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By CDFIs, CNote, Impact Investing

Making an Impact: How to Invest in Community Development Financial Institutions (CDFIs)

Stacked coins growing a return

Large banks and foundations have been investing in community development financial institutions (CDFIs) for decades. But until recently, investing in CDFIs was challenging and usually limited to all but experienced large banks, foundations, and some high-net-worth investors. Now technology platforms like CNote are allowing investors of all types to easily deploy capital across a diverse pool of CDFIs. 

Many communities across the country are underserved by traditional lending institutions. CDFIs make a social and economic impact in disinvested communities by providing affordable financial products and services, such as mortgage financing for first-time homebuyers, commercial loans, and small business lending. 

CDFI financing in underserved markets has shown that community development financing can be profitable and that CDFIs are valuable partners to both their investors and borrowers. Their place-based development strategies have played a critical role in effectively building community wealth.

What are CDFIs?

Community development financial institutions include mission-driven banks, credit unions, loan funds, and venture capital providers. Through CDFIs’ efforts, billions of dollars have been leveraged for investment in communities left out of the economic mainstream. With limited access to affordable credit and capital, residents of low-income communities are locked out of starting and growing a business, purchasing a home, and having access to retail banking and social service facilities. 

Money growing in community soil

CDFIs’ primary mission is focused on supporting economic growth in the communities they serve. CDFIs fund small, often minority-owned businesses, affordable housing, volunteer organizations, and services essential to revitalizing low-income neighborhoods. CDFIs are of critical importance in safeguarding the ability of all Americans to share in the prosperity and innovation of our country.  

CDFIs are certified by the U.S. Treasury Department, and most banks supported by community investments are certified CDFIs. Currently, the number of CDFIs continues to increase. There are over 1,000 CDFIs certified by the U.S. Treasury’s CDFI Fund. CDFIs can be found in every state and the District of Columbia, serving both rural and urban communities. As of 2019, certified CDFIs hold $136 billion in assets. 

The history of CDFIs

Historically, mainstream banks and financial institutions viewed low-income and minority communities as too risky for investment. Banks took part in the practice of redlining, drawing actual red lines on physical maps to exclude disadvantaged urban and rural neighborhoods from loans and financial services. 

Gale Cincotta, co-founder of National People’s Action

Gale Cincotta, co-founder of National People’s Action, instrumental in the passage of the CRA, courtesy of Community-wealth.org

The CDFI movement traces its roots to community advocates who sought to end redlining practices and re-direct capital back into underserved areas by forming community-controlled banks. The federal government also sought to address redlining and alleviate racial discrimination through The Community Reinvestment Act of 1977 (CRA). 

The CDFI industry really began to take shape in the 1950s and 1960s. During this era, through its “War on Poverty” campaign, The Johnson Administration launched community development corporations (CDCs) to serve urban and rural poor communities. The foundation for the modern CDFI industry was laid by the successes of many of these early CDCs.  

In the 1970s, community-controlled banks were formed, such as South Shore Bank in Chicago (1973) and the Santa Cruz Community Credit Union (1977). 

CDFIs also expanded their funding sources by reaching out to private organizations, particularly religious institutions and wealthy individuals. And many community development loan funds were launched with federal funds from the Department of Housing and Urban Development, the Economic Development Administration and the Department of Agriculture. 

Washington DC capital government building

Credit unions expanded significantly in the 1990s when the government provided new funding and encouraged conventional funders to do the same through revised CRA regulations. In 1994, the Clinton administration enacted the Riegle Community Development and Regulatory Improvement Act. This act established the CDFI Fund “to promote economic revitalization and community development through an investment and assistance program for community development financial institutions.”

In 1995, the Clinton administration also revised CRA regulations that explicitly recognized loans and investments in CDFIs as a qualified CRA activity. The growing record of success of CDFIs has inspired confidence in the industry and continues to attract new sources of support and funding.

The different types of CDFIs 

Although CDFIs share a common mission of community development, they have a variety of organizational structures and lending goals. Each type of CDFI has different investment opportunities, and financial products and services it provides to customers in low-income communities.

Here are the four basic types of CDFIs: 

  • Community development banks

CDFI-certified banks are for-profit corporations with an economic development mission and community representation on their board of directors. These federally insured banks are organized like traditional banks but are required to have at least 60% of their financing activities targeted to low- and moderate-income communities.

  • Community development credit unions 

CDFI-certified credit unions are federally insured financial cooperatives that are designed to provide financial services to individual members of the credit union. The National Credit Union Administration (NCUA) charters, supervises and insures federal credit unions. The deposits in these institutions are insured by the NCUA up to the maximum allowed by law. Many CDFI-certified credit unions have also received designation as “low-income” credit unions by NCUA. This designation allows these institutions to accept non-member deposits and secondary capital.

  • Community development loan funds

CDFI-certified loan funds lend to build local businesses, affordable housing, and community facilities. Loan funds’ borrowers are small businesses, nonprofit organizations, charter schools, individuals, and organizations involved in community development projects. Loan funds also provide financial counseling to individual and business borrowers. 

  • Community development venture capital funds

CDFI-certified venture capital funds pool investor money to make equity investments in private operating companies that yield financial returns while accomplishing community development goals. They also provide equity and management expertise to often minority-owned small businesses that have the potential for rapid growth.

CDFI banks and credit unions are depository institutions regulated by federal agencies. CDFI loan funds and venture capital funds are not federally insured and not subject to federal banking regulations. 

Where CDFIs get their capital

Banks, the government, foundations, and individual investors are the main sources of funding for CDFIs. The CRA encourages financial institutions to fulfill their CRA requirements by investing in CDFIs. This capital, in turn, funds the capital needs of the CDFI and its community. A CDFI’s success is measured not just on their financial performance, but also by their impact on underserved communities.

Depository CDFIs, such as community development banks and credit unions, get capital from customers and non-member depositors. CDFIs work in partnership with conventional financial institutions to guide private investment into distressed communities, either through direct investment in the CDFI or through lending, investment, and other services.

The CDFI Fund is a crucial source of support for CDFIs and offers capital grants, equity investments, and awards to fund technical assistance and organizational capacity-building. CDFIs apply for funds through a competitive process that often requires the organization to provide a one-to-one match of non-federal funds to receive financial assistance. 

The CDFI Fund also rewards banks for making investments in CDFIs and distressed communities through its Bank Enterprise Award Program. The New Markets Tax Credits Program encourages private sector investment by offering tax credits for qualified community development investments. 

The role of CDFIs in community finance

CDFIs gather specific knowledge about the communities in which they do business. They create strong relationships with their customers and community leaders. This translates into a willingness and commitment to spend time on specialized programs that are often too time-consuming or costly for traditional financial institutions to implement.

For example, many CDFIs offer small business loans that have lower eligibility requirements than most traditional bank loans when it comes to time in business, credit score, collateral, and annual revenue. Others make financial accounts available to customers with limited or poor credit history. In contrast, traditional institutions tend to offer only a few programs that target the broader market.

Man working at a small business

Rebuilding underserved communities and making loans to those with limited or poor credit histories requires more than access to conventional loans. It demands lending guidelines that can adapt to the needs of borrowers, the acceptance of unconventional collateral, and educating, training, and assisting potential borrowers on how to effectively use credit and capital.

CDFIs enable those who are economically disadvantaged to become self-sustaining participants in their own future. CDFIs are community pioneers, leading the way in investing in distressed neighborhoods and bringing everyone into the economic mainstream as important contributors.

How community foundations partner with CDFIs

Foundations employ CDFIs’ expertise in everything from sourcing to underwriting. Foundations have even developed their own CDFIs. A notable example is New Hampshire Charitable Foundation that started the New Hampshire Community Loan Fund in the 1980s.

Since 2000 or so, community foundations have been facing competition for donors from commercial banks and investment firms managing donor-advised funds, as well as crowdfunding platforms and giving circles. At the same time, according to this Democracy Collaborative report, community foundations have begun paying more attention to structural poverty and what they can do about it.

As a result, some community foundations that have focused on a passive approach to making grants, have begun experimenting with becoming more proactive through partnering with and investing in CDFIs.

 

For example, CNote recently worked with the Sierra Club Foundation to figure out how their portfolio could help advance social justice as well as their core environmental goals. CNote made it possible for the Sierra Club to meet its objectives through place-based investing. After finalizing the investment terms, the foundation was able to deploy capital to its targeted communities and connect partner CDFIs on the ground with local Sierra Club leaders to boost momentum for their Ready for 100 Campaign.   

With economic factors playing a key role in most social missions, CDFI’s insights can be very informative to the strategies of thematic and place-based community foundations.

Why community foundations invest in CDFIs

CDFI investments work well for foundations that don’t want to deliver loans and manage risk but want to make an impact by directly investing in local businesses.

The CDFI is staffed with loan officers and has built all the systems needed to market and manage a loan portfolio. Their staff have intimate community relationships, so they’re successful in finding the high-impact transactions that foundation investors want.

CDFIs offer foundations a way to cushion financial risk by spreading the foundation’s investment over a diversified portfolio of loans. They also monitor and manage risk, and hold loan loss reserves. These costs are factored into the CDFI business model and interest rate that CDFIs offer investors.

Foundations who care about a specific geographic region invest in CDFIs for both a financial return and social impact in their communities. Foundations are becoming more involved in CDFI and impact investing as a complement to their social and environmental work. 

The benefits of CDFIs for individual investors

Awareness and interest in community investing options have grown. Americans have shared a difficult financial experience in recent years that has heightened the awareness of larger numbers of low-income families needing help.  

Stock exchange board

The financial crisis also encouraged some distrust of financial institutions whose risky practices helped induce the crisis. These developments have motivated some to invest more in local and community-based institutions.

The positive effect that CDFIs have on their communities can not be underestimated. Local community-based organizations make the best decisions about how to meet their community’s needs, and CDFI activity also brings responsible first-time homeowners, locally-owned businesses, neighborhood facilities, and other benefits to communities beyond just the financial bottom line.

When you invest in community development financial institutions, you can:  

  • Align your investments with your values

Because CDFI investing can make positive changes for those who need it most while generating financial returns, investors can support the causes they care about while putting their capital to work. CDFIs generally offer a modest, fixed rate of return depending on current interest rates and the length of the investment.

  • Increase your portfolio stability 

A Morgan Stanley study, of over 10,000 equity mutual funds over seven years, found that, on average, impact investing funds had lower volatility than comparable non-impact funds.

  • Expand your community network 

CDFIs offer investors the chance to truly invest in the small businesses of “Main Street America.” The greater impact investing community includes policymakers, entrepreneurs, human rights activists, and development experts, all dedicated to utilizing capital in pursuit of tackling important societal issues. 

How to invest in a CDFI

The most common type of CDFI investment is in a community development loan fund. Loan funds provide the security of pooling capital with other investors and spreading risk within a diversified portfolio. 

CDFI loan funds are also increasing their presence and sophistication in the community investment sector. Several funds now have formal offerings and are registered to offer their notes in multiple states. Others operate more informally and reach out to investors as an extension of their local fundraising efforts.  

Here are a number of CDFI note programs that are available to retail, accredited, and institutional investors in states where they’re offered:

CDFI note programs

  • The Impact Note – Enterprise Community Loan Fund 

The Impact Note offered by the Enterprise Community Loan Fund allows you to invest in your community while earning a fixed return of 2.5% for a 5-year term. With your minimum investment of $25,000, you support projects and businesses that are solving essential community development issues, such as affordable housing, health services for the homeless, quality children’s education, entrepreneurial funding, and healthy active seniors. The Enterprise Community Loan Fund has over 30 years of investing experience and is a treasury-certified CDFI that is rated by AERIS and listed in ImpactAssets50.    

  • The LIIF Impact Note – Low Income Investment Fund

The LIIF Impact Note is an easy way to invest in the communities you care about while earning a competitive return of 1-4%. This note offers a flexible commitment of 6 months – 10 years with a minimum investment of $50,000. The annual percentage rate is 3% for a 5-year Impact Note. The note is available to non-accredited investors on ImpactUS, a broker-dealer “impact marketplace.” 

  • RSF Social Investment Fund Note – RSF Social Finance

RSF Social Finance is among the first to create widely available notes for the “retail” market. It’s open to residents of 48 U.S. states, the District of Columbia, and Puerto Rico, excluding Arkansas and Washington. The note requires a minimum investment of $1,000 and offers a 90-day term, a current interest rate of 1.25%, and is annualized and reset at the beginning of each quarter.  

  • Community Investment Notes – Calvert Impact Capital

Calvert Impact Capital’s Community Investment Notes are a “fixed income product that invest in a global portfolio of intermediaries, projects, and funds that finance mission-driven organizations.” Calvert pools investor funds and lends them to a diverse group of CDFIs, affordable housing developers, and international microfinance organizations. 

Although not solely a CDFI investment, these notes offer a financial return of 3% for a five-year commitment term. Calvert’s notes are processed and distributed electronically through conventional investment platforms for all types of investors. Community Investment Notes can be purchased online starting at $20 or through a brokerage account, application or check for a minimum investment of $1,000. 

  • The Low Income Investment Fund (LIIF) bonds

Low-Income Investment Fund (LIIF) is a San Francisco-based CDFI that has been investing in low-income communities for over 30 years. Its loans support affordable housing, high-quality schools, child care centers, health centers, and other community facilities that benefit low-income communities.

While buying bonds may have higher barriers to entry than notes, if you’re able to do so, you can invest in a diverse portfolio that helps achieve both competitive returns and a measurable impact on struggling communities. LIIF’s capital is critical to its borrowers who are mission-driven developers and nonprofits. Recently, LIIF announced its first public debt offering with a $100 million Sustainability bond issuance. The bond issuance allows LIIF to provide more stable, lower cost, and longer-term capital to community organizations.

  • CNote – The Flagship Fund

CNote acts as a bridge between individual investors and CDFIs, pooling small investments and funneling them to partner CDFIs. The Flagship Fund accepts investments from investors of any net worth, so you can get started with just $5. With an online CNote account, you can invest your savings in certified CDFIs that are working to improve community development. You can earn 2.75% with only a 30-month term and flexible quarterly liquidity if you need your money early. And CNote doesn’t charge fees to investors. 

How platforms like CNote make CDFI investing easier

As more individual investors look to CDFI and other impact investing options to give their money more meaning, they’re demanding easier access to them. While some companies have their own retail platforms where you can invest directly, like CNote, many others are only available through brokers or direct offerings. 

Calvert is a trusted impact investment platform due to its long history. You can directly invest online in Calvert’s Community Investment Notes and the easy-to-use platform offers helpful assessment tools that can save investors time in trying to evaluate their impact investment. The vast majority of Calvert’s loans are funded through a combination of balance sheet and structured debt loans. Both lower and higher cost options are available for investors.

CNote is a technology platform that has unlocked a diversified network of certified CDFIs that allow investors to get competitive returns while targeting thematic and place-based investments. The platform supports a variety of account types and customers including personal, trust, and business accounts. CNote also provides support for financial advisors who want to invest and manage their clients’ funds. And CNote partners with institutional investors, foundations, large banks, and other traditional financial institutions. 

The process from the individual user’s side is simple: There is no minimum deposit, and once users create an account, they can use an interface that resembles a standard online investment account where they can link to their regular bank account and transfer money into CNote. 

Because CNote is an investment product, not a savings account, the return is technically not guaranteed, but the security of investments is based on the historical performance of CNote’s CDFI partners, which haven’t lost any investor dollars since their founding and – like CDFIs – are noted for their solid financial performance.

Conclusion

By investing in a CDFI, any investor can make a deep impact in their local communities while receiving a healthy financial return. At CNote, we’re committed to growing community wealth and providing those excluded from the traditional financial system the access to the capital they need to pursue their entrepreneurial dreams and build businesses that increase prosperity for all. 

By Change Makers Series

Change Makers Interview: Leslie Goldman of The Artemis Fund

Change Makers Interview: Leslie Goldman of The Artemis Fund

Slowly but surely, Leslie Goldman is helping to change the face of Venture Capital (VC). After more than 25 years as a corporate lawyer and three years recruiting C-suite legal executives, Goldman started The Artemis Fund with Diana Murakhovskaya and Stephanie Campbell. It’s one of a handful of female-led venture funds that exclusively invests in female-founded, female-led companies in the United States. The VC fund is based in Houston, Texas, and Park City, Utah, and it invests in tech-enabled seed and series-A-stage companies.

Leslie became a dedicated angel investor in 2014, and in the past five years, she’s invested in over 40 companies. Additionally, she’s a board member of the Houston Angel Network, an advisor to two other VC Funds, and she serves as an advisory board member to early stage companies.

We took the opportunity to catch up with Leslie to talk about the creation of The Artemis Fund, the future of the gender funding disparity in VC, and her advice for female founders and investors.

 

CNote: How did you decide to create The Artemis Fund?

Leslie Goldman: I started angel investing in earnest a little over three years ago, and I had been dabbling in investing in startups before that. Over the past three years, I’ve made investments in 44 companies. The more I became interested in the angel investment scene and startup scene, the more I realized the scarcity of women on both sides: the funding side and the founder side. I came to the realization that there were plenty of talented female founders out there, but they weren’t necessarily getting into the accelerators and incubators and pitch competitions and demo days. I wondered why that was, and I decided that I wanted to try to change the numbers by aggregating money and starting a fund. I met my two partners about a year and a half ago, and we all had the same desire, which was to fund more female-led companies. We decided we were going to raise a $20 million fund and we were going to invest in at least 15 female-led, female-founded/co-founded, companies.

 

CNote: How have things been going so far?

Leslie Goldman: We were right in that there are a ton of talented female founders. We launched in April and we started our fundraising in earnest in May, and since then, we get about 300 inbounds a month. There are so many in our pipeline right now that are worthy of investment, so we’re just itching to raise more so that we can invest in these amazing companies. It’s part “if you build it, they will come,” and it’s part network effect. Fellow VCs send us female founders because they know that’s what we’re looking for, female founders find us because they know that’s what we’re looking for, and female founders send us other strong female founders because they tend to help each other out. That’s the power of the female network.

 

CNote: What are your vision and goals for your fund?

Leslie Goldman: The overarching vision is to demonstrate that investing in women makes good business sense.  As an asset class, female founded companies out-perform once they receive money, yet they are largely overlooked.  Money is being left on the table by traditional VCs. I think people will have a real “aha moment” when these funds that are focused exclusively on female founders demonstrate outperformance.  Mr Wonderful won’t be surprised.    I think investors will start to say, “oh, maybe we should consider gender diversity as a key factor in selecting a company.” So, from a macro perspective, we want to outperform with our fund.  Long term, we want to close the funding gap and ultimately, get to the point where we don’t need separate funds for men and women. It would be nice to have the funding fall 50-50 to male/female founders, regardless of where the money is coming from. I think we’re a fair way off, which is why we’re doing what we’re doing — why we’re intentional about it.

As for specific goals, we want to find companies that have exit potential within 5-7 years, for the most part, since we want to deliver returns to our investors in the mid stage of the fund to the extent feasible.   A recent Pitchbook and All Raise article included data on exits by female founders.  They found that companies with women on their founding teams are likely to exit at least one year faster compared to the rest of the market, and the number of exits for companies with at least one female founder is growing at a faster rate YoY than exits for companies with only male founders.   Exits are a key metric for VCs, and all investors for that matter.

We ideally would like returns along the way so that we can show traction. So, we’re being very thoughtful about the founder and the product market fit, which are the two key factors for success/failure. The founder has to be amazing:  gritty, persistent, driven; the customers have to love the product, and there needs to be a huge market opportunity.

 

CNote: How do we get closer to that 50-50 gender split sooner rather than later?

Leslie Goldman:   A few focus areas:  (i) increase the number of female funders and VC decision makers; (ii) raise awareness, as we are doing with social media, press, networking, (iii) educate the male dominated VC world about the problem, about the network effect (ie that their deal sources look like them and therefore the companies they find will look like them), and about unconscious bias, (iv) continue to see female founder success, and (v) educate more potential female funders.

 

CNote: Can you talk about some of the challenges that female founders face with VCs?

Leslie Goldman: To be a female founder, you have to be pretty tough skinned. It’s not that the female founders that we interact with are scared to contact male VCs; it’s more about them feeling like   they are not being heard — they are tired of banging their heads against the male VC wall and not getting traction. Most women out there know about implicit bias, and men are starting to learn. If you are a male VC, your deal source network is male. So the warm introductions come from men, usually leading to male founders.  If your portfolio of male founders is doing well, why change the way you source?  That’s what you know.  If it’s working, then no need to change your lens and look at the other half of the population.

We’ve heard all kinds of stories from female founders. Like the first comment out of VC’s mouth to one was “you’re so pretty, why are you doing this?” things that they would never say to a man. Or “you women look great up there.” Those kinds of things are non-starters. That’s not even implicit bias, it seems a little bit more conscious. Those are the same people whose eyes glaze  over when I stand up in front of a room to talk about diversity, because they don’t see the need for us to focus on it. Those are the types of people that go, “Whoa! Why do you need a women’s group? Why can’t we have a men’s group?” So yeah, I hear stories and things that are pretty hard to believe.

 

CNote: Is it some of those underlying biases that led you to want to start your own fund?

Leslie Goldman: When I started looking at the numbers, and the data showing that women truly outperform when given the chance, and I understood how few dollars, in relative terms, were going to female founders, that’s really what pushed me. And then the fact that I was often the only female investor in the room most of the time. It frustrated me.   I can relate to the stories the founders have when they are presenting to a room or a panel of men. I’ve been part of enough teams at all levels of an organization to know the hurdles that we have to overcome in group dynamics or when presenting. I guess I went from trying to tackle the gender inequality issues that we have in the workforce at the C-Suite level in megafirms, to tackling it from the very beginning of the continuum — in startups.

 

CNote: If you had a magic wand and could change one thing to address the issue of women representation in tech, what would it be?

Leslie Goldman: I would just like to see more women in the investment community, because the purse strings are what creates the power. Since women control something like 75 percent of personal wealth, I would like for women to really understand the landscape and to use that control and not to shy away from it.

 

CNote: What are some trends you’re seeing that are affecting the velocity of change of empowering more women to become investors?

Leslie Goldman: As we develop more female founders, they are starting to put their money toward other female founders, and that’s where the biggest movement is coming from. From a founder standpoint, there’s a lot more interest in getting the other half of the population involved in innovation, because there’s so much more to innovate and so many more products that women need that are yet to be discovered. I think you need women to solve those problems, and so there are more women founders who are coming up through the ranks, and they’re starting to reach their hands back and put their money into other women founders. I think that’s why you see more funds trying to focus on getting women investment partners, and more funds are trying to focus on female-led companies. It feels like there’s a movement, and it feels like now is the time that we’re at a big inflection point.

 

CNote: What suggestions do you have for female founders who are seeking funding and/or mentorship?

Leslie Goldman: There’s no one formula for it, but I’m a networker, so it seems natural to me that the more you network, the more you learn. You have to be inquisitive, you have to ask questions, and you have to listen to people. I think if you do that, you’ll learn a ton, and then you’ll figure out exactly where to go and exactly who might be the right people to pitch to. When it comes to accelerators and incubators and the thousands of venture capitalists out there, you have to do your research. You have to know who they like to invest in, understand their focus, and see who is on their investment committee. Talking to other female founders is the best way to do it, especially a female founder who you trust and who has had success.

 

CNote: As an investor, what’s something maybe unexpected that you like hearing from a founder?

Leslie Goldman: “I may be too early for your fund because my product is not in market, but I would love to just keep you updated on my progress. Is that okay?”  I always say “yes.” If they are self-aware enough to know that they’re not ready for us, that’s fantastic. That’s a good sign. It shows they’ve done their research.

 

CNote: Do you have any suggestions for people who might want to invest in a startup but haven’t invested before?

Leslie Goldman:  I think there are three ways to go about it. One is to invest in a fund and get educated about investing that way. You’ll get 15 companies for the price of your investment, and you’ll get to watch them grow. That’s one way. The second way is to make micro investments through a small nationwide organization like Portfolia or Golden Seeds. The third way is to join a syndicate and become part of an angel network. You’ll get to watch companies pitch and then slowly get involved by talking to your co-investors who are at these pitches, doing the diligence with them and then making smaller investments until you get comfortable.

One thing you have to remember is that it will take a long time to get your money back to see a return, so one of the things I think may be helpful for people to know is they can use their IRA funds. It’s very powerful. Most people aren’t expecting to use their IRA funds right away anyway, so it might be a really good vehicle to fund a long-term investment.

 

CNote: What advice do you have for founders looking for investment dollars?

Leslie Goldman: Founders need to understand that their investors are going to be married to them for 10-plus years, and they have to be picky in terms of who invests in them. Female founders sometimes have less opportunities, but if a female founder has a great idea and a great product in the market, if she has traction, and if she has a great team, then she’s going to have people bang her doors down to try and invest in her. Sometimes you don’t have a choice with who wants to invest in you, but when you do, I would just suggest you be careful as a founder.

 

CNote: Who do you admire or think is doing really great work that’s similar to yours?

Leslie Goldman:  Of course there are the obvious famous women moving the needle like Melinda Gates, Serena Williams, Sallie Krawcheck and others. Then there are some incredibly generous women giving their time and expertise to women all over the world, such as Alicia Syrett.  As for organizations that educate and empower, I am grateful to the founders of All Raise, Golden Seeds, Portfolia, Springboard Enterprises  — they have all been pioneers in this area.  I’d love to give a shout out to all these people who try to move the needle and empower women.

 

Leslie is General Partner and Co-Founder of The Artemis Fund, one of a handful of female-founded and female-focused VC funds in the US.  Evidence shows that female-led (diverse) teams deliver higher value and returns, yet the gender funding disparity continues. With its focus on high growth, high-impact, seed and Series A stage companies, the Artemis Fund seeks a triple bottom line – returns for investors, the community at large, and for women. 

 

By CNote, Impact Metrics

CNote’s Q3 2019 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q3 2019 impact data.

In Q3 2019, our members helped create/maintain 324 jobs!

Over half of all invested capital was deployed with minority-led businesses.

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals, read our 2018 Impact Report.

 

By CNote

Investing locally for a global impact: An Introduction to How CDFIs are Addressing the Climate Crisis

CDFIs have a strong history of providing economic resources to financially under-served communities across America, helping to create jobs, fund small businesses, and support affordable housing development among other great projects.

With international attention and demand for action around the climate crisis, what role do CDFIs have in addressing this enormous challenge facing communities across America?

This webinar explores how CDFIs can proactively address the climate crisis and collectively scale their impact to build sustainable and resilient communities nationwide. It will also explain how investors can support CDFIs working in this space.

You’ll first hear from Elizabeth Rogers from CEI, a leading CDFI at the vanguard of community investing and climate change, and from Jen Leybovich who is leading a CDFI working group on the climate crisis. They’ll detail concrete examples of projects that are addressing climate change, along with sharing insights gained and plans for the future from the CDFI working group.

You’ll also hear from Yuliya Tarasava, the co-founder of CNote, an impact investing platform that works to connect investors with values-aligned opportunities to invest in CDFIs and target issues, like the climate crisis. Yuliya will detail the growing investor demand for climate-centered products and how increasing the pool of investor capital to support climate-centered initiatives by CDFIs can help address this urgent crisis.

If you’re looking to make investments that address the growing climate crisis or you’re a CDFI looking to find ways to get more involved in these issues, this webinar will be of interest to you.

You can watch the youtube recording below, or rewatch the full webinar experience using this link.

 

By Borrower Stories

Meet April Westman, The Entrepreneur Tackling Her Community’s Child Care Shortage

If April Westman was going to start a small business anywhere in the world, it was always going to be in Duluth, Minnesota: the city on Lake Superior where she grew up. Of course, she didn’t always know that.

After high school, April followed her dreams to be a banker in Southern California, but a couple of years later, she was back in Duluth, where she knows every street and every neighborhood, and where everyone says “hi” to each other. It’s that close-knit community of neighbors and family members that propelled April to get into child care.

It was the summer of 2009, and her partner’s sister was not happy with the daycare provider taking care of her child; however, their options were limited. April agreed to watch the child for the summer until the little girl’s parents found another daycare. Summer came and went, and with fall approaching, April asked the girl’s mom if she’d found a new daycare. “She said ‘no, and we don’t want to. We love her with you. And we’re pregnant,’” April laughed. ‘“Will you take the baby too?’”

April doing what she loves

This didn’t fit into April’s plans. She thought she was going to continue to make sea glass jewelry to sell at art and craft shows. April sought advice from her best friend, who not only encouraged her to provide care for her niece and her future niece or nephew but to also watch her child.

Given that April had always loved children and that she had plenty of friends and family members offering their children to her to watch, she shifted gears. April started the process of becoming a licensed child care provider in Minnesota, and instead of moving forward with buying a house for herself, she bought a duplex that was suitable for daycare. In February of 2010, she opened Aunty’s Child Care.

A Hand To Hold

It’s been nearly 10 years since April opened her first eco-healthy child care facility. In that time, she’s gone from taking baby steps to taking some pretty impressive strides as a business owner. Today, April has two subcontractors running child care operations at her duplex location, and on September 26, 2019, she opened a new 6,000 square-foot child care center in a remodeled church that will house 13 employees and serve 56 children.

The New Center

Expanding her business hasn’t been without its fair share of growing pains. Despite a need for child care in the community, April couldn’t find a bank that would give her a small business loan to fund renovations to Aunty’s Child Care’s new building. She was rejected five times and told she didn’t have enough experience. “I was really frustrated,” April said. “If you can believe it, my plan was to just pay what I could afford to pay and do little tiny chunks of the project at a time. It would have taken probably five years to get the building open.”

Instead, April found The Entrepreneur Fund, a Duluth-based Community Development Financial Institution (CDFI). CNote partners with CDFIs like Entrepreneur Fund in communities across America, funding loans to small businesses and empowering local entrepreneurs like April. Entrepreneur Fund stepped in to help April open her new building so that she could serve more children faster, helping to alleviate the local child care shortage.

Entrepreneur Fund not only provided April with two loans for her business, but the organization has repeatedly offered her advice, support, and resources, including help setting up a commercial kitchen. “They’ll just reach out and ask me if there’s anything else I want to learn about as a business owner,” she said. Currently, The Entrepreneur Fund is helping April to learn QuickBooks and to get additional human resources training.

April in the new commercial kitchen

Perhaps the biggest thing Entrepreneur Fund has provided April with, however, is encouragement. “At one point, I called Mike Lattery, my contact at Entrepreneur Fund, and said ‘this is a lot of money, and we’re spending a ton,’” April recalled. “He told me: ‘You got this. You’re doing a good thing, and we believe in your business and what you’re doing.’”

Community, Not Competition

It’s not surprising that as someone with an affinity for teaching and a joy for watching kids grow and learn, April is also a fount of encouragement for those around her. For example, when one of her former employees approached her earlier this year and expressed an interest in opening her own daycare, April helped her to become licensed and to set up her own program, just a few blocks away from Aunty’s Child Care’s new building. The two have even worked out an arrangement where infants and toddlers who age out of Joyful Noise Child Cares program get funneled into Aunty’s Child Care.

That camaraderie wasn’t always the norm. According to April, when she first started 10 years ago, she was warned that other child care providers in the area weren’t typically friends, and that the local industry — however meager — was cutthroat. She didn’t buy into it. Instead, she created a Facebook group to bring people together, and a fellow provider named Summer started a once a month get together through the page., April loves to go out to dinner with other child care providers! “It’s been really great to encourage each other instead of to cut each other down,” she said.

With support from her loyal parents and her community of fellow child care providers, April has her eyes on the future. Not surprisingly, her dueling five-year plans are both aimed at tackling Duluth’s child care crisis. According to her, as of this past spring, the city was short about 1,100 child care spaces, leaving parents without choices of where to send their kids for quality care. At any point in time, April’s waitlist is at least a year long. “Parents can’t tour two or three places and pick their favorite,” she said. “They have to find one with an opening and scoop it up. That’s not right. People should be able to pick the child care place that goes along with their personal beliefs of how they want their child raised.”

In the next five years, April would either like to set up an after-school and summer program for older children, or she’d like to open a nonprofit infant and toddler facility that would qualify her for grants she otherwise wouldn’t be eligible to receive. If she goes down the latter road, she’d transfer children out of her nonprofit care center to her existing for-profit building, which she hopes to one day turn into a preschool.

April working with Miranda, Aunty’s Director of Operations

April is building a community to support the children of Duluth. As she mentioned time and again, it is her commitment to that community that serves as her north star,  “It is a circle, and people need to understand that quality child care is the start of a healthy, happy, well-educated community that we are all a part of,” she added, “my reward is knowing I’m helping children and families in my community.”

Learn More

  • Aunty’s Child Care
  • The Entrepreneur Fund – a CNote partner and certified CDFI, actively partners with small business owners in northeast Minnesota, central Minnesota and northwest Wisconsin to support small business growth and local economic development. The Entrepreneur Fund provides flexible financing, along with small business coaching and strategic support to promote a culture of entrepreneurship throughout the region.
  • CNote makes it easy to invest in great CDFIs like The Entrepreneur Fund, helping you earn more while having a positive impact on businesses and communities across America.
By Change Makers Series

Change Makers Interview: Emily Sipfle of FUND Consulting

Emily Sipfle’s interest in CDFIs came out of her time as an AmeriCorps Vista volunteer working with an affordable housing organization in Chicago. Emily ended her service with a growing interest in community development projects, particularly the funding aspect of those projects, and went on to receive a masters degree in urban planning and policy from the University of Illinois, where she discovered the important economic role that CDFIs play in many communities across the country.

Emily currently works FUND Consulting, a Chicago firm focused on providing strategic and operational services to CDFIs. Founded in 2000, FUND Consulting has worked with over 350 clients and raised over $492 million in government and local grants, investments, and tax credits for its clients. In addition, FUND Consulting has helped organizations understand market needs to enhance and develop products and services through the completion of over 130 market research projects and supported the strategic growth of organizations through the delivery of over 120 business, strategic, and capitalization plans.

Prior to joining, in 2015, Emily was the director of impact at National Community Investment Fund (NCIF), a CDFI nonprofit private equity fund that specializes in supporting mission-oriented banks, including CDFI banks, through research and investments. We took the opportunity to catch up with Emily to talk about the power of CDFIs, the opportunity of impact investing, and the future of community lending.

 

CNote: What led you to FUND Consulting?

Emily Sipfle: I have worked at several different CDFIs in the Chicago area, and that helped me get some experience in the field before coming to FUND. My background is largely more on the data research and impact tracking side of things, and working within CDFIs was a really helpful way of seeing how their work gets done. That’s what led me to FUND, where I now get to work with CDFIs all across the country and across the spectrum of size and product type. Our position here at FUND is really exciting because we can see what’s happening nationally, as well as all of the creative solutions different CDFIs are coming up with for community and economic development challenges in their own community.

 

CNote: Tell us a little bit about the work you do at FUND.

Emily Sipfle: FUND Consulting was founded 20 years ago, and in that time, we’ve worked with more than 350 so different clients. Our focus has been on CDFIs, but CDFI work ties closely into supporting nonprofits more generally. We provide a range of services, including everything from helping organizations think through whether they should become certified CDFIs, through preparing grant applications and providing help with compliance reporting and annual reporting: basically, all of the work that needs to be done to be a CDFI, maintain CDFI status, and access the CDFI Fund’s programs.

We also offer a range of strategic projects that are designed to support the work of CDFIs and nonprofits, like strategic planning, capitalization plans, market studies, and impact analyses. Our goal is ultimately to try to so increase the capacity of CDFIs and other nonprofit organizations so they can create positive outcomes in their communities. It’s really rewarding work.

I am also a board member of FUND Community Institute, a nonprofit think tank conducting independent studies, partner projects and commissioned researched. FUND Community Institute’s grew out of FUND Consultant’s experience in the CDFI and community development field and now the two organizations form the FUND family of organizations to facilitate positive social, economic, and environmental impacts in communities nationwide utilizing multiple approaches.

 

CNote: How does data and impact tracking fit into your work with CDFIs?

Emily Sipfle: That’s definitely my background, and that’s carried over into my work at FUND. We have a series of impact-related reports that we put together for our clients that can help be a tool for CDFIs to better understand their impacts internally as well as make the case for their work if they are going out to investors or grant funders, etc. We also have a product called Impact Systems Analysis, which is designed to help the clients be better at tracking their own impacts.

 

CNote: How do you explain CDFIs to someone who’s not familiar with them?

Emily Sipfle: I like to think of CDFIs as innovative lenders that are working in underserved or distressed communities or populations in order to help them increase access to capital and create positive change.

There are places that traditional banks just don’t go or where other lenders can’t make a product work — That’s really where CDFIs step in. They’re able to look beyond the simple margins and commit to making the loan that helps to create positive change in the community.

 

CNote: Do you think CDFIs have a broader impact on the U.S. economy? 

Emily Sipfle: Compared to the number of banks and credit unions in the country, there are a relatively small number of CDFIs – about 1,100 CDFIs currently. While in terms of asset size or dollars out the door in loans, they are small, CDFI are a very important part of our overall financial system, and I think they do have impacts that we can point to in terms of being more community focused.

They’re often able to identify local challenges and then come up with flexible solutions to make loan products that works for a given community or local region. To quantify the overall effect of CDFIs on the economy, it’s may not be easy to surface big macro numbers, but if you were to dial down to the more local level and even to the household or small business level, a CDFI can have a lot of impact there. This is particularly important because, as I’ve mentioned, CDFIs are often working in areas or with populations where other financial institutions are not.

While CDFIs are a very small niche of the financial industry overall within this country, they are creating outsized impacts on the ground, just because of their ability to be community focused and flexible in the financing they’re able to offer. The other great work that they do that maybe is less apparent sometimes is just how much they do in terms of technical assistance and helping borrowers to better enter the financial mainstream.

 

CNote: How are CDFIs able to be more flexible than traditional banks?

Emily Sipfle: It comes both from the mission of CDFIs and what they are trying to do, as well as the scope of who they work with.

In some communities, CDFI staff might have a personal, on-the-ground relationship with a borrower who’s struggling. That local knowledge helps the CDFIs’ staff be nimble when challenges do arise, and it also adds comfort that’s hard to gain from looking at a credit report when you’re trying to understand a borrower, for example.

Of course there are CDFIs that are much larger and don’t have that may not have that level knowledge of a borrower, but based off of their mission of lending to organizations or individuals that traditional banks aren’t able to reach, there is very much an interest to have flexible terms at the onset of offering a loan product to help get dollars out the door. A good example of some of these flexible terms is being able to look beyond the credit report for alternative flows of capital that a borrower might have.

 

CNote: What are some changes you’ve seen in the industry since you started working with CDFIs?

Emily Sipfle: My position in the industry has been an interesting one because I came in just after The Great Recession. So in some ways, I have seen how the industry responded to that. I know anecdotally, CDFIs continued to lend during the recession and in the time following, when traditional banks and other financial institutions were pulling back and really restricting their credit standards.

In the past 10 years or so, there’s been substantial growth in the number of CDFIs, and in recent years, there have been new lenders that are coming into this space, specifically with the intention to follow a CDFI mission of financing needs of underserved communities. As the industry grows overall, it continues to be an interesting balance of some that are very small and locally based and other CDFIs that are growing in size and scale and are tackling regional challenges or even have a national footprint.

 

CNote: What’s one of your favorite examples of a CDFI doing what a CDFI does best?

Emily Sipfle: There’s a CDFI loan fund we work with that does small business lending. They lend as little as $500 to establish a payment track record to improve their credit score. There’s certainly not much money to be made on a $500 loan after you do all the paperwork and reporting and your staff time to get it ready. But it can be really important to that borrower just to help them start to develop a credit score again. They also make loans up to $100,000 for more established small businesses.

They’ve also put together a really innovative and impactful program where they are working with a range of partners, to work on a recidivism prevention program. This program starts with inmates who might have an entrepreneurial spirit and an idea for a business. The program provides them with training to help develop that with some more business development skills so that when they get out of prison, they can make their own job. The solution that this CDFI has identified to help people make their own jobs by becoming small business owners. The CDFI helps to make that possible both by coordinating resources and providing the loan.

 

CNote: How do you think CDFIs’ capital need gap can be filled?

Emily Sipfle: Solving the capital gap is always going to be a moving target because there’s just so much unmet demand for CDFIs’ products — If you keep giving them more money, they will keep finding good work to do with it.

Other than that, I think there needs to be kind of a couple-pronged approach. One is in terms of just the overall volume of capital. I would love to see CDFIs being able to access funds from impact investors and other sources. They are creating the impacts in the community that investors would potentially be interested in, but it’s about creating that link and familiarity in order to make the investors feel like they’re comfortable with an investment in a CDFI.

The second prong that I think would help meet the needs of CDFIs is the availability of flexible capital. Grant dollars, for example, that could be used to support loan loss reserves or to be used for internal operations to help CDFIs to build out their own systems and be more effective and, importantly, try out new products. As I’ve mentioned, CDFIs have a local grounding and knowledge, so they see what’s happening on the ground and identify potential gaps. But it can be hard for them to deploy a new loan product if they don’t have flexible capital to try out a new product or to provide loan loss reserves to protect the portfolio overall.

It’s about getting a certain volume of funding as well as having at least some of it that can be flexible use for reserves or internal purposes to help build out the innovative side of what CDFIs can do.

 

CNote: Do you have any predictions as to how the CDFI industry will evolve in the future?

Emily Sipfle: I think there’s benefit both in collaboration and consolidation where it’s appropriate. There’s a lot of conversation in the industry about ways that collaboration can be utilized on the back end in terms of back-office work. If there’s some way that CDFIs could come together on back-office work, it could potentially free up staff time and resource for other activities. There are initiatives like that underway to think through how resources could be pooled to make on the ground to work more efficient and go farther in terms of staff time.

I also think there will be a growing number of these larger CDFIs, partially just because success tends to breeds success in terms of what funds you are able to capture, whether it’s through grants or larger scale things like impact investing. I’m not sure that the question has been cracked yet of just how CDFIs can fully take advantage of impact investing as an industry, but I certainly think the future holds the potential to do so.

 

CNote: What are your thoughts on impact standardization? 

Emily Sipfle: Itis certainly a known challenge for the industry and something that there’s been a lot of conversation about. One of the challenges is, again, that range of CDFIs and what they do. For some, it’s they’re small, they’re focused on providing their products and services, so setting up comprehensive impact tracking systems is a real lift for them in terms of staff capacity. Part of what we do at FUND is build out more effective systems for capturing impact so that it can be transferred back into information to include in the grant application or marketing materials or potential funding requests.

More complex conversations are happening in the industry in terms of how impact data can be used to really attract larger scale investments and how could CDFIs come together to create a standard set of impact metrics, whether it’s as an industry overall or maybe by type of lender.  It’s certainly an ongoing challenge and an ongoing effort, and it ties back into the investment side, because many CDFIs are interested in utilizing a wider range of capital sources and know that they need to get the data out there in a way to make a compelling case for impact investors.

 

Emily works for FUND Consulting a women-owned firm located in the City of Chicago with a staff of ten. Founded in 2000, FUND Consulting has worked with over 350 clients and raised over $492 million in government and local grants, investments, and tax credits for its clients. Their team provides both strategic and operational services to community development financial institution (CDFI), nonprofit, and government clients nationwide.

By Borrower Stories

Meet Jamar Kirk, The Entrepreneurial Life Coach Breaking The Cycle Of Poverty In His Community

Jamar Kirk didn’t have to think too hard about what to name his new business, which provides consulting, coaching, mentoring, and resources to often marginalized and at-risk demographics of his community — a community that struggles with violence, drug use, and a 50 percent high school attrition rate for minority students. 

After all, that’s just like the community Jamar grew up in. 

Breaking the Cycle

Jamar was born and raised in a drug-infested neighborhood in Gary, Indiana by his mother and grandmother, and he moved to Duluth, Minnesota just before his 15th birthday. According to him, he was pretty angry about it. Although he wanted to remain close to his grandmother, his friends, and his hometown, Jamar’s world began to change. He began losing friends to violence and drugs, and the odds felt stacked against him at school.

“When I was in high school, my mom couldn’t afford to buy me school clothes,” Jamar recalled. “So it’s winter in Duluth, and I’m in holey shoes and a coat that didn’t zip up, and I’m not really eating the greatest at home. You’re dealing with all of that and then you have to show up at school and be perfect. It’s not a great feeling.”

Jamar’s struggles weren’t unique to him, and the challenges he faced when he was a teenager are the same that many continue to face today. However, through organized sports, fortuitous friendships, and strong mentorship, Jamar navigated his way to where he is today: the entrepreneur behind Cycles Broken LLC

“I identify with a lot of the kids that I see here,” Jamar said. “A lot of the young men I see here are about to go through the exact same things that I went through. If I can reach out to this or that person and directly have an effect on them or start a wave of change for them, I’m here for it. It’s really personal to me.”

Jamar launched Cycles Broken earlier in 2019 to help those trying to break out of the same cycles he escaped. Jamar provides moral support and life coaching, and his expertise includes helping clients manage their finances, establish credit, buy homes, get visitation rights and secure child support. Although he consults, coaches and mentors individuals and families, Jamar also works closely with local nonprofits and businesses.

Recently, Jamar received a grant to facilitate a series of business planning workshops with Families Rise Together, a nonprofit that works to strengthen families by engaging parents in their children’s lives and in the community. The sessions will target 18 to 31-year-olds, and according to Jamar, the grant will allow him to improve and expand curricula he developed for previous workshops. 

“It’s so exciting when those small accomplishments happen because it means somebody else is going to receive something,” he said. “It allows me to say, ‘alright, I’m ready to help. What’s next?’” 

Help Me Help You

Despite Jamar’s altruistic mission and partnerships with local nonprofits, Cycles Broken is a for-profit entity, and when it came to setting up his business for success, he needed some help.

That’s what led Jamar to Entrepreneur Fund, a Duluth-based Community Development Financial Institution (CDFI). CNote partners with CDFIs like Entrepreneur Fund in communities across America, funding loans to small businesses and empowering local entrepreneurs like Jamar.

Entrepreneur Fund gave Jamar the capital he needed to purchase a laptop and buy QuickBooks, and the CDFI provided him with access to an accountant, as well as marketing guidance and website help. They also helped him throw a launch party with families and kids in the community. “They helped to make my business more tech-savvy and financially streamlined,” Jamar said. “It’s been a great help, and I can go to them whenever I have a question.”

Jamar says that the biggest piece of advice he’s received from Entrepreneur Fund is to contract out for help when he needs it, especially until he’s able to grow his team. “One piece of advice they gave me is to hire it out when I come across a problem that’s out of my realm,” Jamar said. “By allowing someone else to take care of it, I can get past it and continue to flourish and be profitable. I understand how much getting help can help you.”

Whereas Jamar is happy to do that in the near term, he’d like to one day grow his team so that he can have more “boots on the ground” facilitators and staff under him who can help with Cycles Broken’s growing operations and outreach. Plus, a larger team will be necessary if Jamar wants to achieve his goal for 2020: to “affect 100 businesses in a year.”

“That’s my personal goal,” Jamar said. “We want to have an effect on the graduation rate and youth entrepreneurship in the community, and being a minority-owned business that can affect the business culture in this community and have an impact is motivating. It would be nice to build my team to a point where we have a major movement.”

As Jamar continues to grow his business, his team, and his brand, his commitment to his community — especially the youth — is unwavering. 

“A lot of kids are dealing with the exact same issues of poverty and lack of education as I did,” he said. “It’s not that they’re out of touch, they just don’t have the dexterity yet to navigate life. A lot of kids don’t think they’re capable of growing. A lot of adults don’t think they’re capable of growing.”

“But I’m still here, and I’ve been through so much,” Jamar said. “It was really bad being a product of my environment, but I was shown another way. I’m driven by my family and kids, and I’m able to do what I do by being fearless. I always tell people ‘there are options for happiness and fulfillment in life, and I’m here to help with that.’”

Learn More

  • Cycles Broken LLC
  • The Entrepreneur Fund – a CNote partner and certified CDFI, actively partners with small business owners in northeast Minnesota, central Minnesota and northwest Wisconsin to support small business growth and local economic development. The Entrepreneur Fund provides flexible financing, along with small business coaching and strategic support to promote a culture of entrepreneurship throughout the region.
  • CNote makes it easy to invest in great CDFIs like The Entrepreneur Fund, helping you earn more while having a positive impact on businesses and communities across America.
By Borrower Stories

Meet Rebecca Biesenbach, The Ice Cream-Loving Entrepreneur Behind Grandma B’s Sweet Treats

If there’s one thing that Rebecca Biesenbach loves, it’s Blue Bell’s old-fashioned ice cream. And it’s not just the company’s 66 unique flavors and deep Texas roots that she appreciates: Rebecca loves how Blue Bell’s ice cream brings people together.

That’s what led her to open her own ice cream shop in Rockport, Texas, in 2018, after Hurricane Harvey destroyed the town’s only purveyor of Blue Bell ice cream the year before.

Opening a small business — Grandma B’s Sweet Treats — in the wake of a major natural disaster wasn’t an immediate decision for Rebecca, who at the time lived in San Antonio. Before the hurricane, she and her family frequently visited Rockport to escape the big city, to relax, and to fish. Following Harvey, Biesenbach and her husband returned to the coastal town to repair their house and to help out neighbors. After a hard day’s work, all Rebecca wanted was some good ice cream — but according to her, there wasn’t any. “After Harvey,” Rebecca said, “I just kept saying ‘God, I miss my ice cream.’”

After a fair bit of sleuthing, Rebecca found out that Waffle Cone’s owners — who’d operated the store in Rockport for over 20 years and sold Blue Bell ice cream — decided not to reopen, leaving the town with an ice cream gap. “You gotta have an ice cream store,” Rebecca said. “I literally got into this because my husband got tired of listening to me say how much I missed Blue Bell. That’s it.”

Even though she spent over two decades working in the dental field as an office manager, Rebecca wasn’t completely new to running her own business. Her husband has owned and operated his own plumbing company, and Rebecca kept the business’ books in order and worked with the accountant to keep everything straight. “I knew we could do it,” she said. “Our last kid was out of school, we could move down there, bring the other business, and open up a store. It’d be fun, and it’d give me something to do.”

At the end of 2017, just months after Harvey had ravaged Rockport, Rebecca was busy looking for a commercial space to rent and for equipment to buy. In February of 2018, she permanently moved to Rockport, and a month later, she opened Grandma B’s Sweet Treats, which sells 16 different flavors of Blue Bell ice cream, as well as candy, sandwiches, soups, and salads.

Help Along The Way

Even though Rebecca says that her and her husband’s two companies are going strong today, getting Grandma B’s off the ground wasn’t without its bumps.

To help get Grandma B’s up and running, Rebecca went to her bank to inquire about a small business loan. Although she was originally denied for a loan due to the fact that Grandma B’s wasn’t “an established business,” the employee told her that another one of the bank’s customers had recently received a loan through LiftFund, a San Antonio-based Community Development Financial Institution (CDFI). CNote partners with CDFIs like LiftFund in communities across America, funding loans to small businesses and empowering local entrepreneurs like Rebecca.

Grandma B’s Menu

Rebecca applied for a LiftFund loan and got the capital she needed to keep Grandma B’s afloat. “LiftFund helped us with some of our operating costs when things slowed down coming out of the winter months,” Rebecca said. “We were able to use the loan to help keep us steady, and it helped us to get that ice cream machine that’s sitting out there now. That was one of the big purchases.”

More so, Rebecca has been able to attend several of LiftFund’s small business webinars, which she says were helpful.

However, the most important thing LiftFund provided Grandma B’s with was stability. “Without that loan, it would have been a struggle,” Rebecca recalled. “I probably would have had to let people go. But because of me getting that money, I was able to keep people employed.”

Ice Cream Scoops Are Here To Stay

Grandma B’s currently has a staff of five, including Rebecca, and the shop is open seven days a week, serving Texans from all over the state.

“We’ve had a lot of people thank us for opening up and for giving back,” Rebecca said. “Our most exciting day was opening the doors and being able to give ice cream back to Rockport, because I thought this town really needed it. Everybody needs a little help now and then. The community helps me, so I help them.”

 

Following Harvey, Rebecca says that a number of local businesses have yet to return to Rockport, and many likely won’t. Grandma B’s, however, isn’t going anywhere.

“I want to see this grow,” she said. “I love it, and it’s totally different than what I’ve ever done. I want to be here for years to come.”

Rebecca outside of Grandma B’s

Learn More

  • Grandma B’s
  • LiftFund is a community small business lender that transforms lives by opening doors and providing capital, financial coaching, tools and resources to entrepreneurs who do not have access to loans from commercial sources. Since 1994 LiftFund has provided over $300 million in capital, propelling the dreams of over 20,000 diverse small businesses throughout its 13 state footprint.
  • CNote – Interested in helping create another story like this? CNote makes it easy to invest in great CDFIs like LiftFund, helping you earn more while having a positive impact on businesses and communities across America.
By Impact Investing

The History of Socially Responsible Investing

Many investors are choosing to align their portfolios with their personal values, using their investments to make a positive impact.

While socially responsible investing might seem like a new phenomenon due to its rapidly growing popularity, its earliest origins trace as far back as the first books of the bible.

The history of SRI

The earliest precursors of socially responsible investing date back to the Pentateuch – the first five books of the Bible, believed to have been written by Moses as early as 1500 BC. The books refer to a Jewish concept called Tzedek (justice and equity) and how it should govern all aspects of life. Tzedek aimed to correct the imbalances that humans inevitably generate, including the benefits one would receive from ownership. Owners had rights and responsibilities in how holdings were used, one of which was to prevent any immediate or potential harm.

This principle formed the genesis of socially responsible investing, providing religious and indigenous cultures with a set of criteria on how to generate financial returns ethically and sustainably.

A simple graphical overview of some SRI investment movements/rules over time

Note: The above image provides a cursory summary of some of the movements and institutions that have shaped SRI investing as we know it today. It is not intended to be a completely exhaustive list.

Religious roots and origins of socially responsible investing

Despite a consensus that ethics were an essential consideration for investment decisions, the application of the principle varied; some groups used it as a guideline, others required it by law. The basis for SRI varies between religious groups, leading to many different interpretations of the subject.

Judaism (1500-1300BC)

As mentioned above, Judaism sees a need for justice/equity in all aspects of life, including government and economic activity. Jewish Law states that investments make us property owners, giving us the responsibility to use our holdings to prevent immediate and potential harm.

While most biblical and rabbinic sources refer to single owners or small partnerships, Jewish religious figures eventually addressed the ethics of shareholder responsibility. Since shareholding is a form of ownership, investors must consider the ethical responsibilities of a company before investing. This prevented followers from investing in “immoral” companies such as those involved in oil, coal and gas because of their immediate impact on human health.

Islam (609-632CE)

The Qur’an established guidelines surrounding investments based on the teachings of Islam, now known as Shariah-Compliant Finance. This philosophy aims to govern the relationship between risk and profit, along with the responsibilities of institutions and individuals. It states that money should be a medium of exchange, not an asset that grows over time.

One of the governing principles in the Qur’an is Riba, which aims to prevent exploitation from the use of money. It prohibits the payment or receipt of all forms of usury, including all sorts of interest payments, gambling or uncertainty. The Qur’an also forbids any Islamic institution or individual from investing in alcohol, pork products, immoral goods, gold & silver and weapons.

Quaker (1650s)

Based in England since the 1650s, Quakers are members of a group called The Religious Society of Friends. While the group is primarily interested in Christianity, it is also known for its opposition to slavery and war.

In 1758, the Quaker Philadelphia Yearly Meeting prohibited members from participating in the slave trade, marking one of the first occurrences of SRI in its current form. Eventually, some Quakers went on to establish two of the largest financial institutions in modern history: Barclay’s and Lloyd’s.

Methodist (1700s)

Established in 1703, the Methodist movement was led by a man named John Wesley, one of the most articulate early adopters of SRI. During a sermon titled “The Use of Money”, Wesley outlined his stance on social investing; avoid industries that have the potential to harm workers and any business practices that might harm your neighbor. Followers eventually resisted investments in “sinful” companies, such as those involved in tobacco, firearms and alcohol. A prelude to modern exclusionary investment screening.

Modern Era: The rising popularity of SRI

The modern version of SRI in America really took hold in the mid 1900s, when investors began to avoid “sin” stocks – companies that dealt in alcohol, tobacco or gambling. In 1950, the Boston-based Pioneer Fund, established in 1928, doubled down on this movement, becoming one of the first funds to adopt SRI principles.

The avoidance of sin stocks in the 1950s marked the beginning of the rise of modern socially responsible investing, each decade bringing forth an influx socially concerned investors:

1960s

Socially responsible investing in the 1960s was largely driven by politics and concerns about the Vietnam War. Protestors boycotted companies that provided weapons for the war, while groups of students demanded university endowment funds no longer invest in defense contractors.

Meanwhile, civil rights, environmental and labor movements raised awareness about social, environmental and economic issues, bridging the gap between corporate and investor responsibility. In support of these movements, trade unions like the United Mine Workers and the International Ladies’ Garment Workers’ Union deployed targeted investments into medical facilities and union-built housing projects.

1970s

In April of 1970, 20 million Americans convened for the first Earth Day celebration, opening the door for a cascade of environmental and consumer protection legislation in the early 1970s. As society reacted to war, sweatshops, Apartheid, climate change, human trafficking and a number of other political and cultural issues, socially responsible investors followed suit.

Supported by consistent efforts from both investors and corporations, it was clear that the SRI movement was here to stay. A growing number of new funds combined social and environmental consciousness with financial objectives, reflecting the prevalence of aspirational progressive values. The Pax World Fund and the First Spectrum Fund were established in 1971, followed by the Dreyfus Third Century Fund, firmly backed by over $25 million.

1980s

In the wake of the Bhopal, Chernobyl and Exxon Valdez disasters, concerns about the environment and climate change were at the core of SRI in the 1980s. This led to the launch of The United States Sustainable Investment Forum (SIF) in 1984, which has now become one of the largest resources for SRI and impact investing.

The standardized approach to SRI in the 1980s involved building a portfolio that behaved like the traditional market while avoiding investments in alcohol, tobacco, weapons, gambling and environmental pollution. Firms paired these avoidance screens with a commitment to shareholder activism, a practice that allowed shareholders to leverage ownership to improve a company’s behavior.

1990s

By 1990, the popularity of SRI mutual funds and socially conscious investing hastened the need for a way to measure performance. Launched in 1990, The Domini Social Index (which is now the MSCI KLD 400 Social Index), was comprised of 400 U.S. publicly-traded companies that met certain social and environmental standards. Many potential investors were concerned that socially responsible investments would have lower returns than traditional investments, but this index helped to disprove those claims.

2000s and beyond (UN SDG)

By the early 2000s, socially responsible investing continued to gain supporters, alongside the introduction of many major initiatives and funds. In 2006, the United Nations Principles for Responsible Investment was launched, establishing guidelines for mainstream investors to incorporate ESG (environmental, social and governance) issues into investment practices.

Many socially conscious investors are going beyond SRI to seek out investments that prioritize a positive impact, sparking a rise in ESG and impact investing. This forward-thinking approach was reinforced by the UN Sustainable Development Goals in 2015. These goals, backed by all 193 UN Member States, are an urgent call to solve the world’s most pressing development challenges.

Conclusion

Socially responsible investments account for over 25% (over $12T) of all assets under professional management in the US, and with increased interest from the millennial generation, that number is only expected to rise. Despite the involvement of large investment firms and funds, socially responsible investments are not exclusive to institutional investors. There are a range of retail impact investment options that allow anyone to invest ethically and responsibly.

The history of socially responsible investing shows that what’s old is new again. We can see that this growing movement shows no signs of stopping, making for an even larger impact as more investors get involved.

 

By Equality, Financial Planning

A great discussion on the state of income inequality, financial markets and monetary policy

When one of the world’s most successful investors says The World Has Gone Mad and the System Is Broken, you listen. That’s exactly what Ray Dalio did in a piece published on LinkedIn just a few days ago. We’ve summarized his views and shared an interview that further colors his viewpoints.

Mr. Dalio’s views summarized

At its core, Mr. Dalio’s article lays out the following concerns:

  • The price of money is low and the supply is high, leading to either the acceptance of low returns or incremental risk-taking
  • This mal-investment is evidenced by recent failures, like WeWork, where investors buy into a “dream” rather than future or current profitability and sustained value creation
  •  Large government deficits will require more debt issuance which should increase rates, at a time when rising rates “would be devastating for markets and economies because the world is so leveraged long”
  • This results in a “dynamic in which sound finance is being thrown out the window”
  • More and more pension and healthcare liabilities will come due while investment targets are not being met, meaning they will be underfunded
  • Changing demographics result in “fewer earners having to support a larger population of baby boomers needing healthcare, there isn’t enough money to fund these obligations either.”

His piece ends with a scary reminder about inequality and its likely trajectory, which dovetails with the work we’re doing at CNote to build a more inclusive economy and fight against this growing wealth transfer to the top:

“At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps.”

Post-Article Interview

Shortly after authoring the piece above, Mr. Dalio spent the better part of fifteen minutes further illuminating his views and the likely outcomes he sees based on the current situation.

If you’re looking to gain a better understanding of the current global economic situation and the likely path forward, this is definitely worth a watch.

By CDFIs, CNote

Announcing a New CNote CDFI Partner: Renaissance Community Loan Fund

CNote announces new CDFI partner committed to housing affordability and community resilience, Renaissance Community Loan Fund

Innovative fintech platform inks deal to become new capital source for Mississippi lender committed to economic development.

CNote has entered into a partnership with Renaissance Community Loan Fund to serve as a new capital source, supporting their mission to increase homeownership and support small businesses and local economic development in Mississippi. Founded in the wake of Hurricane Katrina’s devastation, Renaissance Community Loan Fund (Renaissance) has had a significant impact since its 2006 founding. 

With a strong focus on economic empowerment, wealth building, and homeownership, Renaissance Community Loan Fund is a natural partner in CNote’s mission of closing the wealth gap in America. 

CNote leverages technology to enable impact investing at scale, allowing investors of any size to invest in a diverse pool of stellar Community Development Financial Institutions (CDFIs) like Renaissance. CDFIs are community-focused lenders that provide funding for small businesses, affordable housing development, and other projects in communities that often lack adequate access to financial resources. With a growing nationwide network of CDFI partners, CNote is helping to build a more inclusive economy for everyone by offering competitive financial products that drive positive social change and build more economically resilient communities across America. 

Yuliya Tarasava, CNote’s Co-Founder, notes “CNote is honored to partner with Renaissance Community Loan Fund. We’ve been impressed by their history of supporting and revitalizing the communities they serve, especially in the face of devastating natural disasters. We strongly believe in their ability to leverage new investment capital to create great economic outcomes in the communities they support across Mississippi.”

Since 2006, Renaissance Community Loan Fund has been dedicated to revitalizing underserved communities throughout Mississippi. Renaissance’s success is driven by their ability to understand the specific needs of the communities they serve, having a highly qualified team to address those needs, and developing a customized and thoughtful approach to program implementation. To date, Renaissance has helped over 2,300 families achieve the dream of homeownership, provided personal financial counseling to over 3,500 clients, and created $88.7 million in economic impact from new homeowners.

Kimberly LaRosa, President & CEO of Renaissance Community Loan Fund, remarked, “Our focus has always been on achieving positive results for our community. That is why we are excited about partnering with an innovative capital source like CNote, who’s capital will allow us the opportunity to drive more results for the Mississippi communities that need it most.”

###

About CNote

CNote is an award-winning, first-of-its-kind financial platform that allows anyone to make money investing in causes and communities they care about. With the mission of closing the wealth gap, CNote directs every dollar invested toward funding female- and minority-led small businesses, affordable housing and economic development through its nationwide network of CDFI community lenders.

About Renaissance Community Loan Fund

Renaissance Community Loan Fund was created by The Gulf Coast Business Council in 2006 to help rebuild the community in the aftermath of Hurricane Katrina. Today, Renaissance provides support through financial assistance and development services which help provide safe, quality housing for the residents of Mississippi and providing economic resources for small business owners to add or retain jobs in the community.

###

Link to Press Release

By Financial Planning, Quick Tips

Ignoring The Tired Tropes of Personal Finance

Recently you’ve probably seen headlines about how you could be a millionaire if you just stopped buying coffee, eating out or paying for a gym membership.

There’s merit to being mindful about your spending, but recently some of the claims coming out of the personal finance world appear to be more focused on click-baity headlines than providing useful advice. It’s important you don’t miss the forest for the trees.

We’re going to break down some of this hysteria around some personal finance topics and a common emotion these articles conjour in relation to money: shame.

Is this what’s standing in your way of having a yacht and rubbing elbows with Beyoncé?

Not all advice is equal

Managing personal finances and determining how and where to delegate your cash is tricky business. You’ve got to worry about budgets, retirement planning, investing for your future, tackling debt, and everyday expenses—the list can seem endless. It’s no surprise, then, that a number of individuals rely on the advice of talking heads and financial “experts” to navigate their expenses and investments.

Like with many other facets of life, not all advice is good advice, even when it comes from a professional. In fact, some “advice” offered by those who claim to be financial gurus is not always grounded in a data-driven or practical approach. It is important to have enough knowledge about finance so you can separate the wheat from the chaff when it comes to advice you read online or see on TV. While it might seem daunting, being knowledgeable about your finances is not as difficult as you may think.

The whirlwind of personal finance advice, online, in print, and in real-time, lends itself to a caucus of white noise that causes many people to freeze up.

Shame & Money

People are overloaded with information, which causes decision paralysis. Advice telling people their five-dollar lattes (and other daily indulgences) is what is standing in their way of becoming millionaires is discouraging at best.

This “advice” that treating yourself from time to time is what is ruining your financial health has resulted in the cultivation of what a Huffington Post article describes as a “culture of shame” surrounding the personal finance industry. Even worse than shaming some for their daily treats, this view completely dismisses the plight of individuals who are struggling to make ends meet.

It can be argued that some of the most popular advice has become more of a list of tropes than genuine guidance, little more than a script that some personal finance professionals will recite to make a headline or get airtime on a financial network. It is good to be wise with your money and cut back where you can, but there is no need to shame yourself for living the life you want to live.

The Media’s Financial Panic

41% of Millennials admitted to spending more on coffee in the past year than they had invested in their retirement accounts.”

How many times has this statistic been used? Are Millennials destined to fail when it comes to their finances?

Absolutely not.

Chase’s twitter account took a stab at money shaming too, tweeting:

“You: why is my balance so low

Bank account: make coffee at home

Bank account: eat the food that’s already in the fridge

Bank account: you don’t need a cab, it’s only three blocks

You: I guess we’ll never know

Bank account: seriously?

#MondayMotivation”

(The Tweet, originally posted on May 2019, has since been deleted.)

Chase wasn’t the only one to find themselves in hot water on this point recently. USA Today ran a now-infamous story claiming that the average American spends $18,000 each year on luxury expenses. The breakdown of what these nonessential expenses included was shocking to many. Included in the list were items such as personal grooming, gym classes or memberships, buying lunch, and, of course, coffee.

Further widespread panic around personal spending has set in since CNBC tweeted similar scare tactics in June, quoting Suze Orman’s words, “If you waste money on coffee, it’s like peeing $1 million down the drain.” Where is Suze buying her coffee?

Millennials Actually Care About Finance

When the finance world thinks millennial this is what they see, but not every millennial is committed to a free-range beard, man bun, and $80 haircuts.

Millennials, in particular, have received a disproportionate amount of criticism regarding their spending habits on “nonessentials.” It turns out that millennials are the segment of the population that is the most receptive to financial advice.

So while the impression might be this tweet, the reality is much different.

A study conducted in February of 2018 showed that nearly three-quarters of Millennials demonstrated an interest in attending financial seminars, more than prior generations. Plus, the number of Millennials that are looking to work with financial advisors is increasing.

What everyone – advisors and financial newbies alike need to understand is that the key to a healthier financial future lies in your big-picture and long-term decisions. Sure, flushing $5 down the toilet every day is a bad idea, but it’s often the mistakes around the big financial decisions (ones people often don’t spend enough time considering) that can have the most severe long-term impact.

But if giving up coffee isn’t what will build your future wealth, what will?

Opening Up to the Big Picture

Take a more holistic view of your finances to focus on what goals are most important to you.

Instead of worrying about saving a few bucks here and there on minor purchases, the average American should be considering the impact their larger-scale decisions could have on their financial future. Those truly in tune with the bigger picture of finance will focus less on daily coffee expenses and more on avoiding bad decisions. A few examples include:

1. Cosigning a Bad Loan

It can be easy to misunderstand the meaning of cosigning a personal loan or a car loan, especially when a family member or close friend asks for help. However, cosigning a loan isn’t a way to validate a loved one’s character or reliability—it’s a surefire path to put you at risk to struggle with loan payments when the primary borrower can no longer keep up on payments.

More than one in three cosigners polled said that they had to pay the loan once the

primary signer defaulted. Furthermore, 25% of responders reported that their credit score was damaged due to late or absent payments on a loan they cosigned.

When agreeing to cosign a loan, a cosigner is legally obligating themselves to pay the loan in full if the primary borrower defaults on the loan, or makes late payments.

This huge (and easily misunderstood) commitment can have long-lasting damage on an individual’s personal finance record and even land them in legal trouble, not to mention the emotional damage it can cause.

2. Taking Out an Interest-Only Mortgage

Another financial decision with long-standing impact/consequences that new homeowners often face is whether or not to take out a fixed-rate mortgage or an interest-only mortgage. Given that the average length of a mortgage is about 30 years, there is no denying that this decision should rank highly on the “big picture” scale of important financial decisions.

While interest-only mortgages may look great in the short-term, financial advisors

focused on the importance of big-picture decisions will encourage their clients to

consider this type of mortgage’s long-term risks— “payment shock,” for example,

when the interest-only period expires, and payments suddenly skyrocket to include both primary payments and interest.

3. Ignoring Credit Scores

Plenty of Americans are afraid of checking their credit scores, and 14% of Americans have no credit score at all. Despite this, credit scores remain crucial to a person’s financial and even personal well-being and can majorly impact an individual’s quality of life. Every time a person with a bad credit score looks to rent an apartment, connect a new phone line, open a new credit card, apply for a mortgage, or take out a loan, their credit score will be under scrutiny. Even employers have access to their employees’ credit scores.

However, a survey asking Americans about their knowledge of the risks and potential troubles that accompany a bad credit score found widespread misconceptions and a general lack of understanding. A different report stated that one-third of Americans don’t know how their bad credit is affecting them.

It’s easy to see that a bad credit score can negatively impact many aspects of an

American’s life, so shouldn’t influential financial institutions and major news outlets

focus more on educating the public about how to maintain a good credit score (or

establish credit in the first place) rather than contributing to the guilt surrounding small splurges like that coveted pumpkin spice latte?

4. Not Saving for Retirement

Nearly half of Americans are living paycheck to paycheck, and even less are saving for their retirement. Just 39% of Americans saving for their retirement began doing so in their 20s.

The earlier you start saving money towards your retirement, the less you will have to put away on a monthly basis. Nerdwallet reports that in order to become a millionaire by age 67, a 23-year-old should put $415 away each month, whereas a person who starts saving at 35 should plan to put $912 into their retirement savings each month. With earnings from compound interest building over time, you may even find yourself having to put less away in retirement accounts than initially planned if you get a head-start.

If available to you, an employer-sponsored 401(k) is a great retirement savings account option, with many employers offering to match employee contributions (up to a certain amount). Contributions are made pre-tax, with tax being paid when withdrawing. However, there are penalties (10% fee on top of tax) for withdrawals made before retirement age, so it is best not to dip into this as a personal emergency fund.

According to the Government Accountability Office, 29% of households headed by people 55 or older have no savings in a retirement account.

With it being near impossible to predict the cost of retirement perfectly, it is imperative to have enough saved up; otherwise you can expect to be faced with downsizing and even possibly downgrading your quality of living as you age and look to work less. It is imperative to have money saved in times of rising living, housing, and medical costs.

A critical first step is taking ownership and drafting a plan. Within that plan, you can find a way to balance those small splurges that keep you happy with your long-term goals of financial freedom.

What now?

What does this all mean for the average person? It means that it’s okay to grab a green tea latte or enjoy an iced mocha. It’s often fine to spend money on a gym membership or on personal grooming habits, and eating out occasionally won’t result in bankruptcy.

While every financial decision is important (even the day-to-day ones), it’s the big-picture decisions that matter most when shaping your financial future.

Everyone should look to arm themselves with the basic financial acumen, so they can make the right decisions for themselves. Letting headlines and talking heads scare you isn’t going to open up a new world of financial freedom.

Life is about balance and having a plan to meet your goals.

Taking action to prepare yourself by having a budget, a retirement plan, and avoiding big financial landmines along the way will help to support a sound financial future.

In closing, have a plan but don’t let the clickbait headlines scare you.

Note: CNote is not a registered investment advisor, and this information should not be relied upon as individualized investment advice. Every financial situation is different and you should seek tailored advice to suit your specific financial circumstances. 

By Borrower Stories

Linda Newman, Dog Sled Musher and Off-the-Grid Entrepreneur

Entrepreneur Linda Newman didn’t technically answer the call of the wild when she opened up Points Unknown, an off-the-grid homestead and sled dog-based adventure company, but she did follow her passion.

After 23 years as a real estate appraiser outside of the Twin Cities (Minneapolis/St.Paul), Newman sold everything, cashed in her 401(k), and moved to a piece of land in Cook County that is five miles off the grid, seven miles from Lake Superior, and a stone’s throw away from Canada. Why? Because her passion is sled dogs, not home appraisals. 

Linda Newman

“I decided I wanted to do more of what I wanted to do versus what I thought I should do,” she said. “I’ve always been entrepreneurial, and I’ve never had an issue with risk. I think that’s just part of the entrepreneurial spirit. I had the idea that I needed to stop what I was doing, and I need to follow the passion. I visualized it, and took steps to do it.”

Dogs training for the winter season

Newman got her first dogs in 2000, and she officially started Points Unknown in 2007 as a way to educate people about dog sledding. Today, she has 30 dogs, and Points Unknown’s team of interns and volunteers and offers women’s four-day wilderness adventures, immersive off-the-grid homestead stays, writing-and-reflection weekends, and step-by-step dog sledding experiences. Newman also runs an on-site guest suite that’s “rustic northwood chic” to earn extra income, and she recently expanded a canoeing and hiking guide service she calls Mindful Paddling.

“Points Unknown isn’t just about exploring places on a map,” she said. “It’s also about exploring points unknown within yourself. That’s the whole educational piece, and the dogs are excellent teachers. I want people to come here to learn more about themselves and the dogs and the lifestyle, but it’s always about trying to push people outside of their box. That’s the basis of the company.”

The Essential Small Business Guide

Newman knows that first-time adventurers and dog sledders benefit from having a knowledgeable guide when they set out to explore the Minnesotan wilderness. She’s similarly learned that when it comes to navigating the ins and outs of small business ownership, that same need for expert mentorship exists.

That’s how Newman got connected with Entrepreneur Fund, a Community Development Financial Institution (CDFI) with offices spread around the North Star State. CNote partners with CDFIs like Entrepreneur Fund in communities across America, funding loans to small businesses and empowering local entrepreneurs like Newman. Newman first learned about Entrepreneur Fund through a series of small business administration classes offered by Cook County Higher Education. Whereas a typical higher education business class costs $800, The Entrepreneur Fund offers scholarships that bring them down to $200. 

Newman benefited from several of these Entrepreneur Fund-led courses. “The instructors were great, and everyone was so supportive,” she said. “This past year, we had a monthly business group where we would meet at various places throughout the county and everybody would talk about their highs and their lows and we’d have a question to ponder every month.”

To help promote and expand Points Unknown’s new Mindful Paddling offering, Newman applied for and received a loan from Entrepreneur Fund to purchase a solo canoe, a canoe rack, personal flotation devices, paddles, and camping gear that Points Unknown patrons can use. More so, the CDFI provided Newman with six consultations with a marketing professional to help her better advertise her business. Previously, Newman mainly relied on word of mouth referrals. 

“Entrepreneur Fund is an amazing resource for the life of your small business,” Newman said. “It’s really unbelievable how much support they offer.”

The Next Bend in the Trail

Whereas Newman has to think about the daily operations of Points Unknown, not to mention growing her other business, a hand-crafted pure beeswax candle company called Scent from Nature, she’s also thinking about her future goals.

In the next couple of years, Newman wants to hire a full-time personal assistant who can help her with daily operations, reservations, and emails, and she’d like to expand the number of places where people can stay on her property. Besides growing the guest-suite portion of Points Unknown, Newman wants to add small cabins and other lodging options in the woods for people looking to immerse themselves in the unique off-grid lifestyle.

As ominous as sustaining and expanding a small business in rural Minnesota might seem, Newman doesn’t feel any pressure. According to her, she’s already accomplished what she set out to do: live her passion each and every day.

“The best experience has been the process of slowly watching everything I’d envisioned take place,” she said. “It was invigorating, and the biggest lesson was just letting go because you can’t control the outcomes or roadblocks. You can only take one step at a time.”

It’s not difficult for Newman to remember when she initially allowed that invigoration to wash over her: there’s a framed picture of the moment sitting on her desk in her office.

“We’d just moved in and all of a sudden we got the solar power turned on and the satellite internet started to work,” said Newman. “I’m at my desk with my arms spread wide open with this big smile on my face like ‘ta-da! I’ve arrived.’”

Learn More

  • Points Unknown
  • The Entrepreneur Fund – a CNote partner and certified CDFI, actively partners with small business owners in northeast Minnesota, central Minnesota and northwest Wisconsin to support small business growth and local economic development. The Entrepreneur Fund provides flexible financing, along with small business coaching and strategic support to promote a culture of entrepreneurship throughout the region.
  • CNote makes it easy to invest in great CDFIs like The Entrepreneur Fund, helping you earn more while having a positive impact on businesses and communities across America.
By CNote

Webinar: Introducing CDFIs as a Way to Invest in Economic Inclusion

Interested in learning more about Community Development Financial Institutions (CDFIs)? Even if you missed the live presentation, you can watch the joint webinar by CNote and Access to Capital for Entrepreneurs (ACE) a Georgia-based CDFI.

Watch now using this link, or via the YouTube replay below.

In this webinar we introduce CDFIs, their history, the work they do in their local communities, and how they represent a compelling opportunity to invest in a more inclusive economy.

CDFIs have a strong history of providing economic resources to financially underserved communities across America, helping to create jobs, fund small businesses, and support affordable housing development. Now you have a chance to support that mission. We’ll explore, in detail, the way increased capital access and CDFI lending activities can have a transformative effect on local economies. Join us. 

This presentation was co-hosted by:

Martina Edwards, Chief of Strategic Partnerships, for Access to Capital for Entrepreneurs. ACE is a Georgia-based CDFI that has emerged as a leader in responsive and innovative small business financing.

Catherine Berman, CEO, CNote. Based in Oakland, CA, CNote is an award-winning investment platform that streamlines the process of investing in CDFIs for investors of all sizes from individuals to institutions.

 

By CNote, Impact Metrics

CNote’s Q2 2019 Impact Metrics

We know one of the main reasons you invest with CNote, is because of the impact your investment has.

We’re proud to share our Q2 2019 impact data.

In Q2 2019, our members helped create/maintain 111 jobs!

We’re also extremely proud to announce that more than 70% of CNote capital went to minority-owned businesses!

If you’d like to see our annual impact data, along with an explanation of how we map CNote’s impact investments to the UN’s Sustainable Development Goals, read our 2018 Impact Report.

 

By CNote

CNote Selected as a 2019 Best For The World honoree, top-performing Certified B Corporation

The entire CNote team is proud to announce that we have been selected by B Lab as a 2019 Best For The World honoree in the Customers category.

This award is given only to B Corporations around the world with verified B Impact Assessment scores in the top 10% of all B Corps for providing value to their customers.

As a customer-focused company, we’re extremely grateful for the recognition and look forward to doing even more for our customers next year.

 

We vote every day for a better world through the way we run our business by putting benefits to our customers first. Together, we’re investing in a more inclusive economy for everyone. Thank you for your support!

Learn more about 2019 Best For The World campaign. You can view the full Customers honoree list here.

About CNote

CNote is an award-winning, first-of-its-kind financial platform that allows anyone to make money investing in causes and communities they care about. With the mission of closing the wealth gap, CNote directs every dollar invested toward funding female- and minority-led small businesses, affordable housing and economic development through its nationwide network of CDFI community lenders.

By CDFIs

CNote Adds Another Stellar CDFI Partner, The Entrepreneur Fund

CNote has entered into a partnership with The Entrepreneur Fund to serve as a new capital source, supporting their mission to actively partner with entrepreneurs to grow businesses and create vibrant sustainable communities.

CNote is working to build a more inclusive economy for everyone by offering competitive financial products that drive positive social change. CNote enables investors of any size to invest in Community Development Financial Institutions (CDFIs), like The Entrepreneur Fund, across the nation. CDFIs are community-focused lenders that provide funding to small businesses, affordable housing development and other projects in communities that often lack adequate access to financial resources.

With a strong focus on economic empowerment and security, The Entrepreneur Fund is a natural partner for CNote. Yuliya Tarasava, CNote’s Co-Founder, notes, “CNote is honored to partner with The Entrepreneur Fund. We’ve been impressed by the work they’ve done to economically revitalize the communities they serve. We strongly believe in their ability to leverage new investment capital to create great economic outcomes in the communities they support across Minnesota and Wisconsin.”

Since 1989, The Entrepreneur Fund has been dedicated to revitalizing underserved communities in Minnesota and Northwestern Wisconsin. They have helped start, stabilize or expand more than 2,400 businesses, provided over $50 million in loans, and served 16,000 people through its training, consulting and lending programs.

Shawn Wellnitz, President of The Entrepreneur Fund, remarked, “The Entrepreneur Fund is so excited to have CNote as our newest investor because they make it simple for so many people to have a powerful impact with their investments. CNote capital will help create jobs and support the economic development of the Midwest communities we serve.”

About CNote

CNote is an award-winning, first-of-its-kind financial platform that allows anyone to make money investing in causes and communities they care about. With the mission of closing the wealth gap, CNote directs every dollar invested toward funding female- and minority-led small businesses, affordable housing and economic development through its nationwide network of CDFI community lenders.

About The Entrepreneur Fund

The Entrepreneur Fund actively partners with small business owners in northeast Minnesota, central Minnesota and northwest Wisconsin to support small business growth and local economic development. The Entrepreneur Fund provides flexible financing, along with small business coaching and strategic support to promote a culture of entrepreneurship throughout the region.

Read the press release.

By Borrower Stories

Jamine Moton – The Former Track Star Racing To Revolutionize The Security Industry

Jamine Moton has been protecting people for as long as she can remember. In high school, she was a “bullies bully,” using her imposing size and athletic prowess to stick up for students who couldn’t defend themselves. It was that same size and prowess that carried her to Clemson on track and basketball scholarships.

By the time Moton walked away from the world of collegiate track and field in 2004, she was a national champion, a hammer throw record holder, an Olympic alternate and a future hall of famer. However, when Moton retired from her sport, she didn’t leave her identity as an athlete behind her. Rather, she combined her skillset as a track star with her passion for protecting people to start her own company: Skylar Security. In 2019, Moton is preparing to scale her company to $1 million in revenue. She has no intentions of stopping there.

Moton’s leap from the upper echelons of athletics to entrepreneurial success didn’t come without its hurdles, and it didn’t happen in record time. After receiving a masters degree in human resources training and development and business management from Clemson in 2004, Moton eventually moved from South Carolina to Atlanta, where she took a job with the Clayton County Police Department in 2012 as a sergeant.

She quickly realized a career with the police force wasn’t for her, even if it was only meant to be a stepping stone to her dream job with the FBI. However, a comment from one of her superiors changed everything. “One of my supervisors told me I was being ‘too supervisory,’” Moton said. “As an athlete, I don’t know what it means to give half. I’m always at 100 percent, doing the most.”

Paving Her Own Path

That remark sparked something inside Moton. In 2014, she rescinded her FBI application and started Skylar Security, a private security company that emphasizes client support, success and retention. “You graduate from the police academy, and you put on a bulletproof vest and a badge. There’s a type of pride that comes with that,” Moton said. “I realized you don’t see that same pride in the security industry.”

For the next three years, Moton worked full time with the Clayton County Police Department and full time getting Skylar Security off the ground. According to her, those long hours were spent learning what questions to ask. “I saw there was a need in the industry for quality security providers,” Moton said, “and I became obsessed with providing that quality. So I offered our providers higher than the industry standard, and I gave them the opportunity to work on their own terms. I changed the whole business model on how people think.”

A major tenant of Skylar Security’s business model is Moton’s yes-first approach. Regardless of a client’s budget, she’s been intentional about offering highly customizable solutions. “We can almost fit any budget,” Moton said. “Everyone deserves to be safe.” That’s one reason why Moton has been able to grow Skylar Security on a strictly word-of-mouth referral system. “Our clients win because they get above average service,” Moton said. “In four and a half years, we’ve lost zero clients to poor work or behavior.”

After years of juggling a full-time job and a promising side gig, Moton left the Clayton County Police Department at the beginning of 2018 to focus on growing Skylar Security. As she puts it, she “went all in.” However, one question loomed large over Moton: how to grow Skylar Security into the viable long-term business she envisioned.

An Athlete Without a Coach

Moton knew that 2019 was going to be a year of growth for her company, and she knew she needed help. She approached Access to Capital for Entrepreneurs (ACE), an Atlanta-based Community Development Financial Institutions (CDFI), for a loan. CNote partners with CDFIs like ACE in communities across America, funding loans to small businesses and empowering local entrepreneurs like Moton. ACE provided Skylar Security with the runway it needed to start the year strong. “It was only $35,000, but it made the difference for us,” Moton said. “It really set us up to scale financially.”

However, Moton needed something arguably more valuable to her than capital: she needed a business coach. “As an athlete, I’ve always had a coach,” Moton said. “I’m great when I have a coach. I am unstoppable. But until this point with Skylar, I never had a coach.” Moton told her ACE loan officer she could use someone who could help her scale. “I told her I didn’t want scaling to stop me from serving my clients, and she said: ‘what if I told you I could give you a coach?’ I started crying,” Moton said.

It’s only been a few months, but Moton’s relationship with her ACE business coach is already paying big dividends. With his guidance, Skylar has changed “everything,” including price points, and the company is looking to scale to $1 million in revenue and 200 security providers. That’s a big jump from the beginning of 2018, when the company had 37 providers.

“We are referral based, so I literally have handpicked each one of those providers,” Moton said. “And I will continue to do that as long as I can scale it. It’s a little nerve wracking for me because I’ve been trying to hold back to make sure that we do not grow too fast. I’m trying to make sure that we grow at the pace of the quality we can offer, not at the pace of the need.”

According to Moton, ACE and her business coach helped her get through Skylar’s biggest achievement — and greatest challenge — to date: Super Bowl LIII. The mega-sporting event was hosted in Atlanta on February 3, 2019, and Skylar Security was one of the companies contracted to provide security at Mercedes-Benz Stadium. “Skylar wouldn’t have survived the Superbowl financially if it wasn’t for ACE, period,” she said. “I’m indebted to them, and I really cannot see Skylar achieving [success] without this relationship.”

It’s a Marathon, Not a Sprint

Moton dreams about expanding operations to other states, but for now, she’s content doing business in Atlanta, where she feels supported as a minority-woman-owned business. She credits people like Mary Parker, the entrepreneur behind the city’s first black-woman-owned full-service security firm, ACE’s Grace Fricks, and organizations like launchpad2x, Invest Atlanta and Goldman Sachs 10,000 Small Businesses program for setting her and her company up for success.

“I love it here. I look at the buildings, and I feel unstoppable,” Moton said. “I feel like Atlanta, and the relationships I have here, affords me the opportunity to do anything to be successful as an African American female entrepreneur. I’m thankful to the city for giving us the opportunity to protect them all.”

You can take the athlete out of the sport, but in Moton’s case, she’s finding ways to win in the security sector, and like any top-tier athlete, she credits her team for her success. “We would not be here if it weren’t for our mentors and our advisers,” she said. “Everybody that encouraged us or said something we needed to hear, they’re part of our story.”

“As many opportunities as I’ve had over my life, this is by far the greatest challenge to date,” Moton said. “Business is about exploring yourself, and there’s nothing like it. But we’re in a really good position to be successful.”

Learn More

  • Skylar Security
  • Access to Capital for Entrepreneurs (ACE) – ACE is an SBA Microloan Intermediary, a USDA Intermediary Relender and a certified Community Development Financial Institution (CDFI).
  • CNote – Interested in helping create another story like Jamine’s? CNote makes it easy to invest in great CDFIs like ACE, helping you earn more while having a positive impact on businesses and communities across America.
By CDFIs

Searchable List of Every CDFI

Below you’ll find an easy-to-manipulate table of all certified Community Development Financial Institutions (CDFIs) in the United States.

You can filter by CDFI name, state, city, certification date and institution type. In the table you’ll also find a link to the organization’s website if you’d like to conduct additional research or follow up directly.

If you’d prefer to access this interactive table directly, rather than through the embedded table below, you can view the interactive CDFI list here.

Complete List of All Certified CDFIs (Credit Unions, Loan Funds, etc.)

This data comes directly from the CDFI Fund, an agency within the U.S. Department of Treasury that is responsible for the CDFI certification process. You can access the source data from the CDFI Fund by visiting this page and clicking the link “View the list of certified CDFIs.”

CNote is a financial platform focused on making CDFI investing accessible to everyone.. We created this list to increase visibility into the growing network of CDFIs and allow users to quickly find CDFIs in a specific locality. This list should be helpful for those looking to work with or support a local CDFI.

For those interested in learning more about CDFIs, CNote has produced an article outlining the history of CDFIs and the work that they do.

By CNote

CNote hires Danielle Burns to Head Business Development

We’re excited to announce a new member of CNote’s core leadership team, Danielle Burns.

OAKLAND, California, July 11, 2019 — CNote has hired experienced Business Development professional, Danielle Burns, to help scale its advisory and institutional sales channels. Prior to CNote, Danielle served as the VP Sales & Marketing for First Affirmative Financial Network. There, she contributed to the growth of the firm’s core advisory business, growing assets to over $1B during her tenure. Danielle brings proven thought leadership in values-aligned investing, having spoken at industry events and educating advisors on how to navigate the Sustainable, Responsible, Impact (SRI) investing and ESG landscape.

“Danielle is incredibly well respected and admired in the SRI industry and we are thrilled to welcome her as a core member of our leadership team,” stated CNote CEO, Catherine Berman. “Danielle has a history of delivering exceptional results for the organizations she supports. Not only is she a proven financial professional, she also has a deep commitment to values-aligned investing and CNote’s mission of financial inclusion.” 

Danielle began her financial services career in 1994 at Wachovia Corporation where she worked for both Wachovia Bank and Wachovia Securities performing a variety of management duties over her nine-year tenure there. Prior to joining First Affirmative, she worked for a premier community bank in Clearwater, FL where she provided marketing, sales, and service support. At First Affirmative, Danielle lead sales and marketing efforts for over six years. Over her tenure, First Affirmative grew to be the largest SRI-focused advisor network. 

Danielle serves on the board of Green America: A not-for-profit membership organization whose mission is to harness economic power to create a socially just and environmentally sustainable society. Additionally, she serves on the Advisory Board for both the SRI Conference and the Investment News Impact Forum. She also helped develop Think Big Productions, Inc., a non-profit youth services organization that cultures young artistic talent in Clearwater, Florida. 

“I’m excited to embrace a new and exciting challenge, helping to scale a high-growth financial technology company that is motivated not just by profits but by building a more inclusive economy as well,” Danielle remarked. 

Born in Brooklyn, New York, Danielle has a passion for the culinary arts. She has an undergraduate degree in Business and an MBA with an emphasis in Marketing. She lives in Noblesville, Indiana with her husband and son.

About CNote

CNote is an award-winning, first-of-its-kind financial platform that allows anyone to make money investing in causes and communities they care about. With the mission of closing the wealth gap, CNote directs every dollar invested toward funding female- and minority-led small businesses, affordable housing and economic development through its nationwide network of CDFI community lenders.

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Links to the press release:

PRnewswire

By Borrower Stories

Meet Donica Johns, Inventive Mother and Entrepreneur

Donica Johns, a New Orleans native, has fond memories of going to Belladonna Day Spa with her mother when she was younger. Looking back, she never thought she would go on to create a line of skincare products let alone create a line of skincare products that would be sold on Belladonna’s shelves, but today, that’s Johns’ reality.

Finding a Solution

When her youngest son began to struggle with severe eczema in 2013, Johns was told by physicians that he’d need regular steroid shots to keep his breakouts in check. She wasn’t opposed to the treatments, but she was concerned about the potential long-term effects of the injections. The concerned mother wanted something safe, natural, and sustainable for her baby.

Johns poured herself into researching natural skin products, and she began experimenting with mixing her own natural butters and oils to alleviate her son’s eczema. It took her about a year before she found the right formula that worked best for him. “I didn’t go to school to be an esthetician,” Johns said, “but I read a lot of books. I couldn’t cure my son’s eczema, but his breakouts are far and few between, and he’s not missing out on school.”

Friends, family members, and even her son’s doctor took note. “The doctor said keep doing what you’re doing, because it’s really working,” Johns said. A friend suggested that she sell her small farm-sourced, organic concoctions on Etsy, and in 2014, Johns launched her first online marketplace. By the beginning of 2015, she had her own website and her own skincare line of about six or seven products, from the original cream that she developed for her son to a beard oil she created for her husband.

Natural Mixologist was not just up and running: it was taking off. Although Johns began fielding inquiries and taking orders from as far away as Europe, her skincare line remained “a side hustle.” She was still working full time as a bartender. “I had people wanting my products in their stores, and for the first time I said, ‘well, maybe this is something really real,’” Johns said. In 2016, the concerned-mother-turned-entrepreneur quit mixing cocktails and threw herself into Natural Mixologist, turning her side hustle into her main hustle.

The Missing Ingredient

Her business’ rapid growth came with a host of challenges. Johns’ biggest issue? She couldn’t figure out the branding she wanted for Natural Mixologist. That’s when she connected with TruFund, a Community Development Financial Institution (CDFI) that invests in small businesses in New York, Alabama, and Louisiana. CNote partners with CDFIs like TruFund in communities across the country, funding loans to small businesses and empowering local entrepreneurs like Johns.

TruFund provided the resources for Johns to be able to hire a branding and marketing specialist who had previously worked for Sephora, one of the beauty and skincare industry’s most recognizable companies. “I showed her my branding, and she was like, ‘you’re basically a five out of ten,’” Johns recalled. “I was floored. I bawled out in tears.”

However, there was a silver lining to Johns’ feeling of devastation: the chance to zero in on her target customer. “She was really able to guide me,” Johns said. “Hiring her really did help me focus on what I needed to do to change my business and to make it to where it could be viable. She helped me to get to the point where I could stand on my own two feet. That was really important.”

TruFund also assisted Johns in redoing Natural Mixologist’s website, which, according to Johns, was “all over the place.” She participated in TruFund’s Women In Business:  An EmpowHERment Program which provides innovative financial solutions, hands-on education and business advisory services to small businesses like Natural Mixologist.  Six months after participating in the program, Johns had a more polished, cleaned-up brand. It’s that same website that Johns says is helping to drive her business’ growth and visibility: she recently acquired an account to do private labeling for a California-based company solely based on her website’s design.

“The assistance TruFund gave me helped me to realize the things I was doing wrong with my branding,” Johns said. “I was trying to do too much, and I didn’t know my customer base and I hadn’t figured out what I wanted my brand to stand for. When you’re an entrepreneur, you feel very isolated, and that no one is guiding you. You’re just doing it all by yourself, and you’re not hearing from professionals about what works and what doesn’t work. You really need that feedback. TruFund helped me to get that feedback and to focus.”

Growing Her Business, Growing Her Community

Today, thanks to TruFund’s support, Johns knows her target audience: individuals who are trying to live a healthier lifestyle for themselves and their families. Her new-found, laser-like focus has allowed her to market more effectively, and Natural Mixologist’s products are now in more than a half dozen stores around New Orleans. Interestingly, it was through discovering her target audience that Johns set a benchmark for herself — getting her products into Belladonna, the same local spa she visited growing up.

“It’s one of the best spas in the country,” Johns said. “When they accepted my products into their store, it was the most exciting day for me and my business. Entrepreneurs should have a benchmark of what they think success is. This was my benchmark. When they accepted my products, I felt like I made it. It gave me this confidence to reach out to other companies. It’s been amazing, because I’m getting the acceptance I never thought I’d be able to receive.”

Setting Even More Ambitious Goals

Johns is still riding that confidence well into 2019. Natural Mixologist will have a presence in the new Louis Armstrong New Orleans International Airport when the terminal opens this fall, and Johns has her sights set on finding a larger production facility, hiring more employees and getting her products into Sephora or Art of Beauty, national beauty chains with access to even bigger markets. “That’s my next really big benchmark,” Johns said. “I feel like because I got into Belladonna, I can get in anywhere.”

Regardless of how big Natural Mixologist grows, Johns will forever remain in New Orleans, even as she hustles to fill wholesale orders and keep up with demand. Her main storefront is near the Marigny district, right off of Saint Claude, in a very old neighborhood that’s going through a transition.

“I purposely chose this neighborhood because of that transition,” Johns said. “I want to help my community grow, and I want to do that by growing my business and by creating economic opportunity for others. We’re trying to change people’s ideas that they can build economic wealth, and that this community can sustain a business.”

Learn More

  • Natural Mixologist
  • TruFund – is a 501 (c) 3 certified Community Development Financial Institution (CDFI) headquartered in New York City with field offices in Alabama and Louisiana. TruFund tailors its financial and technical assistance to the unique needs of each site—from contractor mobilization lending in New York and Louisiana to rural Black Belt initiatives in Alabama.
  • CNote – Interested in helping create another story like Donica’s? CNote makes it easy to invest in great CDFIs like TruFund, helping you earn more while having a positive impact on businesses and communities across America.
By Borrower Stories

Meet Clara Richardson-Olguin, Entrepreneur, Philanthropist and Flooring Enthusiast

Growing up in the Dominican Republic, Clara Olguin was passionate about many things: music, dance, theatre, and justice. She even has a law degree from the Dominican Republic and a bachelor in Music Management/Voice from Georgia State. However, it wasn’t until the early 2000s that she became passionate about floors. And not just dance floors.Clara in front of CIC Floors storefront

While Clara was out promoting her annual music show Vivelo! (Live it!), Olguin met her future husband, Cesar, who worked in the flooring installation industry. “You dance salsa on good floors,” Olguin laughed. A year later, the two wed, and as the couple started to grow their family, they simultaneously decided to grow their family business, CIC Floors, which Cesar had founded in 2003.

Clara and Cesar

The Path To Growth

Five years ago, after years of primarily doing installation work, Clara and Cesar decided to open a showroom; however, several banks weren’t willing to approve their loan application. That’s when a friend referred the couple to Access to Capital for Entrepreneurs (ACE), an Atlanta-based Community Development Financial Institution (CDFI). CNote partners with CDFIs like ACE in communities across America, funding loans to small businesses and empowering local entrepreneurs like Clara and Cesar.

The Team Behind CIC Floors

ACE helped CIC obtain a small business loan to rent a small space for its showroom, and two years later, CIC received a second loan from ACE that helped triple the company’s revenues.

Although Olguin credits ACE with allowing CIC Floors to open its first showroom and to grow, it didn’t take long for the small business to outgrow the tiny warehouse space. “We were grateful for the opportunity and trust and money ACE gave us,” she said, “but the showroom was packed, and we didn’t have space to receive all of our customers. We had people waiting outside. Once one client would leave, another could come in.”

More so, as the company continued to get bigger and bigger, it also began to expand its offerings, from carpeting to tile to wallpaper. Plus, as the sustainability movement continued to gain momentum, CIC began fielding more requests for eco-friendly products, and more and more designers asked to bring customers into the store for consultations. “The store was just too small,” Olguin said. “We needed a new location.”

Building On Their Vision

Clara and Cesar found a new space on Peachtree Industrial Boulevard, in Norcross, Georgia and started developing designs for the new showroom. Once again, ACE stepped in and helped CIC Floors get the funds it needed to take its next step as a small business, and last year, CIC opened its new 6,000-square-foot location as a one-stop wall and flooring destination for customers, designers, architects and builders. In honor of their roots, the couple brought in flamenco dancers into the store to celebrate their grand re-opening.

Olguin says the new showroom is a dream come true. And business is booming. Whereas CIC Floors hit its first million right before opening the new store last year, it’s increased monthly sales from $55,000 to $91,000 since opening the new showroom. According to Olguin, it’s also attracting clients with larger budgets than at their previous store. The increased revenue is allowing Clara and Cesar to expand CIC’s team. The two are looking to add two more employees to their staff of three full-time and two part-time employees, in the near future.

“For me and my husband, creating floors and supporting our clients in their home renovations or building their new home should be a celebration,” Olguin said. “This is the place where you will dance as a couple, where your kids will play, and where your pets will lie down. Floors are the foundation of your home, and they have to be a special place.”

Given Olguin’s celebratory outlook on the products and services CIC provides, it’s not uncommon to see customers, clients and designers walking around the showroom with a glass of wine or a mimosa as they compare tiles, color palettes, and flooring options. “We have a lot to offer,” she said, “and we don’t care as much about the number of sales we get as we do being able to offer one-on-one relationships with customers. The numbers are important to us, but the relationships are more important.”

Help From A Trusted Partner

Olguin’s confidence is rooted in ACE, which provided CIC with access to both a “marketing guru” and a finance expert. ACE also helped CIC acquire multiple business certifications, including Minority Business Enterprise and Women’s Business Enterprise certifications, and the CDFI nominated CIC to be a part of The Georgia Mentor Protégé Connection and later the Goldman Sachs 10,000 Small Businesses program, from which Olguin recently graduated.

CIC’s new location

“I cannot say enough about the networking and connections ACE has made for us,” she said. “Because of them, we got into the Goldman Sachs program, and they helped us to further develop our business and to forecast our growth for the next five years. That’s why I feel so confident today. I know where I’m going. I know where we’re heading.”

Next Steps and Giving Back

Clara and Cesar’s long-term goals for CIC Floors are centered around their five-year plan, which includes supporting their clients, offering exclusive product lines, growing the business, and supporting the community. The company already donates a portion of its annual earnings to various causes, including the Jeannette Rankin Foundation, Georgia Goal Scholarship Program, Inc., and Children’s Healthcare of Atlanta. However, going forward, CIC’s owners want to explore opportunities to support the flooring installation workforce through classes and trainings, especially for non-native English speakers and refugees. “To us, being a part of our community and giving back makes sense to us,” Olguin said. “It’s who we are.”

Learn More

  • CIC Floors
  • Access to Capital for Entrepreneurs (ACE) – ACE is an SBA Microloan Intermediary, a USDA Intermediary Relender and a certified Community Development Financial Institution (CDFI).
  • CNote – Interested in helping create another story like Clara and Cesar’s? CNote makes it easy to invest in great CDFIs like ACE, helping you earn more while having a positive impact on businesses and communities across America.
By Equality, Impact Investing

What’s the Big Deal About Inequality And What Role Does the U.S. Federal Reserve Play?

Why Does Inequality Matter?

The phenomenon of increasing wealth inequality has emerged as one of the major socio-political issues of our time. Whether you turn to TV stations, newspapers, or internet blogs to keep up to date with news and current events, there’s a good chance that you have already seen the topic come up with increasing regularity.

Like other hot-button issues in contemporary political dialogue, arguments are raised regarding inequality’s root causes, the most effective policy prescriptions, and even whether it is even a problem in the first place.1 The fact that the wealth gap is indeed widening, however, is one rare point of general agreement, no matter one’s views on those other questions.

Take, for instance, the August 2017 New York Times piece by David Leonhardt titled “Our Broken Economy, in One Simple Chart.” Leonhardt leads with a chart depicting the differences in income growth between 1980 and 2014, broken down by income percentiles. While those in the lower percentiles once saw higher income growth than those in the top, the situation flipped by 2014 in dramatic fashion, resulting in the so-called “hockey stick” curve, where income growth only skyrockets well into the top decile, particularly at the 99th percentile. Additional charts throughout Leonhardt’s piece all indicate a shift in the distribution of income growth over the past several decades, ramping up significantly in the last few years.

Ray Dalio Enters the Fray

While TV pundits and newspaper columnists continued to argue over the seemingly widening inequality, a LinkedIn blog post penned by famed hedge fund manager Ray Dalio surfaced in April of this year and kicked off another explosion of press coverage.2 Dalio, the billionaire founder of Bridgewater Associates, the world’s largest hedge fund as measured by discretionary assets under management, uses the blog post to defend his thesis that “capitalism is now not working for the majority of Americans.”    

In the piece, Dalio acknowledges the productive power of capitalism, which he defines loosely as “the ability to make money, save it, and put it into capital.” At the same time, he believes capitalism has produced “self-reinforcing spirals” that in turn have created “widening income/wealth/opportunity gaps that pose existential threats to the United States.” By the end of Part 1, Dalio connects the phenomenon of widening inequality to the civil unrest and increasing ideological polarity that has led to the rise of populist political leaders worldwide as well as in the U.S.

Dalio engages with the ideas in his post from a systems engineering standpoint, placing emphasis on structural features of the economy. To that end, he slices and dices the data to produce graphs and statistics on such topics as income mobility, education, and health. While the structural reforms Dalio proposes are generally quite vague, he does more clearly spell out a series of investments he recommends focusing on. Areas that he believes have “great double bottom line investments for the country” include programs in early childhood education, microfinance, infrastructure, and public health.

Where the Fed Fits In

Although easy to miss amidst the many charts and statistical discussions of poor social outcomes and seldom discussed in mainstream media channels, Dalio regards the Federal Reserve as a key player in his “diagnosis of why capitalism is now not working well for the majority of people.”3 Recognizing that “reality works like a machine with cause/effect relationships,” Dalio states the following, emphasis added):

Central banks’ printing of money and buying of financial assets (which were necessary to deal with the 2008 debt crisis and to stimulate economic growth) drove up the prices of financial assets, which helped make people who own financial assets richer relative to those who don’t own them. When the Federal Reserve (and most other central banks) buys financial assets to put money in the economy in order to stimulate the economy, the sellers of those financial assets (who are rich enough to have financial assets) a) get richer because the financial asset prices rise and b) are more likely to buy financial assets than to buy goods and services, which makes the rich richer and flush with money and credit while the majority of people who are poor don’t get money and credit because they are less creditworthy.

Shortly thereafter, Dalio runs through a causal chain of events that he believes brought the United States economy to this point. Notably, central bank quantitative easing policy is the second entry on the list, preceding the widening inequality gap, rise of global and domestic populism, and social and military conflicts that Dalio fears will result. He largely repeats the same points as the quotation above when he states that the quantitative easing policies pursued by central banks following the debt crisis of 2008 “pushed asset prices up and pushed interest rates down,” which largely served to “benefit those with financial assets (i.e., the haves).”

Inequality and the Federal Reserve

That there is a causal relationship between central bank policy and the price of financial assets, is far from some esoteric economic theory. Even President Trump has implicitly recognized the connection between Federal Reserve policy and US stock market performance in the following tweet4:

In response to the general pressure exerted by the Trump administration, Federal Reserve Bank of Kansas City President Esther George was recently quoted saying, “Lower interest rates might fuel asset bubbles, create financial imbalances, and ultimately a recession.”5 Despite opposing President Trump’s wishes, Ms. George’s quote is perfectly consistent with the implications of his above tweet, as well as with Ray Dalio’s discussion of the consequences of central bank policy following the debt crisis of 2008.

Plenty of others are also taking notice of the apparent relationship between central bank policy and widening inequality. For instance, Twitter user Nid had this to say:6

Albert Gallo, a partner at Algebris Investments, corroborates Dalio’s central bank narrative, brief as it is, and places the brunt of the blame at the feet of central banks. In the April 26 Bloomberg article appropriately titled “Central Banks Have Broken Capitalism,” Gallo draws attention to the fact that central banks have injected “unprecedented amounts of cash into the global financial system” for a decade now, propelling stock market prices to record highs while also driving global debt to “more than three times world gross domestic product.” Meanwhile, sustained ultra-low interest rate policies have led to more leverage and risk in stock markets and increasing inequality by “giving large firms an advantage through cheap funding in bond markets.” In Gallo’s view, the unprecedented actions undertaken by central banks during the financial crisis of 2008 may have cushioned downturns until now, but only but in the process “have turned capitalism into a short-sighted game of kick-the-can.”

Meanwhile, over in the pages of the Economic Equality blog, Karen Petrou notes how prevailing economic orthodoxy assumes that extremely low interest rates promote equality by allowing more people to access debt. However, the ultra-wealthy have access to the best wealth managers and have a much better chance of beating zero or negative market returns. Low and middle-income households face a considerably more difficult situation, as quantitative easing has driven out asset classes that have traditionally provided lower but more stable returns. In addition, the connection between low interest rates and increased lending rates is also empirically dubious, as bank loans are less profitable as interest rates approach zero.7 In short, Fed policy has been great for hedge fund managers like Ray Dalio, but not for low-income households who have been largely frozen out of the loan market.

On Inflation

In his LinkedIn post, Dalio notes that real wages net inflation have not risen since the 1970s, It is curious, however, that he and many media pundits have quoted statistics to that effect without considering the other side of “real” economic variables.8 In short, changes in “real” variables over time can stem from movements in two different metrics, namely the nominal value of the variable in question and the rate of inflation. The stagnation of real wages, then, means that nominal wages have largely kept pace with inflation over the decades under observation.

To illustrate with a very simplified example, imagine that you earn $50,000 per year and the inflation rate during that time is 1%. If your salary remains the same at the start of the next year, your nominal income will still be $50,000, although your real income is now only $49,500. This is because goods and services cost 1% more than they did during the previous year, reducing your purchasing power to only 99% of what you enjoyed the year before. Of course, your salary may also rise to offset the inflation, as would be the case if you now earned $50,500. In this example with a 1% inflation rate and $50,000 base salary, it would take a pay raise greater than $500 per year to see an increase in real income.

Michael Lebowitz draws attention to the pernicious inequality-generating effects of inflation in his article “Two Percent for the One Percent.” Lebowitz draws attention to the disparate effects of the Federal Reserve’s targeted 2% annual inflation on those living paycheck-to-paycheck versus those with a portion of their wealth in financial assets.9 While those who consume most of their income and consequently invest very little struggle to maintain their standard of living, the wealthy are in a much better position to take advantage of investment products that can keep pace with inflation and benefit from financial leveraged that low interest rates make more accessible. Lebowitz concludes by pointing out how steady inflation “drives a negative feedback loop,” as those who suffer most under the inflation face an incentive to consume more in the present in expectation of future inflation.

The Cantillon Effect

Inflation can thus be considered a “silent tax” that decreases the purchasing power of wealth held in cash.10 Meanwhile, there is an additional aspect of inflation that further benefits the well-connected while leaving lower-income households to deal with the adverse consequences. To use economics jargon, money is not truly “neutral,” meaning that new injections of money into the economy do not lead to higher prices all at once. Instead, different sectors of the economy adjust to the increased money supply at different times.

This piece published by the Foundation for Economic Education explains the mechanisms of what is now referred to as the “Cantillon Effect,” named after 18th-century French economist Richard Cantillon. Cantillon posited that those who first receive newly created money can enjoy purchasing goods and services at old prices before adjustment has taken place resulting from the increase in the money supply. Instead, prices adjust gradually as the new money filters throughout the economy. In the end, those who are furthest removed from the source of the money creation are most negatively impacted by inflation, as they faced higher prices before a commensurate rise in nominal money.

So what does this mean in our economy today?

When the Federal Reserve announces any form of quantitative easing, investors expect prices to rise and seek to enter financial markets, bidding up the prices of these financial assets. Companies and individuals already holding financial assets enjoy this windfall and can in turn invest and consume at old prices using the new profits. Gradually, the new money travels through the economy, bidding up the costs of resources until prices have adjusted to the new supply of money. Wage earners face higher living costs before their incomes can rise commensurately and must demand raises over time to maintain their old purchasing power. While inflation does not affect real economic factors, in the long run, it does affect how resource prices adjust in the short run and serves to aggravate the phenomenon of widening wealth inequality.

Final Thoughts

As Ray Dalio warns in his LinkedIn post, a failure to understand why income inequality is becoming more extreme and how to change the situation could result in “a great conflict and some form of revolution that will hurt most everyone and shrink the pie.” Yet, it is still rare to hear mention of how central bank policies benefit the wealthy and well-connected while comparatively damaging the purchasing power of low-wage workers and households that rely upon savings rather than financial markets.

At CNote, we are committed to growing the pie of wealth by providing those otherwise excluded from the banking system the access to capital they need to pursue their entrepreneurial dreams and build businesses that increase prosperity for all. By investing with CNote, you can earn an annual return of 2.75%, more than keeping pace with the Federal Reserve’s stated inflation target, while making a real impact in the lives of many in underserved communities.

We hope you will consider joining us in our mission to give those struggling in our economy the tools they need to build a better life for themselves, their families, and their communities. Changing macroeconomic policy may seem too daunting, but that doesn’t mean we cannot drive change at a micro level.

By Borrower Stories

Meet Dr. Jeremy Busch, Navy Veteran, Podiatrist, and CDC Loan Recipient

Growing up, Jeremy Busch never thought about becoming a podiatrist. According to him, it was the last thing on his list. The sight of blood — in real life, in movies, or on television — made him squeamish, and besides, his passion was engineering, not healthcare.

Then September 11th happened.

In 2001, Busch was a cadet at the United States Merchant Marine Academy, just across the Long Island Sound from Ground Zero. The campus quickly became an aid station, and facilities were used to both help victims and store bodies. Lacking any kind of medical training, Busch felt helpless. As some of his peers sailed towards the fallen buildings, Busch stayed behind to set up cots and to prepare food at the academy. “I felt like there was more I could be doing to help people,” Busch said.

“I felt like there was more I could be doing to help people.”

Busch changed career paths. He signed up for an EMT course and began volunteering at a local hospital. It was too late for him to switch majors, but while he was completing his engineering coursework, he enrolled in pre-med classes. In 2005, when he graduated from the academy, he was accepted into a condensed post-baccalaureate program for medical prerequisites at the University of Pennsylvania, and in 2008, he matriculated at The Lewis Katz School of Medicine at Temple University.

While he was pursuing his medical degree, Busch remained in the Individual Ready Reserves, having already spent time as a midshipman supporting the war effort in both Iraqi Freedom and Enduring Freedom. After eight years of service with the U.S. Navy, he received an honorable discharge as a lieutenant. Even though the veteran didn’t initially know where he wanted to go in the medical field, Busch knew he wanted to have his own practice. “I had no interest in working for a hospital,” he said, “and I didn’t have any interest in working for another doctor except for obtaining the knowledge that I would need to utilize in order to start my own practice.”

In 2012, Busch became a Doctor of Podiatric Medicine and moved to Long Beach, California for his residency requirements, where he continued to seek out opportunities to prepare himself to one day build a successful practice.

Rescuing a Sinking Ship

After completing his residency, Busch got a shot at his dream: his own practice. However, taking over Total Foot & Ankle Center in Riverside, California wasn’t easy. The practice he was inheriting was an antiquated operation that needed massive TLC. By the time Busch took it over in late January of 2017, he had his work cut out for him. He was commuting an hour and a half each way and seeing between 40 to 50 patients every day.

“I had to learn how to see a ridiculous number of patients without losing the quality of care,” Busch said. “As doctors, we’re forced to see so many patients in order to be profitable. It’s sad, but it’s true. You can do it, it’s just not a skill that comes easily.”

While Busch was fine-tuning his skills as a patient-focused podiatrist, he was struggling as a business owner. “I didn’t know anything about business,” he said. “It was completely insane, the mountains of paperwork taking over a practice. There was no way of staying on top of everything. I was going to bed at midnight and waking up every single day having to run this marathon.”

Fortunately, Busch found CDC Small Business Finance, a nonprofit that partners with CNote to offer small business loan options to entrepreneurs in California, Arizona and Nevada. If it wasn’t for Busch’s CDC loan officer, Anna Marie Cruz, the former midshipman wouldn’t have been able to keep the practice afloat. According to him, he was doing everything humanly possible to ensure the survival of his practice and to meet payroll. “The CDC loan came through at a clutch time,” Busch said. “What CDC provided me was an avenue for obtaining a goal. They didn’t just throw a book at me say ‘go do it.’ They streamlined the process and answered my questions.”

“Podiatry is one of the medical practices where you can do things that have an immediate effect on people. It’s instant gratification. As long as I’m able to provide that high level of care, I’m going to expand as much as possible.”

The capital working loan from CDC gave Busch the financial runway he needed to get his feet underneath him as a business owner and to continue operations at Total Foot & Ankle Center. The capital injection helped him meet payroll, make minor improvements to the practice, and begin to scale. “It wouldn’t have been possible without that loan,” Busch said. “In the medical field, when it comes to insurance companies, it can take up to four months to get paid for services rendered. That’s frustrating, and it can be killer for sole private practitioners. Without that loan, I would have landed flat on my face.”

Stormy Clouds Behind, Calm Seas Ahead

Busch, however, didn’t land on his face. With the CDC’s help, he navigated a particularly challenging first six months. According to him, his best day as a business owner was when he was able to pay his ten employees with revenue dollars instead of loan money. “To turn around and pay my employees with a check that said ‘Total Foot & Ankle Center,’ it finally allowed me to breathe and say ‘it’s finally working,’” Busch said. “It gave me a lot of confidence.”

He’s quick to credit CDC — and his loan officer — for providing capital and business plan guidance that have ultimately kept the lights on at Total Foot & Ankle Center; however, Busch says without his upbeat, committed staff, his practice would be short on patients. “I can’t take too much credit,” Busch laughed. “My office manager hired such quality employees who turn these laborious appointments for patients into really warm and comforting interactions. My employees have the right attitude, and they make patients feel cared for.”

The word has spread: Busch says that between referrals from current patients and primary care doctors in the community, business is booming. “That’s one of the most rewarding and gratifying feelings,” he said. “I never had to go out there and promote myself.”

Today, Busch is looking to ride his early, albeit hard-fought success towards scaling his practice. He’s already opened a second office in Victorville, and he’s starting up a third location in Barstow. His goal is to ultimately grow Total Foot & Ankle Center and onboard another podiatrist who shares his values for helping people.

“That’s why I got into this,” Busch said. “Podiatry is one of the medical practices where you can do things that have an immediate effect on people. It’s instant gratification. As long as I’m able to provide that high level of care, I’m going to expand as much as possible.”

Learn More

  • Total Foot & Ankle Center
  • CDC Small Business Finance is a leading U.S. small business lender focused on helping entrepreneurs in underserved markets obtain financing.
  • CNote – Interested in helping create another story like Dr. Busch’s? CNote makes it easy to invest in great CDFIs like CDC, helping you earn more while having a positive impact on businesses and communities across America.