Pinsky discusses the work of his national network of Community Development Financial Institutions.
Opportunity Finance Network CEO Mark Pinsky
Tavis: Mark Pinsky is the president and CEO of Opportunity Finance Network, a nonprofit designed to align money and capital with political, economic, and social justice. There have been many milestones under his leadership at OFN, which we’ll get to, I’m sure, later in this conversation. But first, Mark, good to have you on this program.
Mark Pinsky: Thank you. It’s great to be here.
Tavis: One reason I wanted to have you is because, as you know, I have, and I’m not the only one, but have continued to try to do as much work as we can on the issue of poverty and eradicating poverty in this country. There are so many people who I think are now starting to pay attention to this issue.
But what often doesn’t get talked about is the fight back. I don’t want to be guilty of only talking about the ugly and the bad, but not talk about the fight back that does exist in the country on behalf of those who are trying to dig their way out of this hole that so many Americans of all races and colors find themselves in now.
So your outfit is one of the many in this country who are doing some good work to try to alleviate this sort of pain and suffering, so let me just start by asking a top-line question of what OFN does, and then I want to get into some specifics about the fight back against poverty in this country.
Pinsky: Absolutely, and I appreciate you paying attention to this issue, because it’s one that sometimes gets lost. So Opportunity Finance Network is a network of private sector financial institutions using capital. They’re called Community Development Financial Institutions, or CDFIs.
They’re using capital to create opportunities where opportunities don’t usually get created, so low-income communities, low wealth communities, communities of color, other disadvantaged communities.
It’s fundamentally the idea that capital too often is a problem, and certainly when you’re dealing with poverty it’s a problem, but capital can be the solution. So we are working all across this country, in all 50 states, in urban communities and rural communities and native communities to try and create opportunities where there aren’t any.
Tavis: So two things about capital. I’ve said many times in talks across the country that there’s nothing wrong with capitalism except that they get the capital and we get the ism – the racism, the sexism, the cronyism, the good old boyism.
So there’s a fundamental question about how you align capital with the people who most need it. Muhammad Yunus has been a guest on this program; Nobel laureate, as you know, whose claim to fame is microfinancing.
But tell me more about how you think in this economy, especially, we can align poor people with the capital they need to exercise their agency and their right to self-determination.
Pinsky: Well, the last five years, this recession has actually given us a chance to prove what we do. It’s given us a chance to show that you can lend money in distressed communities, and there are more and more distressed communities over the last five years than ever, and you can put the money in the hands of folks and they will perform.
They will create the businesses that they’re out to create, or they will make sure that they have affordable housing, or if it’s a nonprofit, that it’s a well-run nonprofit that’s providing valuable services. And that what they’re doing is proving what people think can’t be done is possible.
So we’re doing a little bit of impossible every day, and if you can prove that capital can work, if you can prove in this recession that you can lend to small businesses when everybody out there wants to say you can’t do it, it’s not going to work, there are no deals out there.
Then you can prove that it’s possible to lend to poor people, it’s possible to lend to folks who are kept out of the system and to create opportunities. So we’ve done that, and through this recession we’ve performed, our CDFIs have had very good results, not only in terms of the jobs created and the housing units created and the nonprofits we’ve been able to support, but also in terms of the payback, right?
We lend money out; we need to get paid back so we can pay back our investors. Our loss rate, our net charge-off is the fancy term we use for it, is about 1.7 percent. That’s about as good as the banks do in good times. So the point is proven you can do this.
Tavis: The second point about capitalism specifically, and there are a number of people increasingly in this country, as you know, who feel this way, and they’re not all crazy.
My friend Michael Moore, the great filmmaker, and I have this conversation all the time about whether or not the time has come for us to rethink capitalism. Now, you say that and automatically you shut half the room down, because capitalism is all that we know.
We believe it is the American way, and don’t hate on rich people for being successful. But what are your thoughts or what would you say to persons watching right now who are increasingly becoming concerned about whether or not capitalism is at the epicenter of what’s causing the destruction in our country?
Pinsky: I think that the issue, what’s going on is you have this ideology of capitalism rather than the practical reality of capitalism in some ways. So we have this idea that we had self-correcting markets.
Anybody who goes out and tells you we have self-correcting markets, that’s the epitome of capitalism, it’s just not true. It’s just not true anymore, right? Capitalism can work, but it needs to work in different ways than people tend to want to believe that it can work, that its advocates talk about.
So what I would say is let’s figure out how to connect you with what a CDFI’s doing. CDFIs are using capital to create opportunities where mainstream, conventional thinkers would say it wouldn’t work.
We went through, I remember in 2010 I was at a meeting at the Federal Reserve in Washington, and all the bankers got up and said – not all the bankers, but a few bankers got up and said, “If there are any deals out there, if there were any businesses to finance, we’d be financing them. The fact that we’re not financing them is proof that they aren’t out there,” right?
Meanwhile, we’re doing billions of dollars a year in financing of these businesses, right? So they’re out there if you know where to look. What I would say about that is that this notion of aligning capital with justice is really this idea that we can demonstrate that capitalism can work in different ways.
It can work in ways that are more sustainable, it can work in ways that are more just.
Tavis: But that’s part of the indictment – back to my question – that’s part of the indictment of this system of capitalism that we live under, that the big boys have hijacked the system.
The fact that you could go to a meeting with the Federal Reserve and bankers stand up and say incredulously if there were credible businesses to finance, we’d be financing them, and then you guys stand up on the other side of the room and put out a long list of companies that you are helping to get off the ground, that’s the point – that they’ve hijacked the system and they’re not putting the money where it ought to be.
Pinsky: That’s right, and if we could be levers, if we can be in those communities and say you can put it – we consider it a success if we go into a market and we work there and some of the big guys want to come in.
Pinsky: That’s a good thing. We don’t think that’s a bad thing. But we understand that when times get bad they may get out of that market really quickly. So we need to be there, we need to be able to step in.
But if we can keep sort of moving – I talk about it as moving the margins. That what we do is work sort of outside the margins of where conventional finance goes, but the margin moves. In good times, the margin moves out, and we’re happy to have the banks and the others move in.
But in bad times, and we just saw this through the recession, they pull back. So what do you do? How do you help those folks in those communities who are suddenly left high and dry?
Tavis: So what kind of role, what kind of access, what kind of influence do people like OFN, organizations like OFN have in Washington, because one of my assessments is, and I’m not the only one who feels this way; again, there are other folks who feel like this, that both parties are bought and bossed by big money, by big business.
So where do people like you, who are trying to move the margins, what kind of access do you have in Washington?
Pinsky: We have a lot more access than we used to, and for one reason and one reason alone, which is that we performed. We’ve been doing this for 30 years. At first, no one cared what we did and no one paid attention to us, and slowly, they did.
So we created a few programs that worked with CDFIs and they worked, and everybody said, “Oh, how come that’s working over there? Let’s try and do it over here.”
So people pay attention, but we still have tremendous frustrations. We think that there are so many more things that policy could be doing to sort of align capital with justice.
Pinsky: Like for example there’s this thing called the capital gains tax. You’ve heard of it, everybody talks about it. We want a community gains tax. We want an investor who puts money into a community to help it develop, which requires the investor to be patient. It may mean that you don’t maximize – what we do is profitable, but it’s not profit-maximizing.
So if you’re willing to invest in something that’s profitable, may or may not be profit-maximizing, you’re willing to stay there, and the community is getting stronger as a result of that, wherever that is, whether it’s urban, rural, or native, that there ought to be some tax advantage for that investment.
Tavis: Is there a push-back on that in Washington, or it’s just not being considered as of yet?
Pinsky: It’s just not being considered. There’s a lot more attention around capital gains tax, because there are a lot of people invested in capital gains tax. So one of the things that we all know is that we see things that are good, like a community gains tax, and we want it to happen right away.
We think that would be great. It takes time. It takes time. So we’re willing to be patient to a point, but when we prove something, when we see that it works, we’re willing to push really hard.
Tavis: But see, that’s what – this is my axe to grind and you and I are on the same page in some regards. I’m preaching to the choir here. But you said it takes time. This is what angers me. It didn’t take time for Wall Street to get what they wanted.
Pinsky: Yeah. Yeah.
Tavis: These guys say, “If you don’t give us what we need the whole country’s going under,” and people stay up all night for days trying to figure out a way to get them their money.
Here you have a credible idea like this, a community gains tax, and you’re telling me it takes time. I guess that just (unintelligible) me.
Pinsky: Well, when I’m not on camera I get impatient too. (Laughter)
Tavis: I guess I’ve got to learn how to do that.
Pinsky: That’s right, that’s right. No, you’re good at it. But we’re going to keep pushing. The point is yeah, it is hard. A lot of really important, good things have taken longer than they should have, and we think this is taking longer than it should.
But you know what? We’re not going to stop pushing, we’re not going to stop trying, we’re not going to stop teaching.
Tavis: Here’s the part of the conversation where I give you a chance to brag, and I’m not doing it just for bragging’s sake. But we’ve talked in theory here, at least, about how this can work, and you made the point that it does work. Give me some examples.
Pinsky: Sure, absolutely. There is a transaction, a deal that we did in Harlem, Family Health, Community Health Center? Family Health Center of Harlem, I think it’s called. There had been a community health center there that was shutting down, and it meant that about 15,000 patients a year weren’t going to have access to healthcare.
We were able to put together the financing and put it together. Not only did we replace it, we were able to increase it. They’re aiming to get to 27,000 patients a year that they’re able to treat.
They’re providing more services than they ever did before. They’re creating jobs. There’s a hundred jobs that are there as a result of it. They also have started a program which I love. It’s a residency program, so they’re training doctors and they’re training dentists in urban healthcare, in a way.
So that’s one transaction on a big-end side of things. Another transaction that we think about is there’s a credit union in Durham, North Carolina, called Latino Community Credit Union, and it was started because the Latino community there was wary of banks.
So what would happen is they’d get paid on Friday and not put their money in the banks, and what the community realized was there was this rise in crime on Friday nights against Latinos. So they started this credit union. It now has – it was one of the fastest-growing credit unions in the United States.
It has 50,000-plus members, 11 branches across the state. They provide consumer products and services. So there are people now who have mortgages, there are Latino workers who now have mortgages through this bank that wouldn’t have otherwise, for example.
So a couple examples of what we do. But we’re doing microenterprise all over this country, we’re doing small businesses all over this country, and community health. So healthcare is going to be a big issue for this country, obviously.
Tavis: Sure, absolutely.
Pinsky: Community health centers are going to be really on the front lines of that. So that’s an area, that’s why I give you that example. That’s an area where there’s going to be a lot more activity.
But we’ve done, we do $5 billion of financing a year, we do something like 180 transactions every business day. It doesn’t get noticed, and that’s why I’m glad to be here to be able to talk about it a little bit.
People need to understand that sometimes, things that we think are impossible are possible. That goes back to your question about capitalism. The reality is we think that in capitalism, what we’re doing is impossible, and it’s not. It’s happening every day.
Tavis: Well, one of the things that we want to continue doing on this program, whether I’m on the road on a poverty tour or writing a poverty book or what have you, we want to continue as often as we can to showcase for you ideas that do work, because I get so tired of hearing folk in Washington suggest that nothing works unless it’s connected to a big business or a big bank.
So this is an idea, Opportunity Finance Network, based in Philadelphia. Around the country, of course, but headquartered in Philadelphia. Their leader is Mark Pinsky, and I’m delighted to have him on the program to showcase the good work that they are doing to reduce and eradicate poverty in this country. Mark, good to have you.
Pinsky: Great, thank you, Tavis.
Tavis: Thanks for your work, and thanks for being here.
Pinsky: My pleasure.
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