CFED Newsletter: February 2012
There is growing interest across the country from innovative affordable housing providers in integrating asset building and other financial services into their affordable housing programs. As a pioneer and leader in asset building, CFED is being tapped to help structure financial programs and services in affordable housing programs that encourage low-income families to increase their level of financial literacy, improve their access to financial services and build assets.
CFED has long been engaged in one particular niche in the affordable housing marketplace – helping owners of manufactured housing take advantage of factory-built housing’s affordability, while also accessing the opportunity to build wealth in a way that more closely resembles the experience of owners of site-built housing. CFED began broadening its engagement in the housing field in 2011 through outreach and discussion with a number of housing organizations, including several innovative public housing authorities, a HUD Choice Neighborhoods Implementation Grant Awardee and the largest community development intermediary in the U.S.:
- The Cambridge Housing Authority in Massachusetts and the Tacoma Housing Authority in Washington State are both Moving to Work (MTW) participants and national leaders in affordable housing innovation. MTW gives unprecedented flexibility to public housing authorities to innovate. In 2012, CFED will be assisting both organizations with their efforts to integrate financial security programs within their housing programs. Exciting new ideas include efforts to get public housing residents banked, as well as the creation of a student Individual Development Account (IDA) – a special savings account that allows young residents to earn deposits by achieving personal and/or academic goals.
- The Boston-based organization – Preservation of Affordable Housing (POAH) – recently was granted a HUD Choice Neighborhoods Implementation grant for their work in the Woodlawn public housing development in Chicago. CFED is currently exploring numerous ways to assist POAH as they seek to fulfill the promise of the Choice Neighborhoods Initiative. Building on HOPE VI, Choice Neighborhoods seeks to provide support for the preservation and rehabilitation of public and HUD-assisted housing within the context of a broader approach to concentrated poverty that addresses basic services, schools, public assets, transportation and access to jobs.
- CFED continues our engagement with Enterprise Community Partners and is exploring new areas of partnership. Through a recent contract with HUD, Enterprise is working with a wide range of housing authorities on troubled projects, institutions and initiatives. CFED looks forward to working with Enterprise on embedding asset building as part of proposed turnaround strategies.
CFED believes that using housing as a platform for delivering financial security programs and systems has the power to change the trajectory of the lives of low-income families and children. We’re excited about working with such innovative partners in 2012 and are encouraged by the growing acceptance of a more holistic and integrated approach that has implications for a variety of platforms beyond housing.
To learn more about CFED’s affordable housing initiatives, click here.
- Assets and the Poor: Twenty Years Later (scoppcanton.wordpress.com)
For many of us, the idea of starting a small business is a lifetime goal. In fact, the chance to be your own boss by providing a product or service ranks right up there with homeownership as one of the true American dreams. Despite tough economic times, the environment for starting a small business in many parts of the country is better than you might think, particularly in view of the various assistance programs made available for small business owners.
An enterprising business owner can be very successful, but it takes a lot of work. (And usually a lot more time and money than the business plan calls for.) Christy is an individual who knows the score. A Registered Yoga Teacher, she has been helping people achieve healthier lifestyles through massage therapy, group exercise, yoga, and Pilates for over 17 years. However, success had rendered a problem for her: the small storefront she used for years in a downtown Midwest city is just too small for her growing clientele. She faced a daunting task: Find a new location that would be a lot larger — yet also fit into her operating and personal budgets.
Driving to work one day through town, she noticed that ‘for sale’ signs had just been posted in front of a small one-story home nearby. All along Christy had been thinking about finding a larger storefront or office. Suddenly, the idea of conducting her instruction classes in a small home made sense. The next several weeks were consumed with meetings and communications with the local town officials, realtors and the chamber of commerce, to be sure that the zoning was correct and that she could have access to some small business assistance programs.
That was three months ago, and the bottom line today is: Christy has much more room in brand new surroundings, her customer base is growing by the week and it all fits into her budget very nicely. Things are looking up now for her.
All told, there are an estimated 15 to 17 million small businesses operating in America today. Small businesses are still the backbone of our communities – our Main Streets! — and are seen by many as the embodiment of the spirit of entrepreneurship.
Entrepreneurs are credited with creating the vast majority of new jobs and employing the majority of the nation’s workers. Granted, big businesses have emerged in fields where new technologies permitted economies of scale in the production and/or distribution of goods. Still, small businesses have remained vital to the nation’s economic development, and even more important as a component of American culture.
Even as our new 21st Century embraced what many Americans could view as superior efficiency and productivity (for both small and big businesses), Americans continued to revere small business owners like Christy for their self-reliance and independence and can-do spirit.
Small businesses have also been the primary way immigrant families coming to America have climbed the economic ladder and achieved the American dream. Many minority populations today — in urban, rural and suburban communities — have seized the small business pathway as a road to economic independence and building personal wealth.
CIN editors have always recognized the vital role played by small businesses, and we devote a large section of the CIN to them. This resource tool provides basic information – including the pros and the cons of small business ownership – basic start up information – government assistance programs on the Federal and State levels – grassroots programs provided by NCRC members – private sector assistance programs – franchising basics – banking connections assistance – available small business resources and the latest small business news and information. Here are some recent excerpts:
Small Business Owners Think Controlling Employee Expenses Will Lead To Cost Savings
(Source: Gaebler) A recent Citizens Financial Group/Mastercard study found 55 percent of small business owners believe better management of employee expenses would reduce costs and benefit their business, while 40 percent said more control over employee spending would give them a better peace of mind.
Wells Fargo Lends More Dollars to America’s Small Businesses Than Any Other Lender
(Source: Market Watch) 2011 US Small Business Administration data shows Wells Fargo & Company is the top lender in dollar volume, approving $1.2 billion in SBA loans to America’s small businesses for the 2011 federal fiscal year.
How Small Business Owners Were Hurt by the Fall in Home Prices
(Source: Forbes) Personal borrowing plays a key role in how many small business people finance their companies. When the housing crisis hit, small business owners that relied on home equity to finance their companies’ operations faced a credit squeeze. Thus, small businesses have access to about $25 billion less in credit than they would have had if the trend in home equity loans had continued in the direction it had been going in the first half of the 2000s.
Coffee Fix: Starbucks Pushes Small Business Loans
(Source: Business Week) New York Times columnist Joe Nocera lauds Starbucks for supporting community development financial institutions, the nonprofit lenders serving small businesses and affordable housing in low-income communities. The coffee chain is donating $5 million and encouraging customers to pitch in at the checkout line as well.
Geithner Defends Performance of Small Business Lending Fund
(Source: Business Week) Treasury Secretary Timothy F. Geithner says that the Small Business Lending Fund had been successful even if it was smaller than envisioned. The program closed Sept. 27, having distributed $4 billion of its $30 billion to 332 community banks nationwide.
- PR Tips for Small Business (wordsforhirellc.com)
- Small Business Concepts That Work in Today’s Economy (cash-bandit.com)
Living Cities, one of the more impressive foundation collaboratives still in existence, celebrated its 20th anniversary late last month. I was lucky, having been involved tangentially at the birth of Living Cities, when it was emerging from the thinking of a handful of national foundations plus two national community development financial intermediaries, the Enterprise Foundation and the Local Initiatives Support Corporation. The mix of foundations at the table has changed over the years. It has gone through a couple of staff leadership changes and the roles of the two intermediaries have changed, in part because Living Cities made a strategic decision to staff up and begin developing and implementing its own program initiatives. And the environment in which the collaborative operated went through a massive change as the housing markets collapsed due to the foreclosure crisis.
If you want the statistics on what Living Cities has accomplished, the money it has raised and leveraged, the affordable housing units Living Cites-assisted CDCs have generated, check out the Living Cities website. And if you want a variety of perspectives, including mine, posted as sort of live blogs from the Living Cities event, turn to the three pages of posts at the blog of Next American City magazine. But without claiming to do justice to the rich Living Cities conversation, here are some perspectives that other foundations, whether addressing community development or not, might find instructive:
- Pablo Farias from the Ford Foundation talked about the community development sector as a “core response to the civil rights movement from protest and confrontation to responsible collaboration…to make the aspirations of civil rights a reality in our communities.” Farias observed that community development had changing needs, not just for aggregating and streamlining capital, but creating “a platform for shared learning and evaluation.”
- Rip Rapson of the Kresge Foundation remarked that Doug Nelson, the former president and CEO of the Annie E. Casey Foundation, talked about “real leverage” in the future of community development as “cross-disciplinary,” connecting education, health, transit, and environmental enhancement. Living Cities has gone beyond transactional approaches to housing and the intermediaries have gone significantly beyond the unit-count/dollars-loaned vision of community development-in both cases, because they had to if they really wanted to impact community development in distressed urban and rural neighborhoods.
- Dennis White of the MetLife Foundation identified the U.S. Department of Housing and Urban Development (HUD)’s 16-year investment in Living Cities as one of the most significant accomplishments of the collaboration. This was a partnership that lasted, in part, due to some excellent policy advocacy that will be needed to keep Living Cities as a public/private partnership.
- Rapson noted that the Living Cities model of public/private partnership has been powerful. The key going forward, according to Rapson, is transcending the parochialism of funders themselves. He cited the fact that the Robert Wood Johnson Foundation, devoted to health issues, has stayed at the Living Cities table despite the relatively little that Living Cities has done explicitly on health. The cross-sectoral involvement of funders-and agencies like HUD-is needed. Funders can’t squeeze social problems into their predetermined program categories. To be truly affective, they have to rethink their program definitions and see how they can be adapted to the needs of the real world.
- Patrick McCarthy, the newish president and CEO of the Annie E. Casey Foundation, talked about the future of Living Cities in terms of people. He said, “Without investing in the folks who are being left behind, without investing in their physical and economic health, we’re not going to make it back.” To be more explicit, Walter Wright from the Cleveland Foundation made clear the importance of Living Cities reaching out to low-income people. One never hears about low-income people in today’s political discourse. Major leaders shy away from explicitly naming the issue of poor people as a specific target of their initiatives; it’s always conversation about the “middle class.” Will Living Cities be the venue where the conversation about how to address poverty becomes reinserted into the national policy conversation? If Living Cities helps public agencies and foundations re-engage the issue of poverty, that might be the community change that Living Cities brings to community development around the nation.
With the current and continuing federal impasse on budgetary issues, it would be hard not to see some aspect of the “public” side of the Living Cities public/private partnership at risk. Will that mean that foundations will look at a diminishing federal commitment to conclude that their resources are best put elsewhere? Or will the history of Living Cities remind foundations that their best efforts are needed now more than ever, in partnership with the infrastructure of local nonprofits and national intermediaries they have sustained, to keep the federal government engaged in community development writ large and not to leave it to the vagaries of the “free markets?”
Rick Cohen is a columnist with the NonProfit Quarterly.
The government simply can’t keep up with rapid urbanization and rural residents seeking opportunity in cities. Regional governments are suppressing populations so they have time to build, but the construction can’t be completed fast enough.
China is developing entire neighborhoods and cities at once, and a large portion of that development is “green.” This March, China adopted its 12th Five-Year Plan calling for actions to, “address inequality and create an environment for more sustainable growth.”
The Chinese are not deploying the latest green energy, water, and transportation innovations that reduce energy consumption and carbon emissions per unit of GDP by 17 percent because of some larger desire to be sustainable. They are doing it because they see it as the only way to achieve the necessary long-term cost and resource savings required to serve the 250 million people who will migrate to Chinese cities over the next 15 years.
China is not alone. Around the world, urban development and revitalization efforts are accelerating despite our international economic woes. The mainstreaming of green building — previously the domain of but a handful of the most progressive cities 10 years ago — is influencing the revitalization and begging a provocative question: How do we do this at scale?
The answer is green neighborhood development. Neighborhoods are an important place to innovate — small enough to go fast and large enough to make a difference. Cutting edge neighborhood projects from Vancouver to Abu Dhabi are focusing on carbon, water, transportation, human health, security and resource-sharing. Green neighborhoods are important for the future resiliency, stability and economic health of cities and countries. The Chinese understand this better than most.
A new era of urban innovation is upon us, and it’s focused on redesigning or creating neighborhoods that are safe, affordable and walkable. Here in Portland, Ore., we recently converted our South Waterfront district from a contaminated former industrial ship building area into one of America’s greenest neighborhoods.
All of the buildings are green, there’s lots of open space, and there’s a streetcar and even a gondola. In Denver, Kansas City and Seattle, major neighborhood retrofit projects are underway. And in two weeks, more than 400 people from around the world will gather here in Portland for the second annual EcoDistricts Summit, which will focus on how to link green building, smart infrastructure with community engagement and action in existing urban areas.
Progressive mayors, city administrators and developers are driving the global transition to green neighborhoods. To some extent, they don’t have a choice. In 2008, for the first time in world history, more people lived in cities than not. City officials — despite political and financial pressure — have no choice but to sprint forward on green neighborhoods in the name of resource protection, economic development, and creating clean places where people actually want to live.
The tying-together of so many urban innovations at once — district energy, green streets, smart grid, and local transportation options to name a few — to create efficient neighborhoods and cities is what industry insiders call the “era of integration” or “green cities.” Aside from population pressure, this new era is also emerging because of the financial crisis, not in spite of it.
These projects create jobs, strengthen the clean tech and real estate development sectors and provide consistent and ongoing cost and resource savings. They also demonstrate that the world’s greatest greening opportunity many not be saving trees, but rather making our cities self-reliant so they are less dependent on the natural order for resources.
Naysayers claim that all of this activity is a bolt-on addition to the real economy. But look closely at any large-scale development project in the middle of nearly any American city and a different picture emerges. These projects are all green in various ways, whether we call them that or not, and they are happening at larger and larger scales.
By 2015, most of these projects will be certified green, equating to more than $150 billion in economic activity. For now and the foreseeable future, these green projects are a good part of the mainstream American economy.
Rob Bennett is the executive director of the Portland Sustainability Institute in Portland, Ore.
- Dockside Green – Substainable city neighborhood of the future! (discoveringnewurbanism.wordpress.com)
- A New Rallying Cry: Occupy Green Building (treehugger.com)
- Green Building Organizations Gather in Phoenix to Discuss Sustainable Facility Rating Systems (prweb.com)
- How Green Is My City (preview) (scientificamerican.com)
The bankruptcy of the solar cell maker Solyndra, despite massive federal loan guarantees, has analysts and pundits declaring the demise of the green job movement. Don’t look now, but I think the corpse is breathing. One bankruptcy will not kill the trend toward green jobs.
Moreover, the failure of a private company is not a rarity in the United States. Typically over 50,000 businesses file for bankruptcy every year. From June 2009-June 2010 this number approached 60,000. Without question the Solyndra loan was a bad idea. However, the sustainability movement in the United States is a primary driver of economic growth, and one high profile failure does not alter that reality.
Part of the problem is the definition of “green jobs.” All of the work involved in managing, designing and implementing reductions in energy, water and resource use are green jobs. All of the workers devoted to preventing or mitigating environmental pollution hold green jobs. In New York and California, major efforts to enhance energy efficiency are now underway and are creating lots of opportunity for jobs and growth. A company I advise, Willdan Energy Solutions, works with utilities and commercial businesses to help them reduce energy waste. In both California and New York a surcharge on our electric bills goes into a fund that is used to help businesses and households eliminate wasted energy. All the jobs at Willdan, their competitors, and the many contractors they work with to install energy saving technologies are green jobs.
Of course the largest stimulator of green jobs in the world is probably Walmart. This company asks all of its 100,000 suppliers to examine their carbon footprint and use of natural resources. This drive for sustainability is good for Walmart’s image, but is also good for their bottom line. Products that are more efficiently produced cost less. Products that use less packaging are cheaper to ship and also use less of Walmart’s scarce shelf space. All of this helps Walmart’s bottom line. All of the jobs created to make Walmart and its suppliers more resource-efficient are green jobs.
Green jobs are the future as we learn to make our economy more sustainable. Anyone thinking seriously about a planet of seven billion people realizes that we need to move our economic consumption from our dependence on finite resources to the use of resources that can be reused or re-grown. Obviously, loaning money to companies to subsidize solar manufacturing is a weak policy prescription. Government money would be better spent funding basic research into the technology of renewable energy, waste treatment, recycling and water filtration. I am far from the first to observe that a tax on fossil fuels could generate the funds for this research and hasten the day when renewable energy is less expensive than fossil fuels. That day will come, but it is in America’s economic and foreign policy self-interest to bring that day sooner rather than later.
If we are to develop the high production and high consumption economy needed to enable seven or eventually ten billion people to live like many of us do here in America, we need a sustainable economy. That is an economy that does not use up the planet’s finite resources or poison the air, water and food that the biological creatures called human beings require. Building this sustainable economy will require massive amounts of technological and managerial innovation. We do not yet have the technology or organizational capacity to build a sustainable economy. But it is urgent that we learn how to develop the ability to build a green economy as soon as possible.
There’s a simple reason for the need for speed. We seem to be making more and more people, but we haven’t figured out a way of making more planet. Technology has enabled us to improve the productivity of the planet, but if we destroy the ecosystems that sustain life, we will threaten our own survival.
Everyone knows the planet is getting more crowded. Traffic and congestion are getting worse, not better, in many places. The answer is to make better use of the resources we have. New York City loses substantial amounts of water between the time it leaves the reservoirs to the north and the time it comes out of local faucets. That will be improved when the multibillion dollar third water tunnel is fully operational. Similarly, investment in a smart grid electrical system would improve the efficiency of power distribution.
It’s important that we don’t derive the wrong lesson from Solyndra’s bankruptcy. A failed subsidy doesn’t mean that all subsidies are bad. A poorly thought-out public policy does not mean we need to abandon public policies and let the market determine everything. The private market is a powerful force in the drive for a sustainable economy. We are seeing many companies looking to reduce their use of energy, water and other resources. That is stimulating the development of new technologies and new ways of doing business. Government needs to encourage this trend. Well thought-out changes in the tax code, investments in basic R & D and even subsidized capital are all needed. Poorly thought-out, symbolic, politically motivated and possibly corrupt government programs should be avoided.