Beyond U.S. Borders: Shared Interest's Community Development Fund
In South Africa, a US-based community development fund provided the loan guarantee for 16 black women to start a commercial farming project. In post- apartheid S. Africa, credit is still very hard to come by for the majority of black people. The women had little farming experience and barely any resources. The land they had been allotted by the government was barren, arid and prone to both long droughts and sudden floods.
They were turned away by bank after bank. Through sheer persistence, they found a local community development institution called the Bushbuckridge Local Business Service Center (BLBSC) that was willling to help them. To secure a commercial bank loan on their behalf, BLBSC turned to an international guarantee fund established by Shared Interest, a US-based nonprofit social investment fund designed to help low-wealth South Africans access credit.
Investors can earn up to 2% interest on a five-year investment in Shared Interest's fund, and the money is used to help build small businesses, microenterprises, community facilities and affordable housing in the country.
Shared Interest helped BLBSC get a $709,000 loan for the women, which enabled them to launch the New Forest Vegetable Project. The project quickly became successful. In their first harvest, the women grew 175 tons of top-grade tomatoes using a technique called "shade-cloth" farming. Greenhouses - each half the size of a soccer field - are covered by sturdy plastic nets on tall wooden poles, protecting the crops from strong winds and abrupt changes in weather.
Today, each woman owns her own greenhouse employs four other women - 80 women in total are employed by the project. They grow tomatoes and peppers which are sold throughout the country via a farming network.
Most people in the U.S. don't realize that their money can have such a significant effect on an international level through community investing. Shared Interest started in 1994 and today manages about $6.2 million from 140 individual and institutional investors.
Donna Katzin, executive director of Shared Interest, says community investing practices are changing the way banks do business. The success of the women's farming project, for example, is encouraging more commercial banks there to lend to the country's newest borrowers and businesses.
Though the fund is not insured and is consequently considered a somewhat high risk investment, Katzin says Shared Interest has repaid every loan. "The bottom line is that no lender has lost a penny of principal or interest as a result of a loan to Shared Interest."
The women farmers have met all their loan payments and are now discussing whether to restructure as a cooperative. Katzin says the transformation the women have effected in their lives and in their community is incredible, particularly since they managed it in less than three years!
So, How Do You Get Involved?
How to Invest Your 1% In Communities
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1. Commit to at least 1% in community.
2. Shift your bank accounts
3. Explore options beyond bank accounts
4. Educate Your Financial Planner
5. Spread the word
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When you put your money in a bank, it doesn't just sit there waiting for you to take it out. Banks make money by loaning and investing your money, and seldom do they ask you what projects you want your funds to support. Your conventional checking account could be financing construction of a natural gas pipeline in the rainforest. They could be loaned to a company embroiled in sweatshop labor in China. Your CD might support construction of a big box store in your home town, forcing small locally owned businesses to close.
You can open a checking, savings, money market or CD account at a community development bank or credit union. They operate on the theory that ownership allows people - particularly minorities, women, low-income families and rural residents - to improve their economic positions. They may specialize in supporting affordable housing in New York City, financing locally owned businesses in rural Arkansas, or providing credit and financial services to Native Americans in the Southwest.
They may even fund community organizations in low-income areas to support social change. In 1994, 15 unemployed women were living in subsidized housing rehabilitated by Shorebank in inner city Chicago. With the bank's help, these women organized a peer support group called Sisters Building Bridges for the residents of their building. Some enrolled in employment programs sponsored by the bank, while others applied for loans to start businesses or attend school. Today, almost all the women are employed full-time.
Community development banks offer competitive interest rates and are federally insured up to $100,000 - just like any other bank. What if you don't have a bank like this in your neighborhood? In today's world of electronic banking, distance is not an issue. Co-op America executive director Alisa Gravitz has her bank accounts in a community development bank 1000 miles from her home. She has her paychecks automatically deposited and moves her funds around electronically - over the phone or through an ATM. Many grocery stores offer free check cashing cards, making it easy to get cash remotely. Or get a free checking savings account at a conventional bank that has lots of ATM machines. Keep the minimum required in the account for free use of their ATMs. Write a check from your community bank to the conventional bank once a month to cover your cash needs.
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Get a copy of the Investing in Communities Guide. The guides are free, you just pay for postage.
http://www.communityinvest.org/1percent.htm
See the listings of banks, professionals etc. www.socialinvest.org
Excerpted from Investing In Communities, a special issue of Co-op America Quarterly, fall 2002.
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