concern with limited equity development and also a more fundamentally political concern. What kind of services we provide will vary, again, depending on the community, the group, and th.eir needs. In some instances, when we go into a community-and it's always at their request, we don't initiate that involvement-in some instances, we're dealing with groups that are fairly sophisticated, that know very well their community and their needs.... They want to talk about practical development models, or they may already be involved in a development program and they need some specif.ic assistance in carrying out their plans. In other cases, we may go in at the request of unorganized low-income tenants facing displacement.or · local,churches with no experience whatever in economic development or housing, but with good roots in the community. In that instance we may have to start by helping them understand what's happening. They know that they're confronted wifh an immediate threat or that they're living in some distress; they don't necessarily understand why that situation has developed or what trends they·are riding the crest of and where . things are headed. One way or another we'll come to a common understanding of what the problems are and , we'll talk about different development approaches to those problems._ If they want to go with one of those models, we can help them with legal assistance and incorpora_tion, outreach, public education, ~nd community organizing. We teach property acquisition and financing and development planning skills, and we can assist them in negotiations with public and private agencies. · We feel that the ability to get to the roofcauses of social and environmentql probl~ms requires a willingness to confront the institutions of land ownership. RAIN: You said most of your work is with fand and housi.Qg., and that a smaller part is with businesses., Matthei: Right. There is another category that' has emerged in the last couple of years, and that's with community loan funds. We initiated our own revolving loan fund about five years ago. It grew out of our experi- -ence as a technical assi~tance organization, and the frustratior that you feel when you work with a group to identify their problems, create a development organization, do the planning, identify the right property, and ' then everything grinds to a halt for the lack'of start-up . capital. · Fiye years ago when interest rates went completely . through the roof and federal cutbacks began, it became clear that what had always been the prindpal barrier to March/April 1985 RAIN Page 7 low-income development was f!OW almost an ipsuperable barrier and was going to get worse. So we decided at that point that we simply had to intervene directly to provide some assistance with start-up capital-particularly with young groups that don't have a track record and are confronted with that "catch-22" that says that you can't get money without a track record and credit history, and you can't build a credit history without money to borrow and spend. If you were interested in lending money to our fund, you would tell us how much you wanted to lend, for how long a time, at what rate of interest, what repayment schedule, and ifyou have qny special condit~ons on the use of the fund. So we figured there must be some way to get them over that initial hump. We knew that we would never be the sufficient lender to any group. We're not going to be their permanent financing source to meet their financing needs over time ... but we felt we needed to have some ability to make a strategic infusion of capital tp get a project started. · RAIN: Do you provide technical assistance with the loans? And what percentage of your loans have gone bad? I'm trying ~o· grasp the risk involved in providing loans to new groups. Matthei: Let :i;ne tell you very briefly how the loan fund works._We knew that we needed access to a pool of capital to help these groups get started-particularly the young groups and groups that had a high percentage of low-income people, minorities, and women. What we figured was that we had more contacts with individuals· and-institutions that had both social concerns and investment capital-though often those two had not been put together-than any of the individual groups. It was all most of these groups could do to deal with their immediate low-income community where there seemed to be few concentrations of capital and few sources of . financing. So we figured that we have a w~der recognition than the individual groups because we do a certain amount of publishing and a lot of traveling and speaking: Can we use that network to create a financial resource? So we set up a very simple mechanism, which is essentially a restriczted account within our nonprofit corporation, and called it a revolving loan fund. We invited these individuals and institutions to,take investment monies and lend them to the fund and we permit
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