convip.ced of that, you will go a long way. They are.usually concerned that they will be sued for negligence by someone ·down the line or that they aren't going to meet their income requirements. You need to .show them the records pf existing social investment funds, and say this isn't "true. We can prove that you can do just as well with social screens applied to a portfolio. You need to provide the data that they need to feel that they are not taking undue risk, and let them know that you are the owner and you have rights, too. RAIN: Another option for socially responsible investors are community loan funds. How do they work? Matthei: Over the last six years almost 200 investors, in:- dividual and institutional, have committed a total of almost $4 million to our loan fund on a variety of terms. We have taken that money.and made about 150 loans to community development projects in 20 states, and wonder of wonders, We ought to be looking at how public agencies dispose ofpublicly held property. we haven't had a single loan loss yet and we've never been a day late in payment to a lender. The social performance has been just as exciting. We did a brief survey of our housing loans. We found that in $500,000 of housing loans we've leveraged at a rate of five to one. That means that for every - dollar that we put directly into those projects comes more than $5 from conventional sources that would not have ·flowed unless we came up with the missing piece of the financing package. Who benefits from that housing? Two hundred and fifty households, 36 percent black, 23 percent hispanlc, 40 percent white, 41 percent single-parent women heads of households. Look at the complexion of deep poverty in the United States; we are building houses for those people and successfully financing them: RAIN: There was a recent meeting to form a national association of community loan funds; are more of them popping up? Matthei: The proliferation of community investment - funds is particularly exciting. We at ICE convened the first national conference of community loan funds. We assembled representatives of 23 operating funds and 12 developing funds. · This month we will. incorporate the National Association of Community Development Loan Funds. The association will provide technical assistance, information, and peer evaluation to member funds to safeguard and strengthen their performance. It will be a national focus for these efforts, working on media relations an~ presentations to constituencies of major investors such as the insurance industry, churches, foundations, and individuals. It will be involved in research and advocacy. We are now working on an amendment to the 1984 tax law which will make it easier to become involved in community investing. We are also lookirig at the development of several new financial mechanisms that will expand the flexibility and volume of community investment activity. We are in the Summer 1986 RAIN Page 17 process now of developing a national secondary mortgage market in community investment. We're also negotiating,,... with a bank for a line of credit that would allow them to/ function as something of a federal reserve bank for community loan funds t9 give us more liquidity and flexibility. The growth in this community investment field is indeed very dynamic. RAIN: What can be done to keep capital irt the local area? Matthei: What's needed is both public and private·activity. We've spent most of the day talking about what investors· can do in the private sector. The social investment move- . ment is also in some sense a grassroots political movement. This movement can help build a constituency that can build more effective public policy. We ought to be looking at how public agencies dispose of publicly held property. We should insist that every public agency give first consideration to economic institutions that have the greatest benefit for the community over the long term. We should be willing to take even more aggressive action if that's what required. In New Bedford, Massachusetts, · the mayor threatened to use eminent domain power to seize a factory to protect it from becoming a runaway shop to Taiwan, leaving the community in shambles. We need to recognize where the community has created value and assert our legitimate interests as a public body. Finally, I think we need to hold the priva~e institutions more accountable. In Massachusetts we have an organizaiton called the Massachusetts Urban Reinvestment Advisory Group. It monitors bank compliance·with the Community Reinvestment Act [CRA]. CRA doesn't go far enough, but it at least says that banks have some responsiblity to the. communities in which they are taking all that money. A CRA challenge in Chicago resulted in a $135 million settlement from the major banks and a commitment to mortgage money to neighborhood housing development. It's a movement ori several levels. It's a movement on the grassroots level wherever it's conducted. Ies a movement of accountability to private institutions. It's a Chuck Matthei meeting with a community group.
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