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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
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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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
DEVELOPMENT FINANCEFive Areas of Innovation
1. SCALE2. TECHNOLOGY3. THINKING
GREEN/SUSTAINABILITY4. WORKING ACROSS SILOS5. NEW MODES OF THOUGHT
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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.
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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Our Newest Initiative: CapNexus
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
DEVELOPMENT FINANCETOP INNOVATION IN
COMMUNITY DEVELOPMENT
FINANCE IS:
CDFIs
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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.
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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
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PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
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INNOVATION IN COMMUNITY
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.
PCG, Inc. 1444 Eye Street, NW Suite 201 Washington, DC 20005 202.689.8935
Partners for the Common Good
Kristin FaustDirector of Lending and Network Services
Partners for the Common Good
[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.