Build your nonprofit: MakE Your Advocacy Sustainable

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Build your non-profitMakE Your
AdvocacySustainable

• Adam Rust
• Community Reinvestment Association of North
  Carolina

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Taking it to the Street

• CRA-NCs Modify This Tour

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The Modify This Tour

• Buses from Durham, Rocky Mount, Rich Square,
  Winston-Salem (NC) and New York City.
• Housing counselors
• Non-profits
• Why it Works
• Housing Counselors talk Congress listens
• Funding for housing counseling
• More loan modifications
• More consumer protections

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Achieving Sustainability

• Unless there is coercion or some other special
  device to make individuals act in their common
  interest, then rational self-interested
  individuals will not act to achieve their common
  or group interests.
• - Mancur Olson
• The Logic of Collective Action

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Sustaining Advocacy

• Making our non-profits strong and independent

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Sustainability Understanding the Challenges

• Not enough dollars for advocacy
• Taking Money from Banks Comes with Downsides
• When Non-profits compete, banks win!
• 1,746 non-profits in Durham, North Carolina 91
  in advocacy, alone
• One non-profit for every 119 residents
• 5,510 non-profits in Cleveland
• Some non-profits would not survive the loss of
  key staff.

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What are we Doing?

• What non-profits tell their clients

• How non-profits run themselves

• Build assets
• Dont live paycheck to paycheck
• Buy a Home
• Have a rainy day plan
• Make a legacy
• Do what you love, but be financially savvy
• Have a financial plan

• Get grants, do fee-for-service
• Get the next grant
• Rent office space
• Host a conference!
• Depend upon charisma of one leader
• Do what we love
• Dream of more grants

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Reversing our Poverty Mentality

• Make a plan to Build Institutional Assets
• Develop real estate
• Own your own office space
• Transform your program work into intellectual
  capital
• Create capital with an investment portfolio
• Grant-funded program work is business income

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Assessing Cleveland Non-Profits

• Research 39 groups in advocacy, services, or
  development.
• Community Shares of Greater Cleveland
• Guidestar Advocacy, CDC
• Makeup 11 CDCs, 21 advocacy groups, hybrids
• Asset range less than zero to 28 million
• Legal Aid and AIDS Taskforce are the only
  advocates with substantial rent income
• Only six make money on fee-for-service
• Almost half have investment income

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Revenue Streams for Advocacy Cleveland

• At 16 of 21 advocacy groups, expenses exceed
  profit from fee-for-service plus asset income.
• 2 are sustainable without public non-govt. grants
• Already on the way 14 advocacy groups with asset
  income
• Only four have more than 10,000 in asset income
• Only two have more than one positive revenue
  stream.

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Funding Patterns

• CDCs

• Advocates

• 10 of 11 have investment income
• All of the CDCs with more than 200K in assets
  also have positive incomes.

• 3 of 21 have investment income
• 3 of 21 make money on fee-for service
• Grants cover more than half of expenses at 16 of
  21

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Divergent Applications, Common Mission

• CDCs

• Advocates

• Build housing
• Manage property

• Create opportunities
• Lobby
• Research problems

Service Providers
Credit Unions and CDFIs

• Housing Counseling
• Legal Advocacy
• Small business coaching

• Build Assets
• Accept PRIs
• Make loans

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Different Ways to Reach Sustainability

• No Change do the same thing, maybe better
• Difficult Alternatives Community Benefits
  Agreements, L3C
• Third Way Mergers and Asset Building
• Development and advocacy
• Housing counseling with advocacy
• Program services with advocacy
• Real Estate with advocacy

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Mergers

• How it can lead to opportunity

• Challenges

• Pair Policy with Development and Services
• Grant-makers
• Facilitate real estate ownership
• Fund mergers
• Use opportunities to build assets

• Skill overlap
• In a merger
• Redundancies
• Leadership
• Cultures
• New accountability
• Collaboration

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Merger SWOT
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Takeaways

• CDCs should be advocating
• Advocates should be building assets
• Asset Building is not easy
• Money makes More Money
• Money makes Sustainability

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How Data Drives Advocacy

• Updating Data Reporting
• The Community Reinvestment Modernization Act of
  2009

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Looking Back How the CRA dialogue has changed

• 1977 to 1998

• The Subprime Era

• Redlining
• Homogeneity in Loan Products
• Genuine neighborhood banks

• Lots of Money, Some Good
• New credit products
• New Lenders
• Declining wealth
• Consolidation of Banks
• Loan Securitization

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Changes in the Regulatory Environment

• Before Bush

• Since Then

• CRA Exams with weight
• Fair Lending Enforcement
• Lending Agreements

• CRA Grade Inflation
• Lack of Regulatory Enforcement
• Data Falls Behind
• Pre-Emption
• Lending Agreements Dont Count
• Fewer Assessment Areas

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Changes in Community Organizing and Advocacy

• Before

• Now

• The People, acting with the fire that fostered
  their creation
• Saul Alinsky tactics
• Funded by membership

• Advocacy and mobilizations by paid, professional
  activists
• Evolution of mission, tactics, and strategies
• Data-driven
• Funded by foundations

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Everyone knows we need Better Data

• Please consider that HMDA results only tell part
  of the story, since risk and other loan factors
  that affect pricing are not including. Because
  these factors are not contained in the data,
  there is wide agreement that HMDA statistics can
  not be used to show discrimination. Race is not a
  factor in our pricing, and differences in pricing
  are based only on risk.
• Lynn Greenwood, Wells Fargo Home Mortgage, 2008

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New Data in the CRA Bill HR1479

• Small Business

• Mortgages

• Loan Terms and Purpose
• Business information
• Minority or female ownership
• Franchise?
• Staff size
• Census Tract
• Revenue Size
• Loan Decision

• Interest Rate type
• Loan terms
• Underwriting
• Borrower data
• Lender description
• Real Property flag
• Loan Performance and subsequent Modification

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Additional data

• Geo-coded
• Unique ids linkable to loan performance
• New business segments
• Insurance customer and geographic
• Securities dealers
• Deposits by residential and commercial consumer

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An important bill

• 54 co-sponsors
• Lead sponsor Rep. Eddie Bernice Johnson (D-TX)
• Currently in House Financial Services Committee