turned to the Chicago Community Loan Fund (CCLF). Established in 1991, CCLF provides loans and technical assistance to community development organizations throughout Chicago for affordable housing, economic and commercial development, and social service and nonprofit facilities. The organization targets challenging projects that will help revitalize low- and moderate-income communities.

With a $505,000 fixed-rate loan from CCLF and another $78,000 from the North Country Development Fund, Logan Square Cooperative purchased an eight-unit property in 2001. The co-op has done extensive rehab on the building. Because the co-op operates the property as a limited-equity housing cooperative, when a member sells a unit, the price is capped to keep units affordable.

Having found high-quality, affordable housing, Logan Square Cooperative members continue to pursue their social justice work—and to enjoy a rare sense of community in the midst of a dynamic urban environment. “I’ve gotten used to there always being somebody nearby if I need someone to take care of the cats or I feel uncomfortable if I’m home by myself,” says Judi Kinch, a founding member of the co-op. “I think that’s the kind of experience most people in this building have. They have a personal sense of security and community because they know everybody well.”

Southern Bancorp

KIPP Delta College Preparatory School, Helena, AK

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In 2005, the largest school district in Phillips County, Arkansas, went through five superintendents and had a projected budget deficit of $2.26 million. Not surprisingly, the district had a graduation rate of only 54 percent and was undermining the county’s revitalization prospects by failing to provide a workforce that could compete in today’s economy.

One organization working to reverse the decline in education in Phillips County is the KIPP Delta College Preparatory School. And it has found a highly effective ally in Southern Bancorp of Arkadelphia.
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KIPP Delta was founded in 2002 on the premise that education and high expectations can help children to overcome the obstacles created by race, economics, and environment. It is affiliated with the KIPP (Knowledge Is Power Program) Foundation of San Francisco, California. Currently, 57 KIPP schools operate in 17 states and the District of Columbia, serving more than 14,000 students.

When KIPP Delta opened, it had just three classrooms and served only 65 fifth-graders. The school continued to add one grade level each year and by its third year was ready for a larger facility. It was a project that Southern Bancorp was eager to take on.

Founded in 1986 to help end decades of economic decline in the rural South by investing in people, jobs, business, and property, Southern Bancorp has evolved into the largest and most profitable rural development banking organization in the United States. With $550 million in assets, 40 locations in rural Arkansas and Mississippi, and more than 250 employees, the organization has the physical presence, infrastructure, and capacity to drive regional change.

With a $1.15 million loan from Southern Bancorp, combined with a $1.15 million U.S. Department of Agriculture direct loan, KIPP Delta built a new school with 11 classrooms, office space, and a multipurpose area. It was the first new construction in Helena in 10 years.

Today the school serves 315 students in grades 5 through 10 and has achieved astonishing results in the classroom. The first class increased its median score on standardized testing from the 18th to the 82nd percentile in four years, and successive classes have shown similarly dramatic improvements. A recent column in the Wall Street Journal called KIPP Delta “one of the best schools in Arkansas, maybe the South.”

“We view our relationship to Southern Bancorp as a key factor to our growth, development, and success,” says Scott Shirey, Director and founder of KIPP Delta.

Idaho-Nevada Community Development Financial Institution

T&L Cedar Lawn Furniture Buhl, ID

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In 2002, Tom and Leasa Speck, the owners of T&L Cedar Lawn Furniture, reached a crossroads. After 16 years in business in Buhl, Idaho, their company had struggled in the economic downturn that followed the events of September 11, 2001. The lease on their building was set to expire, and even though they had an option to purchase the property, they weren’t sure they could qualify for a loan.
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After reviewing T&L’s financials, the loan officer at Key Bank suggested that the Specks contact the Idaho-Nevada Community Development Financial Institution, a CDFI founded in 1999 to provide financing for small business ventures and affordable housing projects in Idaho and Nevada through its offices in Pocatello and Boise.

Realizing that T&L was one of the few companies in its predominantly agricultural community to provide manufacturing jobs, the Idaho-Nevada CDFI offered the company a $30,300, 20-year loan with a fixed interest rate of 6.5 percent. Once the CDFI was on board, Key Bank agreed to provide additional financing of $170,000, and T&L purchased the property.

“At first, Key Bank was skeptical about giving us the real estate loan,” says Mr. Speck. “If it hadn’t been for the CDFI, it probably wouldn’t have happened. We would probably be doing something different right now.”

Things are going well for T&L. The company’s annual sales have increased from just over $200,000 in 2002 to $710,000 in 2007. Its seven employees have good jobs they can count on, and Buhl continues to have a vital manufacturer in its downtown core.

Community First Fund

Carlos Gonzalez, Lancaster, PA

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Some people believe one individual can do nothing to transform a decaying neighborhood. But not Carlos Gonzalez.

A native of Chile, Mr. Gonzalez came to the United States in 1986 with his wife, Lucciola, and settled in Lancaster. He became a master plumber and started his own business, C.G. Plumbing and Electric. In time, he purchased and renovated a rundown house on South Ann Street.

But when Mr. and Mrs. Gonzalez moved into their new home, Mr. Gonzalez discovered that the neighborhood was a lot rougher than he realized. Crime was rampant, and police were a constant presence. So Mr. Gonzalez decided to clean up his neighborhood one house at a time.
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His idea was simple: He would buy an abandoned house in his neighborhood, renovate it, and sell it to a good family—not to make a profit but to improve the neighborhood. All he needed was someone who believed in him enough to lend him some money.

Mr. Gonzalez approached Community First Fund (CFF). Formed in 1992, CFF is the premier economic development organization serving low-income communities in central Pennsylvania. The organization provides loans and technical assistance to small business owners, affordable housing developers, and community organizations throughout a 13-county region that is home to 3.5 million people.

CFF appreciated Mr. Gonzalez’s intentions and his work ethic and in 2001 gave him a $5,000 loan to buy the house. It was the first of eight loans, totaling $188,700, which CFF has provided to Mr. Gonzalez. With CFF’s help, Mr. Gonzalez has purchased, renovated, and sold 15 homes in his neighborhood—all while continuing to operate his plumbing business. As a result of his efforts, the property values in his neighborhood have increased and crime has declined. He has also created jobs for members of his family who help him manage his business.

“Community First Fund is wonderful,” Mr. Gonzalez says. “They’ve believed in me and my view of making a profit in the neighborhood, not in the pocket.”

First Nations Oweesta Corporation

Oweesta Collaborative Rapid City, SD

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Like many reservations in the western United States, the Wind River Reservation in Wyoming and the Pine Ridge and Cheyenne River Reservations in South Dakota are plagued by persistent poverty. One key factor that contributes to their economic hardship is the lack of small businesses and the resulting lack of private-sector jobs.

The Oweesta Collaborative is a partnership of nine regional organizations—including three certified Native CDFIs—in South Dakota, Wyoming, and Montana dedicated to transforming reservation economies by strengthening the culture of small business development. Funded by a three-year, $2 million grant from the W. K. Kellogg Foundation, the Oweesta Collaborative provides technical assistance, education, networking, and access to capital to Native entrepreneurs on the Wind River, Pine Ridge, and Cheyenne River Reservations. Its ultimate goal is to create a system for entrepreneurial development that can be applied in other reservations across America.
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The Oweesta Collaborative was formed by First Nations Oweesta, the nation’s premier intermediary for Native CDFIs. Established in 1986, Oweesta (from the Mohawk word for money) helps to build strong Native institutions and programs through various professional services designed to build local capacity and to promote economic sovereignty.

During 2006 alone, the first year of the Oweesta Collaborative, partners created, expanded, or sustained 80 Native-owned businesses, provided training in entrepreneurship and small business management to 592 adults and 300 young people, and provided technical assistance to 274 entrepreneurs. They are indeed creating a functioning and adaptable system for private-sector economic development in rural Native communities.

“With the Oweesta Collaborative, as with all of our work in Native communities, we try to follow the principles of our Oweesta asset-building model and develop institutions, programs, resources, and tools that can be easily adapted in the communities we work in,” says Elsie Meeks, President and CEO of First Nations Oweesta Corporation. “We know every Native community is different, but we continue to work on learning from the successes as well as the challenges so we can promote collaboration and cooperation, and spread the seeds of economic success.”

Federation of Appalachian Housing Enterprises Inc.

Kentucky River Community Care Inc. Hazard, KY

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Case managers at Kentucky River Community Care Inc. (KRCC), a nonprofit community mental health center established in 1969 to serve an eight-county region of southeastern Kentucky, recognized that many of their clients lacked access to decent, affordable housing, which undermined their ability to succeed in their treatment. Indeed, managers were spending much time trying to help their clients find rental units—no small task in the small communities where KRCC works.
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In 2006, KRCC decided to build new rental properties for its clients in three of the most impoverished rural communities in its service area. Realizing they needed the services of an affordable housing expert, KRCC turned to the Federation of Appalachian Housing Enterprises Inc. (FAHE) of Berea, Kentucky.

Founded in 1980, FAHE serves the Appalachian states of Kentucky, Tennessee, Virginia, and West Virginia by providing access to financial services to a member network of more than 40 local community agencies working to eliminate poverty in the region. Over the years, FAHE has invested more than more than $60 million to build more than 6,000 new, affordable homes and to preserve more than 33,000 units of existing housing.

For Red Bud Housing, as the KRCC project came to be known, FAHE provided consulting services, including project planning and assistance with grant applications, and served as the syndicator of $2.95 million in low-income housing tax credits through FAHE capital’s equity fund. For long-term management of the properties, FAHE connected KRCC with one of its members, Community Housing Inc., which specializes in managing affordable rental homes for special-needs residents.

Red Bud Housing was completed in less than a year, providing 32 affordable, two-bedroom rental units for special-needs populations, including survivors of domestic violence and people with serious mental illnesses or in recovery from substance abuse. All the units in Red Bud Housing were rented the first day they became available in 2007. KRCC is already partnering with FAHE on two new projects that will create 70 more units.

“FAHE was a partner at the table in terms of helping us think through how to minimize the risk of the project and to serve the population that needed this housing,” says Sheila Allen, KRCC’s Administrator for Executive Services. “Without them, it would have taken us a lot longer to come up with a workable model.”

Coastal Enterprises Inc.

Look’s Gourmet Food Company, Whiting, MA

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In 1917, Willard M. Look founded the East Machias Canning Company on a wharf at the head of Holmes Bay in Whiting, Maine, and soon developed a reputation for selling canned crabmeat and lobster with an authentic, fresh-off-the-docks taste.

East Machias Canning was one of more than 100 multiproduct food canneries that once flourished in Maine. But by 2002, it was the last one standing. Managed by Mr. Look’s son, it had seven employees and annual sales of $800,000.
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One man who wasn’t about to let the old cannery die was Mike Cote.

In 2003, Mr. Cote—a Maine native and a 25-year veteran of the natural and specialty foods industry—purchased East Machias Canning and set out to continue handcrafting and hand packing specialty seafood in small batches, the way people on the Maine coast had always done. With a nod to its founder, he christened his new business Look’s Gourmet Food Company.

Early on, Mr. Cote formed a productive partnership with Coastal Enterprises Inc. (CEI). Established in 1977, CEI provides financing and support for the development of job-creating small businesses, natural resources industries, community facilities, and affordable housing. Its primary market is Maine, but in recent years it has expanded its programs to northern New England and upstate New York.

CEI provided significant venture capital to help the new Look’s Gourmet Food Company to develop its business model. It also provided technical assistance in branding and marketing. Today, Look’s still uses many of the handling and canning processes that Willard Look developed, but its impact has greatly expanded. There are now 26 employees—a significant economic contribution to its coastal community of 2,200—and sells its products nationwide, under the Bar Harbor Foods label, in supermarkets, natural food stores, and other specialty food outlets.

“Look’s makes a wholesome product, and it is creating jobs in rural Maine,” says Ron Phillips, President of CEI. “They represent a true triple-bottom-line investment involving the nexus of economic impact, social equity, and environmental stewardship. We are happy to be able to support them and to help them grow.”

Enterprise Community Partners

Green Communities Initiative Columbia, MD

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For all of us, the environment in which we live and work has a profound impact on our physical and mental health. But a growing body of research indicates that for low-income people, the impact can be especially negative because they are more likely to live in substandard housing that can cause various diseases attributed to the environment, including asthma, lead poisoning, and cancer.
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That is just one reason why Enterprise Community Partners, through its supporting organization the Enterprise Community Loan Fund, is seeking to transform the way we think about, design, and build affordable homes.

One of the largest nonprofit loan funds in the country, the Enterprise Community Loan Fund is a leading source of short-term financing to build affordable housing in the United States. Through the fund, Enterprise Community Partners focuses on providing critical up-front funding for the predevelopment and acquisition phases of development and, over the past 25 years, has supported projects of more than 800 community development partners nationwide.

Enterprise Community Partners has become a pioneer in financing green affordable housing. Through its Green Communities initiative, the first national green building program developed for affordable housing, Enterprise offers grants, loans, tax-credit equity, training, and technical assistance to give developers and builders the resources they need to bring green projects to life.

Through 2007, Enterprise Community Partners had made more than $37 million in predevelopment and acquisition loans to support more than 50 green, affordable rental and for-sale developments around the country. The organization also operates regional loan funds in Louisiana and Atlanta that include incentives for green development and is piloting a new construction-financing product for green single-family homes.

For Michael Sloss, Vice President for Product Innovation at Enterprise Community Partners, the benefits for everyone are clear. “Our Green Communities initiative is helping to produce healthier, more affordable, and energy-efficient housing for low- and moderate-income people,” he says. “At the same time, it is contributing to the reduction of greenhouse gas emissions.”

ShoreBank Enterprise Cascadia

Willapa Land and Dendrology Corporation, South Bend, WA

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In the 1960s, the Knappton Cove woodland, a 120-acre forest on the Columbia River estuary, was clear-cut by bulldozers. As the forest regenerated, the trees that grew back were not the hemlock and spruce that once flourished, but alder—a species that is common in the region but that had become unnaturally dominant at Knappton Cove because of the destructive logging practices employed there.

Allen Lebovitz looked at the Knappton Cove forest and saw the potential for great things.
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Mr. Lebovitz had founded the Willapa Land and Dendrology Corporation (WILD), a timber company, to employ a new approach to forest management based on the idea that selective logging and replanting could extract more log value and protect sensitive ecosystems. He believed that his company could restore balance to the Knappton Cove forest using practices that would produce economic as well as ecological benefits.

Mr. Lebovitz turned to ShoreBank Enterprise Cascadia for financing to help him test his premise. An affiliate of ShoreBank Corporation, the nation’s oldest CDFI, ShoreBank Enterprise Cascadia was established in 1995 to strengthen the economic, environmental, and social conditions of the natural resource-dependent communities of the Pacific Northwest. In the last decade, ShoreBank Enterprise Cascadia has invested $20 million in 200 business, social, and civic ventures that represent new strategies for economic security and ecological health.

With a $222,828 loan from ShoreBank Enterprise Cascadia and $123,000 in additional financing from other lenders, WILD purchased the forest at Knappton Cove. The company’s crew harvested some of the alder and directed it to high-value markets as Forest Stewardship Council Smartwood™ for furniture, paneling, and plywood. They also replanted the tract with native species that complement the remaining mature trees and stabilize steep slopes. Conservation easements and riparian deed restrictions generate additional return on investment.

It may take a century for the Knappton Cove forest to return to its original state, but WILD’s project has ensured the perpetual protection of the site’s environmental values and could produce strong, sustainable economic returns from forest products for years to come. Mr. Lebovitz is grateful for a financing partner that appreciates both aspects of his work. “My company’s business model is built on two kinds of capital: financial and natural,” he says. “ShoreBank Enterprise Cascadia recognizes value in both.”

Mountain Association for Community Economic Development

Forest Opportunities Initiative Berea, KY

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The forests of eastern Kentucky are a tremendous environmental and economic resource, but they have long been managed with a certain lack of balance. “Central Appalachia is a region where destructive forestry practices and coal mining have been the norm,” says Justin Maxson, President of Mountain Association for Community Economic Development (MACED). “Economic extraction and environmental degradation have gone hand in hand.”

MACED is working hard to reverse that unfortunate history.
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For 30 years, MACED has been dedicated to growing local economies and creating opportunities for low-income people in Appalachian Kentucky. The organization recognizes that, although a vibrant economy is critical, it is only one measure of a community’s well-being. So in addition to providing financing and technical assistance to develop local businesses, MACED crafts a variety of initiatives to protect the rich natural resources of the region while creating new wealth.

One of those initiatives is the Forest Opportunities Initiative (FOI). Launched by MACED in 2007, FOI is designed to enable owners of forestlands to restore the health of their forests and to generate income from a new source: the sale of carbon credits earned for the greenhouse gases their trees remove from the atmosphere.

To be eligible for the FOI program, landowners must develop a stewardship plan for their forests, conduct a forest inventory, and be certified through the Forest Stewardship Council or the America Tree Farm System. MACED provides loans and educational and technical assistance to help them get started, and then collects and sells their carbon credits for them on the Chicago Climate Exchange.

MACED currently has 5,600 acres of forest under contract and is working with landowners to meet the eligibility requirements on another 20,000 acres. The program has already helped to sequester 25,000 tons of carbon, generating $90,000 of new income for landowners. “In bringing carbon credits to landowners, MACED is helping to show that good environmental practice can also make economic sense,” Mr. Maxson says. “Sustainable forestry practices can show real monetary and environmental returns to people and communities in need.”

Montana Community Development Corp.

Big Sky Shavings Hall, MT

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When a retired forestry professor and his two partners, a retired rancher and a retired banker, decided to start a new company that would create jobs in Granite County, Montana, population 2,965, they looked to the forests around them and saw an unwanted but abundant resource that they believed could be transformed into a profitable product.
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The resource was slash—the limbs and branches left behind by tree-thinning operations intended to improve the health of the forest and to reduce the hazard of wildfire. Landowners are required to burn the slash piles on their property, but the three retirees had another idea. They would process the raw wood into wood shavings and sell it as bedding for horses and other animals.

In 2007, the trio launched Big Sky Shavings. Among the financing partners contributing to the creation of the start-up was the Montana Community Development Corporation (MCDC) of Missoula.

MCDC partners with people and communities that want to prosper, providing innovative financing and business development products that create income opportunities for all members of its community. Since 1989, MCDC has served hundreds of entrepreneurs in western Montana with loans, consulting, and training.

MCDC provided Big Sky Shavings with two loans totaling $111,750, which, when combined with $538,000 in financing from the Flint Creek Valley Bank, enabled the company to get started. MCDC also provided invaluable guidance. “They have an individual on staff, Craig Rawlings, who is an expert in wood products,” says Bob Lanford, the retired forestry professor who cofounded Big Sky Shavings. “He has certainly been a good sounding board and source of technical expertise to help us with the development of the project.”

After just three months in business, Big Sky Shavings is thriving. It has already become a two-shift operation that employs 12 people. Equally important, it is finding a use for wood waste that would otherwise go up in smoke.

Opportunity Fund

Lien Cao, San Jose, CA

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A single mother taking care of two elderly parents, Lien Cao was struggling to find an affordable place to live in Silicon Valley when she found Opportunity Fund through a social service agency.

Opportunity Fund, a CDFI founded in 1993, helps low-income people throughout the San Francisco Bay Area build assets and hope for the future. Ms. Cao’s life changed when she joined Opportunity Fund’s matched savings program and began to attend financial education classes.
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Ms. Cao’s goal was to buy a home for her children and parents but she thought it would take a lifetime to save. She started saving a minimum of $60 each month, learned to stick to a budget, and avoided going further into debt. At the end of three years, Opportunity Fund’s program matched her savings two to one to equal $6,000. She used her savings to buy a home on a safe, tree-lined street in San Jose.

Because of the financial education she received, Ms. Cao continues to save for a down payment for her children's future home and for her retirement. For Ms. Cao, disciplined savings gave her a new sense of security. She says, &lddquo;What I learned from the IDA program will last me a lifetime, and it has secured my children's future as well."”

New Hampshire Community Loan Fund

Schuyler Merritz, Concord, NH

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For most of the 10 years that Schuyler “Sky” Merritz and her children lived in low-cost rental units owned by the Concord Area Trust for Community Housing (CATCH), she never thought she would be able to afford her own home. That began to change when she learned about the New Hampshire Community Loan Fund’s (NHCLF) Individual Development Account (IDA) program through CATCH’s homebuyer education class.
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One of the first statewide community development financial institutions in the country, NHCLF launched its IDA program in 2001 to help low- and moderate-income individuals become homeowners, successful business owners, or post-secondary education graduates. Using funds donated by financial institutions, government agencies, and charitable organizations, NHCLF provides three dollars in matching funds for each dollar an IDA participant saves, up to a total of $8,000 in combined matched funds and savings. NHCLF also provides extensive financial literacy training geared to each participant’s savings goals.

During the two years that Ms. Merritz participated in the IDA program, she saved $2,000 on her own, which qualified her for a $6,000 match from NHCLF. In July 2007, she used her savings for the down payment and closing costs on a condo in Concord. She found the unit through Homes Downtown, a CATCH program to revitalize downtown Concord neighborhoods by renovating duplexes and selling them at below-market rates to people of modest means.

Ms. Merritz loves her new home, and so do her children. “They have told me they feel really good that they have something that is theirs that they can take care of,” she says. And she acknowledges that none of it would have been possible without NHCLF and CATCH. “It was definitely a team effort. I don’t believe I could have done it with any one of those pieces missing. If I didn’t have the IDA fund, I couldn’t have saved the money. And if CATCH didn’t have the Homes Downtown program, I couldn’t have found an affordable house.”

Northeast Entrepreneur Fund

Let the Whole World Know, Duluth, MN

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For years, Carol Willoughby worked as a volunteer, making signs for her church and local PTA. Then one night she had a dream that she was going to have her own business. “It was such a strong feeling that I just thought, you know what, this is what I’m supposed to do,” she recalls.
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And so Ms. Willoughby did it. She started a sign-making business, even though she had nothing to start it with beyond a certain amount of technical skill and a capacity for hard work. To learn something about running a business, she took a class at a technical college. And she got a one-year grant to launch her company, Let the Whole World Know.

She started out small, serving other small businesses and individual contractors. But her experience soon yielded an important insight. “I learned enough to know that I really needed a lot of help,” she says. Unfortunately, help was no longer available through the technical college. Then she heard about the Northeast Entrepreneur Fund (Fund).

The Fund was established in 1989 to help people in an 11-county region of northeastern Minnesota and northwestern Wisconsin to develop their ideas for starting or expanding small businesses. By offering financing as well as classes and one-on-one consulting for budding entrepreneurs, the Fund is creating an environment that fosters the growth of independence and self-determination.

At the Fund, Ms. Willoughby found all the help she was seeking. “They provided technical training and also gave me the confidence to actually think I could do it,” she says. “I would ask them for help with everything I faced, from making business cards to going to a trade show to writing an invoice—everything.” She has also received several loans from the Fund.

Today, nearly 17 years after Ms. Willoughby first went to the Fund, Let the Whole World Know is thriving. The company uses modern computer graphics and printing technology to create state-of-the-art signs for some of the biggest organizations and events in the region. With the Fund’s assistance, Ms. Willoughby has started a second business, Window Doodads, which supplies unique window appliqués to more than 600 retailers nationwide. The two companies that literally began with a dream have created six new jobs and provide a comfortable income for Ms. Willoughby’s family.

Carver Federal Savings Bank

Richar Anozier, New York, NY

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Richar Anozier is only six-years old, but he already has a savings account and dreams of attending Stanford University when he grows up.

Richar is just one of 75 preschoolers in New York City who participated in the Corporation for Enterprise Development’s Saving for Education, Entrepreneurship, and Downpayment (SEED) Policy and Practice Initiative, launched in 2003 in 12 communities across the United States to provide matched-savings accounts and financial education for young people. Each SEED account holder receives an initial deposit of $500 and can earn a dollar-for-dollar match and savings incentives up to a total of $2,000. The money can be used for financing education, starting a small business, buying a home, or financing retirement.
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In New York City, the SEED savings accounts are held at Brooklyn-based Carver Federal Savings Bank, a CDFI and the largest bank operated predominantly by African Americans and Caribbean Americans in the United States. As of June 30, 2007, Carver’s SEED participants had accumulated $115,467 in savings and matching dollars, with an average account balance of $1,539.

Both Richar and his mother, Darlene, attend financial education classes offered by the SEED program. Whenever Ms. Anozier had savings, she took Richar to Carver Bank to make deposits into his account. “It”s a fantastic feeling knowing that the money I’m depositing is going toward my son’s future,” she says. “I want him to know education is the most important thing.”

Richar recently transferred his savings from Carver Federal Savings Bank to a 529 account to further his dream of one day attending Stanford University.

Alternatives Federal Credit Union

Payday Credit Plan, Ithaca, NY

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New York State does not have a legally established payday lending industry, so the kinds of storefront payday lenders that flourish in cities and towns in other states across the nation are not seen there. But according to Tristram Coffin, CEO of Alternatives Federal Credit Union, payday lenders still do business in New York, both online and through a small, underground payday loan industry, and they are finding a ready audience for their services.

“The members of our credit union are predominantly low-income or very low-income people who often need short-term financing in order to make ends meet,” Mr. Coffin says. “So they are more predisposed to look for that sort of loan.”
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The problem with payday loans is not just the high-interest rate and fees. The short repayment term— typically one week to one month—makes it hard for cash-strapped borrowers to repay their loans and to pay their basic expenses. As a result, many borrow again and again. “They get trapped in a cycle of repetitive borrowing,” Coffin says. “That leads to paying interest this month on last month’s loan, which ultimately leads to paying far more back in interest and fees than they borrowed in the first place.”

As a CDFI dedicated to building wealth and creating economic opportunity for underserved people and communities, Alternatives Federal Credit Union was determined to offer its members a better choice. In 2007, the organization launched its Payday Credit Plan as an alternative to payday loans. The plan works much like a line of credit. Members can borrow whenever they like, but must pay off the amount with their next paycheck or benefit check. The Payday Credit Plan carries a $40 annual fee and an 18 percent interest rate—a bargain compared with the staggering rates payday loans charge. And five percent of each loan is deposited into a savings account for the borrower to help encourage savings.

Mr. Coffin says that the Payday Credit Plan is enabling members to meet their needs for emergency cash at a fraction of the cost they would pay a payday lender. But that’s only part of the plan’s value. “We have an opportunity to integrate consumer credit counseling in our delivery of the service and to help people deal with the root causes of why they need a short-term loan in the first place,” he says. “By providing education about borrowing and then having our Payday Credit Plan as a fallback for emergency situations, we are better positioned to help people avoid the trap of recurring use.”

Self-Help Credit Union

Carl and Doreen McAllister, Wake County, NC

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The McAllisters had lived in their home for years and had always made their mortgage payments on time. But when an unexpected drop in their income forced them into bankruptcy, they faced the prospect of losing their house.

While the McAllisters were in bankruptcy, a new lender took over the servicing of their mortgage and claimed that the McAllisters owed $13,000 in overdue payments and late fees. The McAllisters maintained that they had made their payments when due. And they knew that they could never afford to pay their mortgage and the past due amount the lender demanded.
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The local nonprofit legal aid service that was helping the McAllisters settle the dispute also referred them to Self-Help Credit Union (Self-Help CU).

Self-Help CU is an affiliate of Self-Help, one of the largest community development financial institutions in the United States. Since its founding in 1980, Self-Help has provided $4.5 billion in financing to 45,000 homeowners, small business owners, and nonprofits nationwide. The organization also operates the Center for Responsible Lending, a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices.

In 2006, Self-Help CU provided the McAllisters with a new $113,000 fixed-rate mortgage, which enabled them to escape their predatory loan and remain in their home. The interest rate on their new loan was 7.5 percent, a welcome change from the 13 percent they had been paying.

Since getting the loan in 2006, the McAllisters have made all their payments on time and are well on their way to rebuilding their credit. According to Culley Holderfield, the Self-Help CU loan officer who assisted the McAllisters, that”s all part of the plan. “Our mission is to help people build wealth through homeownership,” Mr. Holderfield says. “If we have folks who are losing wealth as the result of predatory practices, we want to help them to right their ship, so their home can stop being a burden to them and they can start building some equity.”