Financial Tools to Promote Community Asset Building

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Financial Tools to Promote Community Asset
Building

• at the end of Roundtable 2, November 2001,
  participants discussed the need to secure
  non-debt funding to promote viable project
  capitalization/operations
• interviews were conducted with four experts
  prior to interviewing community asset
  organizations

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• Kerwin Tesdell, PresidentCommunity Development
  Venture Capital Alliance
• Annie Donovan, Managing Director
• National Cooperative Bank Development Corp.
• Chris Mackin, President
• Ownership Associates, Inc.
• Jim Megson, Executive Director
• The ICA Group

3
Coops

• Methodology
• Interviews with financial officers/managers of
  five coops/corporations with cooperative bylaws
• Equal Exchange
• Cooperative Health Care Associates
• Northeast Cooperative
• Arizmendi Bakery
• Hanover Consumers Cooperative

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Coops

• corporate form difficult to raise any patient
  capital
• use C corporate form with cooperative bylaws
• in-house financial expertise greater than CDCs
• more market focused, revenue focused
• solicit near equity, subordinated debt
• social investors
• nonprofit investors
• decrease patronage, increase member capital
  account contributions

5
CDCs

• what are the equity needs of CDCs?
• what other variables affect the CDCs ability to
  do more deals?
• Methodology
• interviews with managers/officers of 30 CDCs
• survey instrument and interview data at available
  at nemarketresearch.com/fir

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contacted 300 CDCs - resulting in 30 interviews
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• Most deals would not happen without CDC
• Sources of equity
• city, state and federal government (21)
• foundation and corporate grants (17)
• individual donors/capital campaign (6)
• tax credits (6)
• generation of income from organizational assets
  and loan funds (8)
• project partner (3)
• venture capital corporations (2)
• Neighborhood Reinvestment Corporation (1).

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  Difficulty in Obtaining Equity