Executive Director, The Reinvestment Fund
by Lynn Adler and Jim Mayer
Producers of Faith, Hope and Capital
Q: How did The Reinvestment Fund get started?
JN: In the
mid 1980's, actually around 1984, there was a lot of interest in social
investment in this area. I think it was spurred in part by some efforts
to rebuild inner-city neighborhoods that needed capital. But, it was
also spurred in part by the politics around anti-apartheid work. At
that time, when people were thinking about getting corporations to disinvest
resources in South Africa, one of the logical questions was, if you're
going to take money out of some place, where are you going to put money
in? So, the effort to create The Reinvestment Fund came out of interest
by three different kinds of constituencies. One group was potential
investors, people that were looking for vehicles to put their money
in places that fit their values. A second group was people who were
working in the inner-city and trying to figure out how to get accessible
and flexible capital to do development projects, housing and economic
development projects. Finally, there were a lot of people with technical
skills in banking and real estate development and accounting and law,
who were looking for an institutional medium in which to both express
their values and use their skills. Those three constituencies, the investors
and borrowers and technicians really were the organizing focus around
1984 and 1985. They came together and got a small grant from a local
Philadelphia foundation to hire someone to put the organization together,
and that was me. It took off from there. Prior to that I had been working
as a community organizer in a neighborhood called Logan, which is in
the upper part of North Philadelphia. I had worked for a few years as
a block organizer, organizing blocks around housing and crime and safety
issues, things like that.
Q: So why
did this opportunity appeal to you?
in an inner-city neighborhood, I saw that the issue of capital was critical,
and that it was an issue that often was avoided, or often wasn't thought
about. So I saw that while civic organization, and civic power were
fundamental to social change, capital was also. This seemed like an
opportunity to combine organizing talent with an interest in how to
put capital in the hands of organized people.
much money did you start off with?
We had nothing. It's like politics, in the best sense of politics--organizing.
This is a retail business, person by person, in a relationship. So,
we're a $45 million organization right now, but it took us three years
to have one million dollars. In the first year we organized about a
quarter million dollars, and then we just built slowly. We learned how
to lend, how to invest, we built credibility with different constituencies.
In the beginning, the people who 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 more
credibility we got more interest from banks and insurance companies,
from foundations and from hundreds and hundreds of individuals. So,
for us it's always been incremental-- it's been conversation by conversation
and meeting by meeting. In that sense we've organized money here in
the way we organize people when we did a house meeting at a block. For
us, the analogy held and still holds.
was a lot of organizing going on in the 60s and 70s. How is this different?
organizing people as a way to organize money, and we're organizing money
to back projects for people who don't normally have that kind of money
on their sides. That's one thing that's different. The second thing
that's different is we don't spend as much time talking about what it
is we're against or what it is we don't like as we spend talking and
thinking and planning and investing in things that we like and want.
So the vision is affirmative and constructive and it's forward thinking
and it believes in a future. The third part of it is that we're an organization
that's built on accountability and reciprocity. Reciprocity not only
to the customers--the neighborhoods and small businesses or day care
centers or community development corporations--but to investors and
money, and we take that relationship very seriously. So we're an intermediary
between those constituencies and we manage the tension between the interests
of those different constituencies. I think that the style of organizing
that happened in the 60s and 70s did not always have to manage that
kind of tension or didn't always have the same kind of culture of accountability.
We're people who have to deliver not just in our social values, but
we have to deliver in projects and deals. We have to be planners and
bankers at the same time, organizers and investors.
you started out, what was your thinking about the banks and financial
industry? I'm asking because when we first started doing our research
here we were thinking that banks were the problem.
I first started out, I came from the perspective that it was most important
to figure out how to get conventional financial institutions to be accountable
to the neighborhoods we invested in, how to make them do that. To a
large extent I believe that's still important. At the same time I would
say that over the last ten years I've watched and understood more about
how the financial services industry has changed and has restructured
itself, so there are not as many banks. They're larger and they don't
look like banks of ten or fifteen years ago in terms of the products
that they provide. It's given me a better understanding that there are
a couple of different ways to hold banks accountable. One way is to
advocate that they provide credit in those neighborhoods, but at the
same time to figure out how there are roles for organizations like ours
to serve those markets that banks are really not as well positioned
to serve. If you are a $70 billion financial institution and you're
trade area is twelve different states in the East Coast and Midwest,
it's harder to position yourself to make a $65,000 construction loan
for a daycare center 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 recipients of investments
from the bank, sometimes by lending money for the bank. This is an industry
that is fundamentally different than ten or fifteen years ago. In that
sense, I'm not nostalgic. I'm not trying to bring back a sense of banks
as they were in the mythical good old days. We're advocates but we're
realists, we're pragmatists.
don't we talk about specific places where The Reinvestment Fund is involved--
North Camden, where we just were.
actually one of the favorite places of mine we've been involved in.
North Camden is one of the poorest neighborhoods in Camden, which is
quite a contest to win. It's probably one of the poorest neighborhoods
in the region, and also one of the neighborhoods that's the best organized
in terms of civic organization. We got involved in North Camden in the
first four or five months of lending. We had just a few hundred thousand
dollars in the organization and we had a request from the North Camden
land trust to provide a rehabilitation loan. Prior to rehabilitating
their own houses, the community group there had "squatted" several hundred
homes in the neighborhood--these are all abandoned houses--and then
won the right to the titles from the city. The best homes they didn't
need to rehabilitate, but some of the other homes they needed to rehabilitate.
I remember on the first house I looked at for a loan in North Camden,
a very small loan--$40-$50,000. It had no back wall and only a limited
amount of its side wall, and I remember going back and saying, "Oh my
God, I don't know if these guys can pull this off!" We had very little
room for any error to start up a little loan fund. So, it was one of
these loans that you had to make on faith. There was no collateral value
in North Camden, trust me. We made that loan, and since then they have
rehabilitated well over a hundred units of housing and have got their
own thriving construction company doing some great stuff. I remember
when they were going to build the second prison on the water front in
North Camden. Remember, Camden is a city where building prisons looks
like economic development, and is sold as that. One of the people in
the community groups told me that if they built the second prison, someone
had estimated that over 25% of North Camden residents would be prisoners,
which is a pretty gloomy statistic. The neighborhood group protested
the construction of that prison, and they stopped it. But people rightly
said to them--at the state level and the city level and bankers and
investors--if your vision for this waterfront isn't that, what is your
vision for this neighborhood and this waterfront? It was really that
question, along with some questions some banks asked us about North
Camden, that led to the creation of the North Camden plan, which is
this comprehensive ten-year revitalization plan that they're well on
their way to implementing. For the first 4-5 years of our lending in
North Camden, no banks would refinance any of our loans. They would
say they were going to look at it and look at refinancing the loan,
but they never really looked at it. I remember talking to a banker,
sitting with him having a beer on a late Friday afternoon, and I asked
him to just level with me. "What is it? What's the story?" And he said,
"My God, there's not even a fire station in North Camden. How can I
sell any of these loans to a committee? There's nothing there." And
I said, "Well, what would it take?" He said, "What it would take would
be a vision, a long-term vision, a sense of where this is going, how
a neighborhood is going to build some assets, build some value." So,
the other thing that the North Camden plan addressed, besides saying
that the neighborhood groups were for something, not just against the
construction of the prison, was it addressed the concerns of the investors.
And the concerns of investors are that there's going to be some long-term
value, that if they invest there, their investment is going to have
some stability, some market. It's really the interesting confluence
of public policy, private-sector need, and civic organization that sort
of comes together in North Camden to do some unusual things in what
might be the most desperate market in the area.
us about the Nehemiah housing development you financed in West Philadelphia.
important thing to understand about Nehemiah is that it's not a housing
development. It's a housing development in that we built houses here,
but it's really an organizing project. The congregations that came together
to create Nehemiah did it as an expression of relationship and power,
more than as an expression of themselves as good developers. It was
a way for them to show that you could rebuild parts of the city at some
scale. You see, there are whole parts of Philadelphia where the real
estate markets collapsed, where there are thousands of abandoned units
and lots. Previously, moderate income or affordable housing developments
in the city happened in very small ways--ten houses here, five houses
there, usually very costly, but usually in ways that didn't really turn
a real estate market around, or really didn't rebuild a community. If
you're going to make a dent in that market, if you're going to try to
turn neighborhoods around you've got to redo it at some scale. But to
do that takes more than money and it takes more than being a good builder
and developer. It also takes being able to aggregate the kind of political
power that you need to be successful. So I think Nehemiah is really
about power, fundamentally, more than just about building and financing.
It's really the story of people coming together with enough power to
be able to change the way business was done in the city.