Meet Federal Paralysis With Local Collaboration

V.2, N.65

Whatever you think of the Trump Administration’s efforts to shrink the federal government—personally, I believe they are foolishly prioritizing damaging public institutions rather than making them more cost-effective—we can all agree that the federal government is essentially closed for business over the next four years. A few community-building programs may survive the onslaught of cuts, layoffs, and lawsuits, but smart communities will look for solutions from the private sector, supplemented by small doses of state government funding and philanthropy. Our first two articles highlight the importance of seeding local innovation with collaboration across communities.

The Boston Impact Initiative released a report on 15 funds whose purpose is “to deliver economic, social, and ecological benefits to the communities they serve, not to maximize financial returns for investors.” Collectively, these funds have put $15 million into 85+ firms, primarily those owned by people of color, women, or both. One reason for these funds’ success is that the Boston Impact Initiative (BII) has organized four cohorts so fund managers can learn together and support one another.

(An aside: The report’s further assertion that these funds cannot possibly operate without philanthropy seems premature. The right balance between maximizing social impact and choosing the right rate of return for investors remains a work in progress in the expanding universe of community funds. BII’s conclusion is also parochial. The Boston Impact Initiative, it needs to be said, was founded by deep-pocket philanthropists who generously put millions into the project. Other, less lucky communities may just need to pay slightly higher returns to make their funds work.)

Collaboration is also a key recommendation of Mark Pinsky, one of the pioneers in the movement to expand community development financial institutions (CDFIs). Thanks to support from the US government, CDFI assets have grown 615% over the last decade. That, of course, may screech to a halt—which is why Pinsky encourages the creation of CDFI Friendly hubs that can help others spread CDFIs in regions with more efficient use of scarce funds.

You’ll also find in this issue of The Main Street Journal articles on the following:

• How Los Angeles CDFIs are stepping up to provide disaster assistance to the tens of thousands of people displaced by the wildfires in Pacific Palisades and Altadena.

• How Mixed-Income Neighborhood Trust (MINT) models in Denver, Kansas City, Tulsa, Boston, and Fresno spread affordable housing by having market-rate homes cross-subsidize below-market homes. (Another strategy that, by the way, contradicts the assertion that philanthropy is essential for meeting the needs of distressed communities.)

• How the Connecticut Baby Bonds Program now invests in more than 15K low-income babies each year to make available to them, as adults, funds of $11-24K for college or a first-time home purchase.

• How an independent grocery store in Honor, a tiny town in northern Michigan with 330 residents, struggles to stay alive and find a new generation of owners.

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The National Coalition for Community Capital (NC3) is dedicated to educating, advocating, and activating community capital—and serves as MSJ's fiscal sponsor. Thank you for being a part of a growing movement! Contact NC3 for support integrating local investing in your work: info@nc3now.org.

NC3 UPDATES AND ANNOUNCEMENTS

• Changing the Paradigm: Mobilizing Community Investment Funds - Community investment funds are the structures NC3 is building in communities across the nation to facilitate inclusive economies. Join us on March 7 in East Lansing, MI, to hear the insights from communities we're working in and to meet experts on a fund for your community. Register here today!

• Coalition Conversations - Tune into our first 2025 monthly conversation with leaders in the field. NC3's CEO, Chris Miller, speaks with Sydney Davis, NC3's Economic Recovery Corps Fellow. An experienced serial entrepreneur, Sydney brings her innovative and tech knowledge to the world of community capital. The Coalition Conversation will be posted to NC3's LinkedIn, Facebook, and Instagram next Tuesday at 2 pm ET.