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Transcript of the Television documentary


VO: Despite a booming economy, millions of Americans are still considered unbankable.

Lendall Alexander: Banks, really, they look at you like you're some kind of fool.

Sandy Ledray: They laughed in my face

VO: But across the country, there's a new breed of grass roots banker willing to take the risk. Patty Grossman: We're not about more pin money, we're about helping poor families create wealth.

Terrell Cannon: I don't want welfare anymore. I want to do something better for me, my kids...

VO: Faith Hope and Capital explores a promising new strategy for fighting poverty and building healthy communities.


VO: This program was funded by Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Wallace Alexander Gerbode Foundation, and the Kokoro Foundation.

Radio 1: More company mergers today, just a day after a Merger Monday that wowed Wall Street.

Radio 2: Even now I can see it--you're devouring the international pages, you're calling your brother in-law in the business for advice, I'm left out...

Radio 1: This is Marketplace...

Radio 1: Yesterday nine corporate marriages were announced, all of them worth more than a billion bucks each...

VO: Bank mergers, record corporate profits, new highs for the stock market. For some people, the economy is doing just fine.

Radio 1: The market hits zenith, then a nadir, then a record high, followed by a bit of retrenchment...

VO: But every merger means lost jobs... unemployment and the specter of homelessness. VO: Poor people are being told they have to take care of themselves. But if you're having trouble keeping a roof over your head and food on your table, how can you find the resources you need to really become self-sufficient?

VO: Dave Kleiber works for a community development financial institution, a CDFI. It's like a bank, but it's purpose is to help poor people, rather than to make a profit. CDFIs across the country believe that loans rather than charity can be an effective way to help people stay out of poverty. This approach sounds risky... making loans to people who banks won't touch?? But doing anything important usually involves risk.


Shaw Canale: Dave, tell me how the call went.

Dave Kleiber: Not too bad... classic Cascadia borrower. They've got negative net worth... but, their , you know, 15 jobs... secondary wood products...

VO: Dave is a loan officer at the Cascadia Revolving Fund, a CDFI in Seattle, Washington that was started by a small group of former bankers and former community organizers.

VO: Over the years, there have been many antipoverty programs that did not deliver on their promises, but Community Development Financial Institutions seem to be traveling a very different path.

Patty Grossman: Primarily what a bank looks at is historical performance. Well a CDFI can't look at historical performance, or if they do it's a little scary and they want to run the other way. They have to look at future possibilities.

VO: Dave's not the kind loan officer you'd find sitting behind the desk at a downtown bank. He thinks nothing of traveling 100 miles into the woods to meet with a borrower.

Guard: Good morning, good morning...

Dave Kleiber: I hope Jack told you about us.

Guard: Where are you going?

Dave: Up to see Jack Billman up there at Hillbilly Logging. He said he'd leave a map with you.

Dave: This is his load of logs here. This is his truck if you want to get some video on that.

VO: Here in the Pacific Northwest, poverty's not in your face the way it is in cities like Detroit, but with jobs disappearing in the logging and fishing industries, people are scrambling to adjust, and a lot of folks just aren't making it.

VO: Dave's come to check in with Jack Billman, a hard working all-American kind of guy who's struggling to survive.

VO: A few years ago, the timber company Jack worked for laid him off without warning. What could he do? Move to the city? Go on welfare? Try to sign up for job retraining? Not Jack. He decided to start his own company, doing a whole new type of logging: timber thinning rather than clear cutting.

Workers: That's it I'm watching. The top one's gonna lift outta there. It should, probably.

Jack Billman: That's good Jim. Dave! (laughs) You ready? This one's gonna go.

Jack Billman: When you get to doing the thing that you like the most, you know it, you don't even have to tell people, it shows. 'Cause, yeah, this is what I want to do. This is me all over. And it ain't just me, there's a whole cycle of people around me just like me. You can see the men around me... they got the same feelings. No body can survive out here without the other person.

VO: Timber thinning is a new niche in the logging business. Jack doesn't mind hard work, but it's not clear that that's enough to succeed. Jack only gets paid for the logs he hauls down to the mill, so when his equipment breaks down, Jack, his employees, and Cascadia's money are at risk.

VO: It's easy to see that Jack's a "hands-on" guy who knows how to do every job and run every piece of equipment... but you can also tell he's not really an experienced manager.

Jack: It's pretty tough. It's tougher than I thought at first. I'm telling ya, I had to take this summer, and take a whole week and just figure this out, because it wasn't working. And all of a sudden I was not only having trouble, I was getting behind.

VO: We all know what banks do when people get behind on their loans. They foreclose, seize collateral, and move on. Are CDFIs any different?

Marcia Ellyson-Billman: Hi Jack. How did you do? How many loads?

Jack: The truck never came. Rob never came. Can you believe that?

Marcia: Last year we were having trouble, and we reworked the loan to lower the payments to make it even more manageable, and we've come to another hard spot, and they're working with us still.

Dave: So, it looks like you've got a problem with the ongoing. . .

VO: Marsha and Jack are like a lot of people CDFIs lend to... they don't have experience with billing, bookkeeping, or the other things you have to do if you're running your own company.

Marcia: My payments fluctuate so from advances...

Dave: To payments for actual shipments?

Marcia: Right.

VO: CDFIs don't just sit back and watch... they get out and try to teach people the things they need to know... in the CDFI business they call it Technical Assistance.

Marcia: I try to do the books, and I'm not a bookkeeper, so it's been a real learning experience for me. I have taken a few classes and actually, Cascadia gave me some funds to teach me how to do this.

Patty: It's not just the provision of technical assistance. It's creating a relationship with a borrower so they're very comfortable picking up the phone and saying, "I'm failing, I'm not going to be able to pay you," and trying to convey the honest reasons why that's the case. I mean, that's a very unusual relationship to have with your banker.

Jack: ...another year and it wouldn't be salvageable...

Dave: It's gotta be a 60 degree slope down there.

Jack: More like 70 (laughs)

Dave: Ya it's incredible.

Dave: Sometimes I find I'm just a cheerleader, back there just trying to keep somebody going, trying to put into perspective when they call and go, "Oh, this is been the worst month that you can imagine." I say, "Hey, look at the last six months... you know, get through this and you'll be fine."

Dave: Jack's just amazing amount of energy, his obvious knowledge of what he's doing, the love of what he's doing, his total commitment to what he's doing. To me it's worth the risk.

Jack: This is what I want to do. I don't want to go out and thin for somebody that's is not going to do it honest. If you were doing it automated, you could just fall trees, bring 'em in, run 'em through a machine and snip them as you go, and a guy'd never even get outside. But look what he's missing... (laughs) 40 degrees, and raining straight down! But, really, I feel this is my part of doing for America to make it better, because I can. I log, or I physically labor. It doesn't have to be logging. But, I prefer it because, well look at it man, I'm out in the park all the time!

VO: You can see how a lender could get to like Jack Billman so much that they might end up loosing all their money. But CDFIs don't lend money to people just because they're nice. While their mission is to make loans to people who don't meet the criteria of commercial banks, they do have standards, and they do expect to get their money back. They just believe that many "unbankable" people can be good credit risks and if given the chance to succeed, they can become anchors that strengthen whole communities.

Dave: I mean we lend to minority owned businesses, women owned businesses, businesses that do good things for the environment. We have lent to a wide variety of industries, but they have to have that common thread of being community building in some sense, perhaps cooperative structure, democratic workplace... it's a wide variety.

VO: Not all of Cascadia's borrowers are having as tough a time as Jack Billman. Sandy Ledray started making soap in her kitchen. Now its a real business.

Sandy Ledray: I made the soap out of necessity originally, but, loved the chemistry, loved the process, loved playing with natural herbs and fun things like that, and it just kind of steamrolled on its own, and I would get phone calls from people who would say, "Hi, you don't know me, but a friend of a friend of a friend of yours gave me a little tiny sliver of soap that you made, and I love it and I want some, I want to buy some."

Sandy: We had a serious bottleneck with our soap production. We'd have to hand wrap everything, and we'd have mountains of soap to hand-wrap. And we went through every movie that was on video. Every A movie, every B movie, everything. We were great until we got to the subtitle movies. You can't wrap and read subtitles at the same time. So, we realized we were going to have to get a piece of equipment. We just physically couldn't do this. Sandy: I went out and researched and found this piece of equipment and marched down to my bank. You know, I had this grand idea. Just say "hey, I need to buy this thing." They laughed in my face. Literally. And I went to other banks, who were like, you know, "Show us your experience in the soap industry, show us your experience running this equipment, show us your chemistry degree and maybe we'll talk."

Dave: That's where character comes into play. I mean, does this person have the drive, do they have the experience? Well, those are strengths. It's not collateral in the sense that if the business fails, we'd be able to go get any financial resources from that collateral, but it's a reason for us to believe that this person can pay this loan back.

Sandy: I called Cascadia and practically on the phone, the first conversation, they said yes. They were so excited. They said, you're exactly the kind of company we want to be involved with. So, I jumped in with them, and they were incredibly supportive and they offer so much more than a bank can. I think banks are very restricted on what kinds of information they can share. Cascadia has been very clear on its ability to help with marketing or any kind of business needs or anything. They've been very involved, very hands-on.

Patty: We're not about helping somebody with expanding their hobby into more pin money. We're about helping poor families create wealth. We want whole families and multiple groups of families to be supported by these business that are started.

Sandy: It feels real good, and it's nice to be able to employ people and be in that position. I know there are a lot of stresses with that, but at the same time it's very rewarding to be able to actually create jobs.

VO: The Cascadia Revolving Fund gets its money from people who are well off and want to do something about the poverty they see around them. But in many parts of the country, poor people have created their own financial institutions using their own money. In Demopolis, Alabama Eddie Ayers helped get a credit union started back in the days of the Civil Rights Movement.


Eddie Ayers: Lynn, let me make an observation here. 1963, when I bought this place here, ahh, I went to the bank to buy this here and across the road over there for seven thousand dollars. The banker told me, I can let you have four, but that's as far as I can have money to loan, to buy land with. Now, I could have bought an old car, and he would give me 50,000 dollars to buy a Mercedes, but to buy land, that's prize to them. They won't let you have what you need to buy the stuff that ought to be important to you.

Lynn: Explain a little more about the difference between a car and land.

Eddie: Ah, You can get an old car, in two years or three years it has depreciated, the value of it is gone, but land holds its value, and it's something that's not going away. So, they love that stuff and they love for us not to have it. (laughs)

Lynn: So in some ways, certain things have not changed.

Eddie: No, it ain't going to change. No, not in my life time.

Earnest Johnson: In the early sixties, during the civil rights movement, banks and finance companies and other financial institutions did not loan money because people wanted to get their right to vote. And it caused a really depressed area because of this fact. Many people were thrown out of their houses, many people were staying in what they call shotgun houses as many as four and five families.

Eddie: In this town we only have two banks, and it is hard for black people to borrow money, and so the idea came up at one of our meetings that we should organize a credit union.

Speaker(on film): ...and the credit union is just getting started.

Eddie (on film): You want to stop and let me explain the credit union to you? Now you can barrow as much as 300 hundred dollars...

VO: In 1965, there wasn't much money in the black community of Demopolis. But Eddie Ayers realized that a Credit Union could put together a pool of money large enough to start making loans.

Eddie (on film): We had a block tea party which last about an hour and we picked up about ten new members, and I believe if we have block parties or something like this often I believe we could increase our membership.

Woman on film: We are joining a new member into the Demopolis Federal Credit Union.

Earnest: For many years people have buried their money in jars, inside trees and put under the bed mattress and things like that, and now they got a chance to own this financial institution and they can make their deposits and it's safe and insured.

Man praying: Bless this credit union. And I ask you to bless it . That you see it stand...

VO: This is the same Credit Union Eddie helped start in 1965. Today, they make loans for everyday necessities like car repairs, home appliances and school clothes -- things a middle-class family would put on a credit card.

Earnest: The banks are not interested in making small loans. They say it's not worth the paperwork to do a 500 dollar loan. Many of us can not afford to pay back no more than a 500 dollar loan, and they are just not interested, and that's one reason that we really need credit unions.

Eddie: 3 dollars and five cents that brings it to 400 dollars. 20% would be 400 and 132 plus...

Radio: ...Demopolis Federal Credit Union has been servicing the community since 1966. Your membership makes the difference

VO: Although not much has changed in Demopolis over the years, a few things have. Like a new local radio station... owned by black entrepreneur Charles Jones.

Radio: ...empowers you to the same privileges as a 20 year customer. For more details of the Demopolis Federal Credit union call ...

Charles Jones: ...Hey your back man.

Dj: How you doin' this morning.

Charles: You've been off a week. How was revival?

Charles Jones: There was a need, there was a void in the black belt. We needed a good radio station that kind of serviced blacks or at least adhered to their needs. And a lot of people came to me and said, you're starting a radio station, and you really should have gospel.

Charles: I wasn't having a real good time with financing for the radio station through local lending institutions, so I went to the credit union and they were more inclined to loan me the money. Because, you go to your typical lending institutions, your banks, and they don't know anything about radio in this neck of the woods. And you can't explain to them that the equipment is worth a value. They're more inclined to loan you money if you're going to buy a mobile home or a car, or a cow maybe, but not radio stations.

Charles: Throughout this bible belt, as I tend to call it instead of the black belt, gospel is very important... you have a lot of people that go and stay out all night, and then thank god the next morning for helping get through that night. So gospel has been very lucrative, it has been very successful for us in the bible belt.

DJ: My telephones just keep ringing this morning. Yes I'm back in town . Been gone all week long...

VO: The credit union recognized the station's potential as the voice of the community. So when Charles needed 10,000 dollars to build a transmitter tower, they were on the same wavelength.

DJ: Hold on to your seats, 'cause nobody's gonna treat ya like the preacher...

REV. CHARLESTON'S CHURCH Church members: (singing)...

VO: Rev. Elister Charleston is a country preacher. He drives a school bus to make ends meet, but his real love is farming.


Eddie: Hi there Rev, get up off your knees down there... what you doin'?

Rev. Charleston: Trying to get the governor spring back in. Eddie: You always do your own mechanics? Why don't you get a mechanic to do it?

Rev. C. Sometimes you ain't able to get him, so I have to do the best I can with what I have.

Eddie: All right, all right.

VO: A lot of people have romantic notions about family farms, but in the age of agribusiness, farm loans are hard to come by, especially for black farmers. When Rev. Charleston needed a loan for spring planting, he called Eddie Ayers at the credit union.

Eddie: What do you have out in here?

Rev. C: We have some collard greens, some sweet potatoes here, sweet potatoes over on that side, and a few peanuts rights there, and peas right over on that side. Eddie: How many acres do you have in the whole farm?

Rev. C: I have 42 Acres. If the farm do good, I can do good with it.

Eddie: You clear 15,000 dollars . . .

Rev. C: Close to 15... with a pretty good crop, I can come out right about 15,000 with it. Eddie: Well, how much money, probably, would it take you?

Rev. C: To get everything that I need, with about, between 25 to 3,000 dollars, I can get all my fertilizer, my seed, diesel fuel, and all the stuff that I need.

VO: Eddie and the Reverend go back a long ways, but Eddie still needs to make sure the loan is a safe bet.

Eddie: you don't care if I get me a stalk here do ya?

Rev.C: Oh no, you help yourself.

VO: After all, the money at risk is their friends and neighbors' life savings.

VO: Despite the friendship between Eddie and Rev. Charleston, the credit committee decided it just couldn't take a chance on this loan, so they told Rev. Charleston to come back next year.

VO: Too much credit can get people into trouble. But CDFIs make loans that are used as Capital. Capital is wealth that creates more wealth. In America, banks, insurance companies, securities firms, and pension funds control most of the capital. These big institutions like to put capital into big projects, projects controlled by people and corporations who already have wealth.

VO: What do you do if you're not already a member of the club? To build wealth, you might buy a house or start a business. But to do that you need access to capital... which usually means a loan. That's where CDFIs come in.

VO: CDFIs have been effective in some rural areas and regions with isolated pockets of poverty, but how do they work in big cities, where poverty can seem intractable?

VO: For decades, black people migrated north to Chicago for jobs, thinking they were leaving racism behind. But housing restrictions shunted the newcomers into South and West side neighborhoods. Mattie Butler's family thought they were moving up when they bought a home in Woodlawn...

Mattie Butler: We had moved into this neighborhood, I guess when it started to really turn... the downturn of it. And my family had bought a three-flat over here, and we all moved over in this neighborhood. And so, we were just about the business of living and trying to make it through each day, and suddenly there were fires and there were gangs and then there were businesses leaving the community and buildings were being burnt down to the ground.

Richard Taub: Landlords stop taking care of their buildings, it gets harder and harder to get mortgages for new housing, harder and harder to get insurance, and that whole package of things which people call red lining, which is where you draw a red line around a community, on the map, and you say--we're not going to lend them money anymore, we're not going to give them insurance.

Richard: The early efforts to deal with distressed communities around the country really focused on organizing--that is marches of one kind or another. And there was a governmental response but it was usually a kind of quick and superficial payoff, and there was no lasting institutional structure put in place which would have ongoing positive consequences.

VO: In the 1960s, demonstrations, rent strikes, and other organizing efforts won some victories, but without access to capital, there was no way residents could buy and maintain their buildings.

VO: One after another, neighborhoods that had once been desirable became ghettos. In l970 it looked liked the next community to fall would be South Shore--a neighborhood that was changing from middle class white to middle class black.

Jim Fletcher: When a neighborhood begins to receive blacks it is thought of that it is in fact going down the hill. And so the perception is that my housing values will go down, my business will suffer, my bank will fail... all of those kinds of perceived things. And what happens is it's a self-fulfilling prophecy. Everybody packs up and leaves... if everybody packs up and leaves you, you're right, the market value is going to go down, and that's what happened here.

Lillian King: The South Shore Bank, the original South Shore Bank members decided that they were going to move out of this community and take the bank and everything else, the name, with them.

Lynn: Why do you think that they made that decision?

Lillian: Because they wanted to make the money and they could move the bank to some other community and continue business as usual with white customers. Well, our organization, a very strong community organization called The South Shore Commission, decided that we would fight it every step of the way, and we were very successful. The bank could be sold but it could not leave the community.

VO: At the same time that South Shore was fighting to keep its bank, Jim Fletcher, Ron Grzywinski and several friends working in and around the University of Chicago were talking about how banks could help changing communities stay healthy, rather than abandoning them. When the South Shore Bank was put up for sale, Jim and Ron had a chance to put their ideas to the test.

Ron Grzywinski: We picked this neighborhood because it was a neighborhood that had begun to show signs of serious deterioration. Many of the experts at the time thought that the neighborhood was going to go to abandonment. There was a bank here that was available to purchase, and it was the right size.

Jim: We didn't want to go to the hardest place to do this work. We weren't sure that it would work. I mean, we felt like we had thought about this and we knew what we were doing and we felt it in our guts, but we were going to be playing with other people's money, and so it seemed that we needed to find a place where we felt we could succeed.

VO: Could a bank really help save a community? Jim and Ron and their partners tried several strategies. The most successful was making loans available to local residents who wanted buy and restore multifamily apartment buildings. At a time when property values were falling in adjacent neighborhoods, this was a serious risk for everyone involved. But it didn't stop South Shore borrower Carl Pettigrew and his son.

Carl Pettigrew: We're in the process of rehabbing it. OK, let me give you a bird's eye view of what's going on. You can see that we're putting in new electrical throughout the building and throughout the apartment.

Carl: I got into the real estate business and also into re-habbing... I guess I had an urge to try and do something for the neighborhoods that were deteriorating, and I wanted to get into the real estate market.

Carl Newton Pettigrew: I would just say that in order for a neighborhood to continue to prosper and grow, people have to take care of the housing stock that is there... not only multifamily units like the building behind us, but also the single family units that surround this particular building. If we can somehow help through our efforts of rehabbing both the interior and the exterior of this particular building it will go a long way in making sure that this neighborhood stays solid and sound for the future.

VO: Physical rehabilitation is just the first step in making a building a good place to live. Re-habber Ocie Windham emphasizes the importance of being a good manager.

Ocie Windham: This building right here that we are approaching, it is terrible, drugs, I don't wanna laugh, gang activities and what not. So, it's a street that I don't like to drive down at night. I wouldn't want to be hanging out... see, such as you see right here... you see the guys sitting out and drinking, they've got nothing to do, but sit in the yard and drink. And that's one of the things that I try not to allow at my building; people hanging around, standing around, loitering and drinking in front of the building. It's a bad scene.

Ocie: I try to establish a good relationship with my tenants. I tell them what I want and what I don't want. And I tell them if they keep their end of the bargain up, I'm going to keep the apartment up so they can have a decent place to live, but I'm not going to fix a place for them to tear up. If you're going to be undesirable, you gotta go where you can live that undesirable life.

Tashata Holbert: Oh man, this building was like... you used to have people sleeping in the hallways and the doors were never, the locks were always broken, and just people like a lot of gangbangers hanging out in the front so, I was like, man...

Latanya Holbert: The police would never come when they call... but they come now, if you have to call which is hardly ever, because everybody here since its been rehabbed has been real nice. They have nice tenants.

Tashata: I feel like I can walk down the street now, cuz I used to hardly come outside- my mother would make me come in when the streetlights came on. You know, it is the nineties, so you have to still be careful, but I mean its nice to know you can come home to a nice clean building and you donĘt have to be like - telling your friends, "Oh I don't live there, I live down the street." (Laughs)

VO: Small rehabbers who borrow money face problems that would scare most people away. Dale Braithwaite was slightly naive when South Shore Bank gave her a loan to buy her first building.

Dale Braithwaite: The first property that I purchased on the south side was a 24 unit building... the corner structure that was in terrible, terrible condition. It had six occupants and all of them were doing things that they shouldn't be doing, in reference to community revitalization.

Floyd Dunn: Let me tell you something about that corner before Dale took over. Now, you see, a lot of mornings when Rose is going to work I can get up and sit on the porch, but I couldn't enjoy it because that, where she's got fenced in now, that used to be wine bottle row. You see the people would come there and congregate with their wine bottle from her fence to the corner, sit there and run their mouths in all kind of language until I'm almost time to go to work at twelve o'clock.

Rosalee Dunn: And the music playing, and the radio's playing and people hanging out the windows and things like that. And that's when the undesirables start movin' in.

Linda Banks: The way she came in, everyone was kind of like standing back, watching. We was nervous, because at the time, when Dale came in we had lost three families in the neighborhood that had been here as long as we had. And we were thinking about moving and Mrs. Dunn and them, everybody was thinking about moving, how much the property value was going to change, and if we should get out now or just wait. So, I think a lot of decisions about what we were going to do was going to be really truly banking on what Dale would truly do over there.

Floyd: And I say, what in the, what in the world is she think she's gonna do with that building?

Linda: People, I know the neighbors, everybody was a little uncomfortable. First of all, you know, we looked at the fact, you know, is this a white woman or a black woman? To be straight up. No body didn't know.. . .

Linda: We got a little discouraged because Dale had a whole lot of supplies and, like I say, you live in a neighborhood for thirty years you know what's going on. She put supplies in the back yard without fencing, and they stole everything.

Rosalee: And I says "Oh, God, Satan's at work again," you know. "They going to tear it up, she's not going to invest any money into that." But she did.

Linda: She came back and she built a higher fence, she put barbed wire across the top, and we was like "okay, she's serious. We may have something going on here."

Rosalee: And the whole block has changed. It's much quieter and everything, because we had a few undesirables, but we started talking to the neighbors and we started beginning to sit out on our porches more, moving around more, and they know people care about their property.

Dale: The interesting thing about South Shore is that the residents really have a strong commitment to the community. . . and those people are saying: "we are staying, we are doing what we have to, we want to reside here and we are going to make it the best thing that it can be."

Richard: The brilliance of the people who founded the South Shore Bank was to say let's create an institution that generates wealth and that uses that wealth in the community, and that furthermore, by investing in the community, strengthens that very institution.

VO: Today, the neighborhood of South Shore has defied predictions. It didn't fall apart. It didn't get gentrified. It's a stable black community whose residents range from blue collar to professional.

Carl: Lynn, I have a very simple philosophy about neighborhoods. I feel that black people can live in a black neighborhood and maintain it as well as the white people in a white neighborhood can maintain it. I feel that we should be able to, that is black people should be able to live in a neighborhood and maintain good schools, good neighborhoods, free of crime, free of riff-raff and what have you. I don't think that we have to chase white people because we think they've got a better neighborhood than we have. We can demand police protection, we can get out and vote for what we need to vote for, we can make sure these things work for us, rather than depending on the white folks to make things work for us.

VO: South Shore is a great story, but an important part of the strategy is keeping out the "riff raff"-- the gangs, drug dealers, and people who just stand on street corners drinking. It's not realistic to expect CDFIs to solve every problem... but can these organizations do anything for people who are really down and out. One answer lies in Philadelphia, where a CDFI called the Reinvestment Fund works with local grass roots organizations to reach people and communities that have hit bottom.

Jeremy Nowak: One of the determinants or characteristics of poverty is really social isolation, and so when you work in a place, in a North Camden or in a part of North Philadelphia or in a part of a little city like Chester, the goal is not simply to rebuild "place" on its own terms, but to rebuild "place" so that you create a set of connections between it and the mainstream economy.

VO: The Reinvestment Fund has attacked the problem of getting poor people into the mainstream by financing companies that offer training and entry-level jobs. Ronette Perkins works for Home Care Associates... every day she travels from her apartment in the Philadelphia projects to provide care to sick, elderly, and disabled people throughout the city.

Terrell Cannon: We usually take people off welfare and give them a good, decent job with some benefits, just as a stepping stone at least to make a movement forward in their life, and the majority are like, "I'm sick of it, I don't want welfare anymore I want to do something better for me and my kids, I want to live a better life," and those are the ones that we say "OK, we'll help you," and we take them in our hands and help them.

VO: Terrell Cannon started out just like Ronette, a single mother on welfare. Today she leads training classes for new employees, she's on the Board of Directors, and she's one of the managers at this worker owned company.

Terrell: When I first came here, and after I got to working, I'd walk into the office and they'd like, Hi! and hug me and I'm like, These people are crazy. I'm like, why are they hugging, just hugging all over everybody. And they were just too friendly, and there's a bunch of women. And I said, "Now what place, with a bunch of women, a workplace, has no animosity, no arguing, no fighting, no bickering, in one place, with all these women?"

Antoinette Harris: They appreciate you for who you are. And they also value what you have to say. They listen. You don't find another company like that.

Terrell: Because I came from welfare I can relate to what it's like to stand in a line and wait for some money, that's some free money, to be degraded by people, who just in general, you go to clinics and they're like, "She's on welfare, we'll make her wait." And you go into the store and spend your food stamps and it's like "Ha, she's on food..." you know, they just make fun of them all the time. I've been there. So, I wouldn't want anybody to have to continue to go through that. So, if I can help you I will.

VO: It might seem crazy to put your money into a company run by former welfare recipients, but so far, The Fund's investment is paying off.

VO: These trainees will soon be going to work every morning, just like Ronette Perkins.

PIX: RONETTE'S CRAZY A.M. Radio: ... 96.7 on your fm dial . you go on and woo!!

Ronette Perkins: Before I didn't get up til 7 o'clock to get the kids ready for school, now I'm up at 5:30 every morning, Saturday and Sunday included. Radio: (music)...

VO: There's a lot of talk about welfare to work, but CDFIs are actually doing something. Of course, their efforts take money, and every CDFI has its own strategy for attracting investments.

Jeremy: In the beginning the people that invested in the reinvestment fund were people who were predisposed to do this out of liberal social values or people from the church community, often Roman Catholic orders and some of the mainline Protestant denominations. But, as we built credibility we got more interest from hundreds and hundreds of individuals.

Marie Lucy: We were the first religious congregation to invest in Delaware Valley Community Reinvestment Fund. And, because we became the first investors, that established some degree of security, I think, for other religious congregations.

Rev. Trimble: This parish pledged to invest $100,000. Holy Trinity did the same thing and then I went to the diocese and said "I want you to invest at least a half a million dollars" which they did, and we went on from there, and now we have invested in the fund from parish churches, individuals, all with Episcopal relations, almost four million dollars.

Marie Lucy: There was some concern at first about whether we were jeopardizing and putting our resources at risk, and especially sisters concerned about retirement. But, I really believe, the Sisters really became very happy and proud of the fact that we were able to use our resources in this manner.

Rev. Trimble: Its wonderful because basically you aren't giving the money away, you are investing the money. You are taking a less of a rate of interest... it's a social investment... less rate of interest than you could normally get outside, but the Fund itself in 12 years has never had a default on a loan, which you can't say that about most banks.

VO: Often, individual investors become boosters and try to get their friends involved by taking them to visit projects financed by the local CDFI. In the city of Chester, just outside Philadelphia, some potential investors looked at the work of a group financed by the Reinvestment Fund.

Chuck Shadle: I was very much impressed as far as what I've seen; seeing it from the ground up; seeing the place torn apart and then rebuilt.

Glendora Shadle: I think the concept is so interesting because I think it spreads. I think if you put a couple of houses in a neighborhood, rehab them, and get them all fixed up, it makes the neighbors on their own want to do it. This a way to fix a whole block. Lynn: You have all these tours with all these white people,and I was wondering, especially you, Annette, you're from here, how you feel about that.

Annette Piatt: (laughs) Initially, it bothered me, because I just can't imagine that there aren't any well-established blacks that can help. But I look at it this way--help from any color is worth it. So I don't look at them as being a color, just an individual that's interested in the well being of the city of Chester. That's all that matters to me.


VO: People who put their money in CDFIs don't expect a high rate of interest... what they do expect is some real impact on local poverty. Credit Unions and banks are federally insured, and even though loan funds like Cascadia and The Reinvestment Fund don't have insurance, they have a nearly perfect record of repaying their investors.

Hal Taussig: Shall we take $10,000? I'm looking at a man over here in the eye! Let's take $10,000...

VO: Individuals, groups, and institutions have put hundreds of million of dollars into these organizations around the country... and at first that seems like a lot of money... then you read about the latest bank mergers and realize that each of those financial giants controls hundreds of billions of dollars--a thousand times as much as the largest CDFI.

VO: It's no secret that CDFIs got started because traditional financial institutions--primarily banks--haven't been making capital available to the people who need it most. So its surprising to learn that many, if not most, CDFIs now have partnerships with banks. This definitely looks like a case of "strange bedfellows", but both sides have something to gain. For banks, the primary motivation is the Community Reinvestment Act, or CRA, a federal law which prohibits red-lining and encourages banks to lend in poor neighborhoods. Most large banks, however, no longer have the expertise necessary to serve local communities.

Jeremy: If you are a $70 billion financial institution and your trade area is twelve different states in the east coast and the Midwest, it's harder to position yourself to make a $65,000 construction loan in Camden. You can understand that to some extent, organizationally. And so, I think the question for us is, how do we help put that bank money there, sometimes as the recipient of investments from the bank, sometimes by lending money for the bank.

VO: In their deals with these financial giants, CDFIs often end up taking most of the risk, but at least some banks are now putting money into community development projects they wouldn't have touched ten years ago. FADE TO BLACK, OPEN ON MAINE BOATS

VO: America's poor are not always who and where we expect. For years, the majority of people on welfare have been white, many living far from large urban centers. A CDFI called Coastal Enterprises serves rural areas and small towns in Maine.

VO: For over 500 years, the Gulf of Maine has been home to a diverse fishery including cod, haddock and flounder. But years of intense harvesting have devastated their numbers, so federal regulators stepped in to impose severe restrictions on the fishery. Lendall Alexander: This whole government regulations..... the way they went about it was to restrict our days fishing, which puts our boat down to 126 days, the red one. Which is, on a normal year, we fish about 225 to 250 days in a normal year. We thought by getting another boat we can work and do other types of fisheries.

Lendall: Initially we went to a bank. Banks really, to buy a fishing boat these days, you know, they look at you like you're some kind of... like you're some kind of fool, but, you know, we do plan on staying fishing and that's what we want to do is fish, you know.

Yvette Alexander: We've invested our entire life in fishing.

Lendall: Yeah, sure have.

Elizabeth Sheehan: From the banks point of view this is just risk. CEI will both come to the table and say we're interested in doing that and pull in a bank partner. And say we are willing to educate you about the fishery., what the risks are and take on the role of doing some of the research and development to get the bank comfortable with lending.

VO: Coastal Enterprises and a bank partner provided the financing Lendall needed to get into a completely new fishery.

Lendall: We call them slime eels... most people... they're called North American Hag Fish. They're a scavenger that lives on the bottom. Well, if you ever saw one, you'd think they really do scavenge. (Laughs) They are disgusting creatures. It's not a bad fishery, you know, it's a decent fishery. So, that's give us a real good option, to do that, you know, with our boat, and it's right close to home too, you know.

Elizabeth: We worked with Lendall in a number of different ways. We provided him with some information on the hag fish fishery ­ introduced him to a buyer and sort of made market connections as well as provided financing and assets from that point of view

VO: With Coastals help Lendall is now selling Hagfish to a buyer from Korea.

Lynn: So, do you ever wish that he was doing something else?

Yvette: No, no I really don't. I've been married to Lendall for 18 years, and I can't imagine it because our life is, you know, I've gotten used to the independence and the flexibility and, you know.

Lendall: Actually, I did try to do something else when we first got married. I was miserable. (Laughs)

Yvette: I didn't think we were going to make it. (Laughs)

Lendall: It was bad.

Lynn: What was it?

Lendall: I worked at Bath Ironworks. It was the most miserable I've ever been in my life. In fact, I quit. I was doing good and I quit, and I went fishing and we starved to death. But, I was happy!

Yvette: And when he's happy, we're all happy.

VO: When it comes to America's poor and neglected communities, decades of private and public efforts have barely made a dent. Community Development Financial Institutions may be dwarfed by the nation's banks but they're doing things no bank is doing. Of course, CDFIs are not the solution for all problems, but if we're looking for models that work, that's something Community Development Financial Institutions do... they work.

Richard Taub: This is not a process that one day it's finished and you walk away from it. The way in which American society works, the way in which people make investment decisions, the way racial prejudice plays out in American society--these are continuous fights, and the flow of resources is always an issue, is always a challenge. So you're really in a situation where one is continually fighting a kind of up hill fight.

Patty Grossman: This is just the beginning of a movement, and I think it's the duty of the CDFI industry or movement to get big enough to make a difference. And we're not anywhere near that. I mean, we're not even close. But that's okay, because the ground-work that's being laid is very difficult groundwork. We're a grass roots movement that's never had government support, never had healthy foundation support. The CDFI industry has proven that suddenly, with 7,000 to 25,000 bucks, people are supporting themselves. And that's a pretty exciting thing, and it's not a very expensive thing. I mean, to us it's a very expensive thing... 25,000 bucks strikes fear in our hearts to lose it. But, time and again the people we've chosen to back have proven that they can do it. And that's a really exciting strategy for really doing what this country says it stands for, which is creating opportunity. Well, you can't create opportunity unless you plunk down money on the line to give people a chance.

VO: To learn more about this program visit PBS Online, at

VO: This program was funded by Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Wallace Alexander Gerbode Foundation, and the Kokoro Foundation.

VO: To purchase a video cassette copy of FAITH, HOPE AND CAPITAL, call 1.800.440.2651 or write to the address on your screen.

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