Episcopal Press and News
Community Investment -- Lending from the Head and the Heart
Episcopal News Service. June 30, 1992 [92166]
Sue Pierce
Maria Colon lives in the Kensington section of Philadelphia, an area suffering many of the same problems that ignited the recent riots in South Central Los Angeles. Drug peddling and addiction, racial division, unemployment and poverty are neighbors to most of the residents. For many in struggling, inner-city neighborhoods, owning a home or business is a part of the American dream that will not come true.
In 1986, Colon moved to Kensington and wanted to buy a home for herself and her three children. "Why should I continue to pay other people's mortgages?" Colon asked herself at the time. "If people own their homes, they feel more involved in their neighborhood," she added. "It helps the children, too -- it lets them know that change is possible, that things can improve."
However, since Colon was only employed part-time, "there was no way any bank would consider me for a loan," she recalled. Then she heard about United Hands Community Land Trust, a community group that helps residents who are usually not eligible for conventional bank loans buy and rehabilitate homes.
Colon, who became involved in United Hands first as a volunteer and was recently elected president, bought her own home last year after two-and-a-half years of hard work and help from United Hands. The purchase represented a chain of goodwill, sweat, and brain power that included financial investments by a variety of organizations, including the Episcopal Diocese of Pennsylvania. The result was not only a new home for Colon, but proof that dreams can come true.
United Hands has received 21 loans from the Delaware Valley Community Reinvestment Fund (DVCRF), an organization in partnership with the Episcopal Community Investment Program (ECIP) in the Diocese of Pennsylvania. Founded in 1985 and based in Philadelphia, DVCRF is a community-based financial institution that provides low-interest loans and technical assistance to community organizations
Ashley Hulsey, director of resources, said that community development loan funds serve as financial intermediaries that borrow capital and lend it in lower-income communities to support nonprofit rental housing, community-based businesses, home ownership and community development generally.
"It was clear that no amount of philanthropy was going to rebuild the inner cities," said Hulsey in an interview. "Lack of credit perpetuates poverty. There had to be a way to lasso private capital. There is this incredible need for affordable capital, and there's a bunch of private capital. Organizations like ours bring them together and give people confidence and show that it's possible to lend from the head as well as the heart."
The long-term, low-interest loans go to grassroots community groups that don't usually have access to conventional credit sources such as bank loans because these groups are considered bad credit risks. Hulsey said that DVCRF's carefully structured program gives confidence to lenders, who are individuals and institutions investing anywhere from $1,000 to $1 million. The long-term investments (usually five years or more) build homes, maintain vital social services, and expand community-based businesses. Depending on the terms of the loan, lenders currently earn from 3 to 4 percent interest on the loans (rates are competitive with some traditional investments).
The impetus for the diocese to become involved in community reinvestment grew out of the 1988 Michigan Plan, adopted by the Episcopal Church's 1988 General Convention in Detroit. The plan called for "a ministry of community investment and economic justice directed to community-controlled economic development programs of the disadvantaged, with a special focus on land trusts, housing cooperatives, worker-owned businesses and community development credit unions," and urged the church at every level "to utilize, where possible, its buildings, properties, personnel, financial resources and moral power in pursuit of this ministry."
Hulsey said that a working group from the diocese came to her organization after deciding that "the Michigan Plan wasn't going to implement itself."
The Rev. James Trimble, rector of Christ Church, a prominent parish within walking distance of Independence Hall in Philadelphia, was part of that working group. "When the Michigan Plan was passed, it was like saying, 'Hey, we've got to do something to help people who are economically down get economically up."' Trimble said. "Nothing much happened until some of us in the diocese decided we would raise $1 million in the first year and invest it with DVCRF because they have the expertise." Trimble's parish became a major investor, pledging $100,000.
The $1 million was quickly raised, and when Bishop of Pennsylvania Allen L. Bartlett, Jr., announced the investment at a press conference in 1990, he called it "a commitment of faith in the Philadelphia region...a way of recommitting ourselves to the future of the Delaware Valley."
Bishop Bartlett backed the partnership from the start. "I got really excited about the partnership because it was a way in which the church can make a continuing difference," said Bartlett. "It's not just words; it's a resolve to change areas that need to be changed by supporting self-help." He added that ECIP is looking to raise $5 million by 1996.
Hulsey said that she sees it as an important step that the diocese wanted to work with her organization. "Too often the church excels at recreating things that already exist," she remarked. As an Episcopalian and the daughter of Bishop Sam Hulsey of Northwest Texas, Hulsey is wise to the ways of the church. She said that the diocesan group sought out a partnership with DVCRF because it wanted to take advantage of DVCRF's successful community reinvestment operation.
One of the reasons that DVCRF inspires confidence in lenders, said Hulsey, is that the organization "has a flawless lending record -- we have loaned out over $7 million since 1986 and haven't lost any money or even had a late payment."
To date, investments by Episcopalians have reached almost $2 million, nearly a third of DVCRF's total loan pool. The diocese committed $500,000 from an endowment, and the bishop made an investment from his discretionary fund. So far, these funds have helped finance 145 units of low-income housing -- like the home for Maria Colon -- and loans have been made to community groups so that they can maintain vital services in times of cash-flow crisis.
Hulsey said that the role of the church is crucial in rebuilding communities. "Within severely depressed neighborhoods, the church is often the only viable institution left, and the best vehicle for renewal," she said.
The community reinvestment movement started in the 1960s and 70s. The movement really began to expand in the 1980s when the inner cities began to rapidly decline as federal support dried up.
One of the members of ECIP, Martin Paul Trimble, said that going with DVCRF made the most sense because an intermediary is very important in the process. "Many churches lost their shirts in the 1960s by doing direct lending," he noted.
Trimble is also executive director of the National Association of Community Development Loan Funds (NACDLF), which is based in Philadelphia. NACDLF is a group of 42 community reinvestment organizations from across the United States, of which DVCRF is one. According to Trimble, NACDLF has $88 million in capital -- 23 percent of that is investments from religious groups.
Trimble's organization has a partnership with the Episcopal Church on a national scale, also as a result of the Michigan Plan. "The national church wanted to provide leadership for local efforts, so the Executive Council approved $7 million from church trust funds for implementing the Michigan Plan."
The church's Committee for Economic Justice Implementation invested $1.5 million in NACDLF, said Trimble. "Our charge was to put it into our member groups on their behalf. They told us that it would be very exciting to use their investments as a challenge fund, to go out to the local community and say, 'If you help us raise money, we can get matching funds from the Episcopal Church.'"
"These challenge loans have been tremendously successful," said Trimble. "In Vermont, we gave the Vermont Community Loan Fund $50,000 and challenged them to raise another $50,000. They went to the diocese and the parishes and raised it. Then they got another $50,000 and matched that." In the end, said Trimble, the Vermont fund was able to raise $230,000 from the national church and local parishes. "The national church grants give our members the chance to go out and talk to local churches," said Trimble.
Hulsey agreed that getting people to talk about their money and their faith is very important. "If people have faith and believe in justice, then they need to put their money where their mouth is. It would be very simple for wealthy churches to use their endowments or building funds for community reinvestment."
"It's a matter of justice, helping human beings be the best that they can be and live up to their full potential," said the Rev. James Trimble as he reflected on his parish's involvement. "It is a kind of witness to what the church can do."
Bartlett agreed that it is important for the church to witness in this way, and he will continue to promote community reinvestment in the diocese and will broaden his efforts to network with other denominations to bring them on board. "These investments are more than just words; they are undergirded by a moral fabric that has its foundation in a Gospel that is for all, not just for the privileged."
In helping rebuild communities, said Bartlett, "rather than simply cursing the darkness, it's even more than just lighting a candle; it's hooking up the electricity."