I think that the issues for our organization, Community First Fund, can be easily identified. We have come a long way since the founding of our organization, on which Antonio, Sean and others have worked. Creating the Fund was, at the time, a far-reaching concept, which was to create a community asset, to create a pool of capital of the community and for the community. I think it was Gar Alperovitz who talked, earlier, about community assets, In a sense the Community First Fund is an asset to the community. I would like to talk a little about the challenges that community organizations face and I’ll focus on some of our own experiences
I think that one of the major issues that organizations struggle with is how to achieve "scale". We have heard a lot about economies of scale in terms of consolidation in the private sector. Scott Sheely and others have talked about that. However, consolidation has also happened with CDCs, and I think that in many respects this has had to happen. We have had to look at our economies of scale and at consolidation. Many of you know that Community First Fund started in Lancaster City but that we intended from the start to expand throughout the region. Many of our communities have the same problems, they have the same issues with access to capital, with the issue of technical assistance that Shirlyn Kamara talked about earlier. As a result, we embarked on this expansion, which has been very successful--we are recognized as a premier regional community economic development organization, dealing with these issues.
But part of the drive to expand was also driven by our very survival. We were not going to be able to sustain what we were doing in Lancaster City and Lancaster County. There appeared to be a lack want or a desire to support an organization that was doing that type of work. We were struggling. I think we knew intuitively that it was important to sustain such an organization, but there really wasn’t anyone out there working to support the initiative other than a few folks like Antonio. I think there needs to be a research center to help community organizations like ours become strong and consolidated.
Right now, the Community First Fund primarily does lending and training and business counseling, but we are only able to generate about 20% of our funds through those activities. At this point we have to rely on other folks to the tune of 80% to stay in business. Folks like President Dautrich, President of the Bank of Lancaster County, and other members of this audience support an organization like ours. However, this model is very difficult to sustain over time. I have looked at organizations like ours across the nation, and we are one of the top lenders: we do about 100 micro-loans a year, multiple million dollars. But we have yet to find a way to be self-sustaining. I once thought going from ten or twenty loans to one hundred loans per year would allow us to become self-sufficient. But self-sufficiency for CFF has yet to take place. The reason the private sector isn’t doing these kinds of lending is that they are unable to make the money necessary to do so. For example, we may spend forty hours with a client, make a thousand dollars in interest but spend four thousand dollars to do it, which is a losing proposition. However, it is important that we provide our services to support entrepreneurs. Many of the entrepreneurs are minorities and they are locked out of the system. Now you can talk about the fact that the skills are not there and other such factors, but there are other barriers too, such as racism. For example, we have looked at hiring bankers for our organization, and looked for people of color. There were none. They’re not being developed. The few that worked at the banks, we could not afford. We were able to hire a lot of bankers, but they were predominantly white. We had to develop junior lenders from business schools, and they’re people of color. We as an organization have to train our own. We should not say that, as a community, people don’t have the skills or education, but find a way to develop individuals in our community.
The Center for the local economy could help CDCs like ours adopt the best practices, help them achieve sustainability. Some of you are familiar with CHODOS, or Community Housing Development Organizations, in Lancaster City. Two or three of them have gone out of business in the last five years. Sunnyside and CANDO were unable to achieve sustainability. The reason for that was that a volume of two or three properties a year was not sustainable. They were not producing enough income to make themselves viable. The issue of adopting best practices and not achieving "scale" may have affected these organizations too.
I think that we as a community need to realize that we have got to do a better job at supporting the organizations that are doing this type of work. We have to come up with better practices so they can stay in business. We have to be able to sustain them, because a lot of the talk about community development is theoretical, and we can talk about it, but if we, as a community, don’t deal with the challenge that Ron issued and develop a Center that can help us with the best practices, we just won’t be able to continue with this type of work.
In conclusion, although this sounds pessimistic, I’m very encouraged by the experience of our organizations. We have been growing by leaps and bounds. I think that many of you may know that we moved. From about 5 years ago CFF has grown from a small "mom and pop" organization to an organization that deals with millions of dollars across the region. I think that I’m probably tougher on our organization than many folks are, but I think that if this asset is going to be here for the future, we have got to do a better job educating ourselves and I think this is what this issue is all about. Thank you.