A Dialogue on Community Development and Impact Investing: Featuring Ron Phillips and Ellen Golden of CEI
Ron Phillips is the founding CEO of Coastal Enterprises, Inc. (CEI), the Community Development Corporation (CDC) and Community Development Financial Institution (CDFI) based in Maine. He will be stepping down from CEI in July 2016 after 38 years. Ellen Golden is the Senior Vice President for Corporate Development and Managing Director of CEI Investment Notes. She is stepping down this month after 37 years with CEI.
Together Ron and Ellen have formed a venerable team in the development of CEI, a publicly and privately funded $150 million organization – plus the largest allocatee in the U.S. of the federal New Markets Tax Credit program (over $800MM). CEI’s primary market is Maine with an increasing presence throughout rural America – now in 26 states. CEI has 85 employees and a 40 person volunteer board and advisory board.
CEI provides financing, technical support and related policy development for small, medium and micro enterprises, natural resource industries of farms, fish and forests, community facilities such as child care and health care, and affordable housing. Lately it has been investing in renewable energy projects, and revitalizing small town real estate in rural Maine. CEI (www.ceimaine.org) has cumulatively financed over 2,500 enterprises, created/sustained 30,000 jobs, counseled 46,000 fledgling businesses, created nearly 1,700 affordable housing and 5,600 child care slots.
The following is a dialogue between the Ellen and Ron, where they reflect on their commitment to the CDC/CDFI field, a field with roots in the civil rights movement of the 1960s. They also discuss how all of this relates to the rising social consciousness for impact investing today.
Ellen: Ron, why did you get involved with CEI and the community development corporation/community development financial institution (CDC/CDFI) field? You often say CEI’s roots are in the civil rights movement of the ‘60s. What does that mean?
Ron: Simply put, it means empowering people and places disenfranchised from a full life and hope. CDCs are grassroots organizations born in the ‘60s as part of President Johnson’s War on Poverty. Then Senators Jacob Javits and Robert Kennedy of New York authored legislation to fund CDCs which were piloted by the Ford Foundation.
Ellen: As I recall, CDCs were created with the promise of hope for low-income people. What does that look like in the community?
Ron: CDCs raise money to invest in low-income rural communities and urban neighborhoods. They build decent housing, revitalize commercial real estate and finance small businesses, education, and the arts. They develop community assets that create jobs and opportunities for those out of the mainstream and also nurture and affirm identity among young people. Bedford Stuyvesant Restoration Corporation in Brooklyn was the first of many to be funded, and it’s still vibrant today, investing in a holistic, targeted way to create impact. CDFIs, which emerged in the ‘90s, continue the tradition of CDCs, but with a greater focus on financing.
Ellen: How did you get involved with CDCs?
Ron: Many of us who came of age in the ‘60s wanted to make a difference in the lives of people and places at the margins of society, whether by income, race, or even place of birth! I organized CEI in 1977 but it all started earlier in NYC. I attended Union Theological Seminary and worked with church mission organizations in Harlem on a college-bound black education academy, at the United Nations on third world development, and at the National Council of Churches on corporate social responsibility. I got a lot of exposure to grassroots groups struggling for economic prosperity all over the U.S. and globally.
Ellen: And today, there are thousands of CDCs across the country, not to mention 1000 CDFIs. There is a rich 50 year history of raising capital, investing in place and affecting people and communities – you can draw a line right from civil rights to impact investing – and to CEI. But in a rural place like Maine, there had to be something to bring people together. What was the spark that led to CEI?
Ron: I was fortunate to be in the right place at the right time. A Maine state agency was planning on establishing a CDC just as I moved to Maine from NYC with my wife, who’s from Maine, and our little kids. The initial state effort wasn’t funded, but I kept it going with fishermen, farmers, bankers, churches, community groups, businesses by turning to churches, and other federal sources like Department of Labor and community action agencies for support. Foundations, churches, community groups and the government have been at this for a long time. Banks have played a role with passage of the Community Reinvestment Act in 1976. The private sector is critical as are CDC/CDFI intermediaries that bridge the gap between public and private sectors.
But what about you Ellen? You went from an adventure with women entrepreneurs to engaging wealthy individuals in impact investing!
Ellen: I too was a child of the ‘60s. I was nurtured by the social and political movements of those times. While you were at Union, I was next door at Barnard College. I too saw the power of collective action and grassroots organizing. My involvement in women’s issues and the feminization of poverty focused my attention on economic issues.
Ron: But what drew you to CEI?
Ellen: I moved to Maine in the 1970’s looking to connect with community and to address social, economic and environmental issues. I knew that economic empowerment was important for social and economic justice. CEI was place-based, building community strength and capacity, helping those at the margins and a great platform for addressing women’s economic issues.
Ron: You got involved in CEI’s early development and growth, but then shifted your focus to develop a program to help women entrepreneurs. What motivated you?
Ellen: The limitations of employment opportunities for women were clear, and business ownership offered an alternative. But, not being taken seriously made it hard for women to access flexible capital and information. My early research revealed a structural mismatch between women’s businesses and the business assistance system. Targeted resources were one way to support women’s economic empowerment. Access to capital mattered, but the right advice delivered well enhances its impact. Impact investing is not just investing in things…it’s investing in people, capacity, and information. That is what we do at CEI – over 3,500 individuals get business, first time homebuyer and foreclosure counseling every year.
Ron: Capacity building is obviously critical, but how does policy make a difference? Can it change the environment for development? Someone once said, “Capital is a necessary but insufficient ingredient in community development.”
Ellen: Yes, policy is important as a way to institutionalize values and best practices. We change policy to build resources and to prevent harm, e.g., regulating predatory mortgage lending or requiring sexual harassment training for businesses with 15 or more employees. By working on all fronts – capital, advice and policy, we have the possibility of helping at the individual, community, state, and national levels.
Ron: Don’t you think impact investors can truly be a source of support for people and communities at the margins?
Ellen: Yes, but we still have a long way to go to connect socially conscious investors with the disadvantaged populations of our society. To succeed, we need catalytic capital in the form of grants and gifts as well as investments. I hope impact investors will understand our industry and its history and help advocate for state and federal resources as well as bringing their own connections to philanthropy.
Ron: We have a range of financial products available to those who want to invest in people and communities. Loans and grants from foundations, banks and government, as well as capital contributions, mission investing from churches, venture capital, SBA guaranteed loans, tax credits, and especially now CEI Investment Notes. After 50 years, our field is sophisticated. Although national intermediaries get much of the attention (e.g., LISC, OFN, Enterprise, Impact Capital, LIIF, TRF), there are thousands of place-based development entities across the country that create opportunities for national investing.
Ellen: With our collective experience and capacity, impact investing becomes a formidable force for the CDC/CDFI industry, especially when combined with philanthropic giving. We need to advance the cause of place-based CDCs/CDFIs with impact investors as well as the fundamental importance of public-private collaboration.
Ron: Yes, and also we need to get better at explaining to impact investors that government plays an essential role in addressing the needs of low income people and communities and that there is value in working with intermediaries and grassroots organizations.
Ellen: I agree. After all, intermediaries are themselves social enterprises, guided by mission and values, and set up to channel capital to purposeful outcomes and impact.
Ron: You reminded me of a recent publication by the San Francisco Fed, What Works. It seems to me we’ve made some key points in this dialogue. We’re part of this 50-year community development history that goes back to civil rights, empowerment, and opportunity.
Ellen: You know, government resources were key to building the field. Impact investors have a role to play, but impact investing must be viewed in context and understood as a complement to other types of resources.
Ron: Absolutely. Government is important to level the playing field. Agencies like the SBA, USDA, HUD, HHS and the CDFI Fund, not to mention the major foundations like Ford and MacArthur, national religious denominations, and state and local government are essential. In bringing this dialogue to a close, I would ask you to share one of the hundreds of CEI stories to illustrate how we make a difference.
Ellen: For me it does come down to the person and place. I often think of a young single mother who started a residential cleaning business using environmentally friendly products with CEI’s help. We provided a lot of business assistance and a small loan of $6,500. It wasn’t easy but that business generated the income needed to leave welfare and the confidence to pursue a college education. It was a transformative experience for her and her family. So, what is your story?
Ron: You know that I always turn to fish. CEI’s first major investment was in a fish-processing co-op in Boothbay Harbor in 1979. A legendary 1910 fish plant burned down just after the community and fishermen purchased it to preserve the working waterfront from tourism development. Two hundred people gathered at the town office to take action. CEI showed up, rallied fishermen, local investors, a bank, and the SBA and helped rebuild a facility that was virtually the last remaining fish processing enterprise in the harbor. It is a story of local ownership, entrepreneurship, private and public capital working together create sustainable social and economic opportunity.
As long as we can engage impact investors in this important work, there is hope, don’t you agree?
Ellen: Yes.
Biographies:
Ronald L. Phillips is president and founder of Coastal Enterprises, Inc. (CEI), a nonprofit community development corporation (CDC) and community development financial institution (CDFI) based in Wiscasset, Maine. Organized in 1977 with roots in the civil rights movement, CEI’s mission is to create economically and environmentally healthy communities in which all people, especially those with low incomes, can reach their full potential. CEI has pursued this mission primarily in rural regions by creating jobs, affordable housing and social services for people and places left out of the economic mainstream. The organization seeks the “Triple Bottom Line” by applying economic, equity and environmental criteria in its investments. Supported by private foundations, individual and institutional investors, local, state and federal agencies, CEI has mobilized over $2 billion for financing and technical assistance in development of small, medium and micro businesses, natural resources industry sectors of fish, farms and forests, community facilities such as family and center-based child care, and affordable housing. In partnerships with other CDFIs and community development entities, CEI is making investments outside of Maine in northern New England, upstate New York, and other regions. Ron was selected by the James A. Johnson Fannie Mae fellowship for the class of 2002. He has served on numerous boards such as the Federal Home Loan Bank of Boston, and currently is on the national board of LISC and Rural LISC advisory board, and the Federal Reserve Bank Board of Governors Consumer Advisory Council. He is a graduate of Boston University with a B.A. in comparative literature; a M. of Divinity from Union Theological Seminary in New York; and Harvard Business School’s Advanced Management Program AMP. Contact him at- rlp@ceimaine.org
Ellen Golden is a Senior Vice President at CEI where she is Managing Director of CEI Investment Notes, Inc. (CEI Notes), a CEI affiliate that aggregates capital from accredited investors to support CEI’s triple bottom line financing programs. She has over thirty years of experience in community economic development with particular expertise in program design, management and implementation; market assessment; partnership development; and resource and policy development. Previously, she managed CEI’s Business Development Services and is the founder of the Women’s Business Center at CEI and StartSmart, a microenterprise program for new Mainers. She currently serves on the boards the Maine Association of Non-Profits and Maine Initiatives and co-Chairs the Steering Committee of the Community Investing Working Group for US SIF. She was a founder of the Association of Women’s Business Centers, MicroNet, the Maine Entrepreneurship Working Group, and the Maine Women’s Policy Center and formerly served on the following boards: the SBA Advisory Council for Maine, the Maine Women’s Lobby, Association for Enterprise Opportunity, the Maine Commission for Women, and the National Commission on Women’s Voices in the Economy. She has received advocacy awards from the SBA for her work on behalf of Women in Business, Minority-owned Businesses and Financial Services. She was recently inducted into the Maine Women’s Hall of Fame. Contact her at- efg@ceimaine.org