1 exploring innovation innovation in community development finance st. louis federal reserve may 13,...

1

Exploring InnovationInnovation in Community Development

FinanceSt. Louis Federal Reserve

May 13, 2013St. Louis, MO

Kristin Faust, Director of Lending

Mission

At PCG, our mission is to advance economic justice and opportunity by partnering with organizations that provide access to capital for low income people and communities.

Wyman Center,

St. Louis, IL

IFF/PCG loan

PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935

Partners for the Common Good

3

INNOVATION IN COMMUNITY

DEVELOPMENT FINANCE

BACKGROUND ON PCGPCG buys participation loans from other

CDFIs across the country that : Create affordable housing Operate community facilities that provide

critical community services (e.g. health care, child care, education, social services, etc.)

Promote neighborhood revitalization Promote double bottom line businesses

We also invest in International development funds promoting microfinance & fair trade



4


DEVELOPMENT FINANCEHOW DOES PCG WORK? PCG delivers its credit products through:

• Partnerships with CDFIs in local markets

• Direct lending to the borrower

PCG’s goal is to facilitate the development of a network of lenders dedicated to serving nonprofits and mission oriented enterprises.

PCG operates as a wholesale participation lender

PCG is building the CDFI industry’s first loan participation network

Model provides an effective way for CDFIs to work in more collaborative and sustainable ways to deliver capital to communities

Strategy to serve community based borrowers more directly and generate greater and more targeted community impacts

Alternative model for community investors to achieve high social impact in a more sustainable manner



5


DEVELOPMENT FINANCE

Working with 30+ different CDFI Lending Partners and impact investors across the U.S., we see tremendous innovation in the community development finance field



6


DEVELOPMENT FINANCEFive Areas of Innovation

1. SCALE2. TECHNOLOGY3. THINKING

GREEN/SUSTAINABILITY4. WORKING ACROSS SILOS5. NEW MODES OF THOUGHT



7


DEVELOPMENT FINANCESCALE

CDFI Bonds – proposed regs issued in January; potential source for long term loan capital

HPN REIT – HPN is a cooperative of the biggest CDC’s and CDFIs in the country. They are forming their own real estate REIT.



8


DEVELOPMENT FINANCETECHNOLOGY

POLICY MAP – wonderful data tool created by The Reinvestment Fund

CAPNEXUS – online platform to match borrowers and lenders created by PCG

MICROPLACE – online investment platform created by Calvert Foundation



9

Our Newest Initiative: CapNexus



10


DEVELOPMENT FINANCEGREEN/

SUSTAINABILITY

Sustainable Communities- years of laying the groundwork are now paying off in favorable policy environments to support sustainable communities and we in community development finance know how to bring the pieces together and make them work, i.e. TOD, public private partnerships

ESCOs – non-profit energy service companies



11


DEVELOPMENT FINANCEBreaking Down

Silos Health Care and CDFIs --- led by LIIF Arts-led Economic Development ---

engaging the creative class Holistic Neighborhood Development

and the role of quarterback --- see What Works article by David Erickson of the SF Federal Reserve

Community Network Building --- see Trusted Space blog

Refining and Improving Social Impact Measurement ---forcing us to think holistically



12


DEVELOPMENT FINANCENew Modes of

Thought

Crowdfunding Supply Chain of Money --- understanding

how your deposit and investment dollars are used the same way you know which farmer cooperative your fair trade coffee comes from

International Development Successes Being Applied Domestically in US

Business Schools Teaching Social Enterprise

Millenials Want Solutions to Worlds Problems Not Partisan Bickering



13


DEVELOPMENT FINANCETOP INNOVATION IN

COMMUNITY DEVELOPMENT

FINANCE IS:

CDFIs



14


DEVELOPMENT FINANCECDFIs as leading innovators

Work in partnership with many parties CDFI’s are R&D factories for

mainstream banking system CDFI’s incubate new products CDFIs continue to masterfully manage

risk as we are pushed further out on the risk continuum

CDFIs seek profits but are not profit-maximizing

CDFIs are the original social enterprise



15


DEVELOPMENT FINANCE

CDFIs are the original social enterprise utilizing business principles but measuring return in both financial and social return. We hold ourselves accountable to our customers, our funders, our beneficiaries, our communities and our nation.



16


DEVELOPMENT FINANCETwo Core Principles CDFIs Must Keep

To Stay Innovators

Collaboration - Open networks are necessary for creativity- CDFIs are unique in the financial world for theirlevelof collaboration amongst each other and other public, private and non-profit partners

Vulnerability - Willingness to try new things and to fail – as individuals and organizations- To be creative is to be humble

.



17


DEVELOPMENT FINANCE

To be good stewards of capital we must plant it like a grain of rice, grow it, share it, it multiplies and we replant and reinvest it for the benefit of ourselves and others – that will indeed create the beloved community.



Kristin FaustDirector of Lending and Network Services


[email protected]

[email protected] A special thank you to the many, many people whose ideas contributed to this presentation

including Ben Hecht, Kevin McQueen, Clarence Williams, Dan Soliman, Jeannine Jacokes, Frankie Blackburn, David Landis, and Adina Abramowitz.

1 exploring innovation innovation in community development finance st. louis federal reserve may 13,...

Documents

pcg pcg

innovation innovation

pcg work

community investors

community facilities

eye street

nw suite

areas of innovation