The Common Good
May 2008

Seeking the 'Fair Balance'

by Peg Rosenkrands | May 2008

How putting our money into community investments -- such as specific banks, credit unions, or microcredit funds -- can help create social change.

Writing about Paul’s second letter to the church at Corinth, Bible scholar Ched Myers points out that Paul quotes Exodus 16:18 to draw forward the “abundance and limits” lesson of the manna story in relation to giving in the Corinthian church. Paul writes, “it is a question of fair balance between your present abundance and their need. ... As it is written, ‘The one who had much did not have too much, and the one who had little did not have too little’” (2 Corinthians 8:13-15). Taken as a whole, 2 Corinthians 8:1-15 can be an invitation to more deeply integrate social justice values with personal giving and investing plans.

This is an important invitation, because many of us have benefited from a system that steers the “gathering of too much” in our direction. One way to acknowledge the responsibility of privilege is by using the economic justice vehicle of community investing to move money for social change. Community investing means putting money into specific banks, credit unions, microcredit funds, and other vehicles that create opportunity and resources for low-income people in the United States and abroad who are underserved by traditional financial institutions. Community investors help make financial services available to low-income individuals and supply capital for small businesses, affordable housing, and community services.

Paul’s timeless message acknowledges wealth disparity and addresses the spiritual issues at the heart of our newer, yet fundamentally old, economic realities. Reporting that the poorer Macedonians have given abundantly and “beyond their means” (2 Corinthians 8:3), Paul tells the wealthier Corinthians that he is now “testing the genuineness of your love against the earnestness of others” (8:8). He further advises that “it is appropriate for you who began last year ... to do something ... now finish doing it, so that your eagerness may be matched by completing it according to your means” (8:10-11). This is an invitation to reflect on the “genuineness of your love against the earnestness of others,” including those who live in poverty (8:8). And all are tested in the context of the Creator’s gift economy, which provides enough for all if we do not gather too much.

A deeper Christian love is a justice love that moves money in solidarity with those who have too little. It touches every aspect of our financial lives, from how we earn, spend, and give to how we invest and write our wills. It is a love that requires vigilant discipline and continuous leaps of faith because the glamour of the marketplace creates a slippery slope. Many of us are continuously drawn off center and lose touch with two economic realities that are as true today as they were in Paul’s time.

First, U.S. philanthropy reports show that, proportionately speaking, low-income households are the most generous givers. More important, in an economic system where altered power relationships serve to direct wealth upward, the poor have also unwillingly “given” their financial security through less-than-living wages, disproportionate taxation, lack of affordable housing, and compromised health care.

Without undue pressure and according to our individual means, Paul’s words challenge believers to “finish” the work. What many of us have begun, in well-intentioned philanthropy or otherwise, can be brought to completion only by intentionally putting some of our net worth to work as well for the good of the commonwealth. Our assets are not sacred. They are a tool we can use to restore right relations—our cutting edge in a life of Sabbath economics discipleship.

Examples of “Moving Money.”
Emotional barriers rise quickly when it comes to money. Voices from the past, anxiety about financial security, and fear of scarcity—often reinforced by culture and the marketplace—paralyze people a­gain and again. One way to gain some resolve is simply to begin by moving a small amount of money and living into the results of that action.

If, simply through changing your bank or credit union, you could move $1,000 of your savings and be guaranteed a high-impact social return as well as market-rate interest for the next three years, would you do it? Or would you choose to move $1,000 at a lower interest rate of 3 percent or less into a Washington, D.C.-based community development loan fund? According to the Calvert Foundation’s online Social Return Calculator, your $1,000 could build .19 affordable homes or finance .32 microenterprises (while creating .53 jobs) over the three-year term of your loan. You did not give the money away to do this; you simply moved it to a financial institution whose primary lending mission is to serve low-income people.

In 2004-05, I was coordinator of the team from Bartimaeus Cooperative Ministries (BCM) that led eight “Sabbath economics” retreats with 60 people from 45 households across the U.S. Participants used the BCM “Sab­bath Economics Cove­nant” to consider cutting-edges and next steps in household lifestyle and financial practices. (See Practicing Sabbath Eco­no­mics, by Matthew Colwell) Andy Loving, a Baptist minister and financial adviser from Louis­ville, Kentucky, was there to explain community investing.

Most of the retreat attendees were “peace and justice” folks. Adults of all ages participated. Some were working and some retired; there was a wide, balanced range of wealth. The weekend surprise, time and again, was the relative wealth that people possessed that they had discounted as unusable in social justice work. In transparent moments of financial sharing, many participants were able to move from their initial subjective feelings of scarcity to the more objective reality of having more than enough. Several groups charted their aggregate net worth and annual incomes, amazed at the potential collective power they held.In follow-up interviews, BCM learned that two-thirds of the households that had participated in the retreats subsequently moved a total of $2.75 million into community investing vehicles. (Many also put money into other socially responsible investments.) Many of the interviewees who were making such investments expressed a sense of empowerment, gratitude, and relief that they were able to address poverty at some of its roots.

In the United States, “community development financial institution” (CDFI) is the designation for approximately 1,000 community development banks, credit unions, loan funds, and small venture capital funds. The broader category of community investment institutions also includes microcredit providers in the U.S. and abroad. Community development banks and credit unions have depositors, but in general community investment institutions also raise operating, investment, and equity dollars from individuals, corporations (for example, banks meeting Community Reinvestment Act requirements), foundations, and government sources.

By 2005, U.S. community investments totaled $19.6 billion, almost five times more than the 1995 total of $4 billion. The “1% or More in Community Campaign” launched by the Social Investment Forum Foundation and Co-op America has highlighted this growth and encouraged more.

Putting Risk in Context.
Community investing opportunities ask people to consider what portion of their financial assets that they keep—not give away—can be put to work as lending capital for the benefit of low-income communities. According to individual means, there is a choice of insured or uninsured investment options, lower or higher interest rates, and varied terms of investment.

In the case of uninsured community development loan funds and microcredit providers, equity capital and loan loss reserves shelter investor dollars against loss of principal. A number of mutual and pooled funds also offer investors the lesser risk of a diversified community investment portfolio. We all need to do our homework in relation to what we can afford, educating ourselves and putting risk in perspective. Accessible and free information on community investing is readily available to individual and institutional investors as well as financial professionals. (See “Where to Learn More,” below.)

National community investing coalitions, as well as the CDFI Fund, established in the 1990s by the U.S. Department of the Treasury, also have organized data collection and research to enhance investment information for investors and professional advisers. The CDFI Fund has “certified” 771 financial institutions and granted more than $700 million in awards to those institutions meeting the rigorous requirements associated with receiving government awards. Awardees are searchable by state in the fund’s database (www.cdfifund.gov).

Better Together.
Consider joining the thousands of investors who have begun the good work of community investing over the past 30 years. You can help “complete the work” by placing a portion of your assets into community investments at the 1 percent, 10 percent, or even 100 percent level. It can be as simple as changing where you bank, or it can be as involved as working toward a new investment plan with an adviser. Begin today and allow it to grow with you over time.

Once you move some of your own money, invite others to join with you. You might start a community investment group in your church, host an education event, make a presentation to a committee, or plan a group visit to a community development financial institution near you. Much like shareholder actions, change in relation to money is driven most easily when it percolates upward from the grassroots. If 10,000 readers of this article were to move $1,000 into community investments, it would mean $10 million working in the banking and investment sectors toward lasting social change. Commit to a learning curve, take action, and encourage one another, paving the way for others to learn and act. Together, we can move money for social change and love more deeply in a spirit of economic justice.

Peg Rosenkrands, who has worked as a fundraising coach with faith-based nonprofits, was a social change investor and donor with 6 percent of her net worth in community investing, and led donor reflections on faith, money, and giving, when this article appeared.

A Measure of Success

The CDFI Coalition, promoting community development financing through advocacy and education, measures community development impact through its Data Project. The results reveal a new story of self-determination in low-income communities.

In fiscal year 2005, 496 “community development financial institutions” (CDFIs) provided $4.3 billion in financing, resulting in the following:

Financed and assisted 9,074 businesses, creating or maintaining 39,151 jobs;

Facilitated construction or renovation of 55,242 units of affordable housing;

Built or renovated 613 community facilities in economically disadvantaged communities;

Provided 11,401 alternatives to payday loans and helped 138,045 low-income individuals open their first bank account;

Financed 470 community service organizations, creating and supporting 14,446 child-care slots, 16,602 education slots, and 245,823 health-care slots.

Statistics from the CDFI Data Project, found at www.cdfi.org.

 

Where to Learn More

The Investing in Communities guide from the Social Investment Forum Foundation and Co-op America includes hundreds of CDFI listings by category. To order hard copies ($2 each), call 888-441-2406 or e-mail communityinvest@coopamerica.org. Or download it for free at www.coopamerica.org/pdf/GuideInvestCommunities.pdf.

To learn about the global impact of community investments, download Co-op America’s 36-page Investing for the World at www.coopamerica.org/PDF/CAQ67guideonly.pdf. Includes Oikocredit, a faith-based microfinance fund.

Find out the good your investment can do with the Calvert Foundation’s Social Return Calcu­lator located on the www.calvertfoundation.org home page.

For financial advisers and institutional investors, a detailed professional overview, due diligence guidelines, mutual fund primer, and a searchable database for hundreds of regional, state, and local community investment options can be found at www.communityinvest.org.

The Opportunity Finance Network has a subscription-based CDFI Assessment and Rating System (CARS) that provides a “comprehensive, third-party analysis of community development financial institutions.” Go to www.opportunityfinance.net and click on the “Financing” tab. —PR

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