$330,000. Other NACDLF member funds also have fine records: any losses sustained (and these have been minimal, except for a few funds engaged in higher-risk business lending, with appropriate reserves set aside) have been amply covered by reserves. The funds have never failed to meet their obligations to lenders. The social impact of CDLFs has been equally dramatic. A representative sampling of 29 housing loans made by ICE showed that: the loans were directly instrumental in the development of 250 units of housing; 86% of the families housed have low or very low incomes, with the remainder being moderate-income people in mixed-income buildings; 40% of the families are white, 36% Black, 23% Hispanic; and 41% of The social impact of community development loan funds has been dramatic. the households are single-parent, women-headed families. This preliminary survey clearly demonstrates the ability of CDLFs to reach deep into the recesses of poverty. CDLFs are beginning to expose a very prevalent and fundamental misunderstanding of the economics of poverty. Conventional wisdom would have us believe that low-income people are credit-starved because they have too little income and thus cannot afford to repay loans. In fact, low-income people receive, and spend, far more money than it would seem. Over their rental lifetimes, for example, they will often pay many times the market value of the housing they occupy—but they will never have enough credit to purchase their homes, find security, build equity, and leave a legacy for their descendants. The problem lies in the structure of ownership. The land and housing, the employment base, and the financial institutions in low-income communities are t)q)ically owned by outside interests, and the money flows out to the owners. Cooperative community development projects address the problem squarely. But they, too, often find it difficult to borrow the capital they need. They, too, confront the myths of poverty, prejudice against people of color, and women, and communication barriers based on differences of class, culture, language, and style. They confront the reluctance of conventional financial institutions to make small loans, loans to unconventional organizations, or loans to unsophisticated organizations that may need some counseling, because these loans take too much time, increasing the transaction cost and reducing the profit margin. New organizations also confront the excruciating "catch-22" of community development: they cannot get loans because they lack track records, and they cannot build track records because they cannot get loans. Often it is only the social investor who will make the initial loan needed to resolve this dilemma, and CDLFs provide this commitment. CDLFs, in fact, are both a direct response and a catalyst. In its statement of purposes, the NACDLF and its member funds identify three related missions: •To assist those who most need capital, providing capital, credit, and technical assistance to projects organized by and for them; •To engage those who have capital, providing opportunities for socially responsible community investment, stimulating a dialogue on the social and ethical responsibilities of wealth; and •By example to encourage and challenge those who manage capital, broadening institutional commitments and credit standards to increase the flow of capital to projects that meet community needs. Directly and indirectly, CDLFs leverage many times the amount of capital that they themselves lend, and open new sources for future development efforts. In some instances, CDLFs provide all of the financing for a community development project, thus enabling the borrower to demonstrate capability and creditworthiness. In other cases, CDLFs provide the "missing piece" of a larger financial package, without which other lenders would not participate and the project could not go forward. For some years, ICE was virtually the only lender for new con\munity land trusts; now, a number of state housing finance agencies and some banks have begun to lend to these groups. NACDLF was formed to support member funds, promote community investment, and develop new financial mechanisms to increase the flexibility and volume of CDLF lending. Its first months of operation have been very productive. Its activities include: assembling a national resource library of legal and technical materials, organizing a second national conference of CDLFs, facilitating press coverage of CDLFs, and producing a national directory of CDLFs. NACDLF has also successfully negotiated with the U.S. Treasury Department for a change in tax regulations which removed a barrier to community investment, established a task force to design a national Page 16
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