In July, I started working at a nonprofit in town called Forward Community Investments (www.forwardci.org). I had never heard of a community development financial institution before, but quickly caught the gist of what Forward Community Investments does: We make low-interest loans to nonprofits that serve low-income people throughout the state of Wisconsin.
Other than learning some basic lingo from my new home mortgage, I came into this job not knowing much about the world of finance. My mom is a certified public accountant and my dad is a chief executive officer, so maybe it should be in my genes to appreciate principal balances, interest rates, and amortization schedules. I'm not sure I've tapped into those genes, unless they are also the ones that make my eyes glaze over.
However, the projects we help fund are very exciting around the state. During my first month of working at Forward Community Investments, we co-hosted a lunch at the new Goodman Community Center. The building was stunning -- a converted iron works factory that had much of the original exterior preserved, but a totally revamped interior that now hosts hundreds of neighborhood kids for a cooking/catering program, basketball, studying and socializing. Forward Community Investments made a $60,000 pre-development loan to help get the planning process underway and provided technical assistance on how to obtain new market tax credits.
In September, I visited Milwaukee to see the groundbreaking celebration for 24 new units of affordable housing being built by United Methodist Children's Services to benefit families in crisis, particularly women and children escaping domestic violence situations. Next door were six townhouses that were schedule to open the following week, also affordable rents for women and children surviving domestic violence. The completed townhomes were beautiful -- I was ready to move in on the spot!
One of the challenges that Forward Community Investments faces is raising enough money to lend out. The money is raised as investments from banks, credit unions, religious orders, foundations and social justice-minded individuals, and we have a lofty standard of lending out as much money as we can. It's a job of perseverance and nimbleness to ensure that enough investments and equity are coming in so that we can meet the borrowing needs of nonprofits throughout the state of Wisconsin.
An opportunity that I have seen since starting here is creating an investment opportunity for religious orders, congregations with reserve funds, and Gospel value-minded individuals. Forward Community Investments provides a safe place for money to be invested with custom rates and terms, and we provide opportunities for investors to know that their money is being used in the community to provide much-needed services to people who otherwise may not have their basic needs met.
Religious institutions have long been leaders in the world of socially-responsible investing, perhaps starting with the Quaker Philadelphia Yearly Meeting that passed a resolution prohibiting the participation in human slave trading. John Wesley, the founder of Methodism, wrote a sermon titled, "The Use of Money," which outlined some basic tenets for how to proceed with socially-responsible investing, including not harming your neighbor through your business practices. More recently, socially-responsible investing has taken the form of boycotting companies that benefitted from the Vietnam War, such as Dow Chemical, as well the boycotting of companies that sold products in South Africa during the years of apartheid.
Socially-responsible investing is a force to be reckoned with now in the world of trading, especially with all the newfound angst against corporate greed during the recent economic meltdown. The Social Investment Forum reported in 2007 that socially-responsible investing assets increased more than 18 percent between 2005 and 2007, while the broader spectrum of professionally managed assets increased by less than 3 percent during this same period. Socially-responsible investing is a growing industry with lots of potential for good for both individuals and religious communities to consider when deciding how to set aside their reserve funds in a way that fits with values of social justice.
The recent mortgage meltdown will probably mean that 2.2 million borrowers will lose their homes with an attendant loss of $164 billion in wealth in 2008, according to the Center for Responsible Lending. Borrowers are trapped with high interest rates and an introductory period, as well as other abusive lending practices. The peopel hardest hit by this sort of predatory lending are racial and ethnic minorities, the elderly, women, and low- and moderate-income borrowers.
Suffice to say, this turns out to be the primary population that community development financial institution's such as Forward Community Investments serves. The Social Investment Forum published a report recently that indicates that the right way to engage in the business of lending to underserved, low-income communities is through investing in community development financial institutions. Such institutions channel much-needed capital to these communities, helping to strengthen them along the way.
The Social Investment Forum sums it up nicely in their recent white paper on the possibilities for community investing: "Community investors who invest in institutions that offer fair and affordable alternative options to abusive predatory lending are in turn promoting this position solution to the growing foreclosure and mortgage crisis."
If you find yourself inheriting some money in the coming years, or you already have money that you want to set aside in a way that will help you earn some interest while having a positive impact in your community, please take the time to learn more about community development financial institutions. Your community will thank you with tangible, like affordable housing, community centers and public health clinics.
(Mike Sweitzer-Beckman recently earned his Master of Divinity degree from the Jesuit School of Theology. He works at Forward Community Investments, a statewide loan fund for nonprofits that serve low-income people in Wisconsin. His hobbies include tennis, bicycling, spectator sports, and cooking. )