Self-Help turns 25: Part 2

Editor’s note: This is the second in a series of stories marking the 25th anniversary of Self-Help.

By Ret Boney

DURHAM, N.C. – Twenty-five years ago, when Martin Eakes created the Self-Help community-development bank to take on poverty, his goal was to close the wealth gap between minority families and white families.

He started that crusade by looking for ways to fuel growth in small businesses, the sector that provides jobs for many of the disadvantaged people he hoped to help.

To do that, Self-Help in 1984 launched its commercial lending business, which has since made 2,302 loans totaling $245 million, resulting in almost 19,000 jobs for Eakes’ target population.

Those loans range in size from less than $1,000 to several million, and have funded a variety of businesses, including hotels, brick masonries, restaurants, beauty salons and child-care facilities, the businesses that make up the backbone of communities and provide critical jobs.

In the late 1980’s, Self-Help started its Community Facilities Fund, designed to bolster the nonprofits and human services providers that are the foundation for communities, and since has provided $89 million in loans to more than 500 groups, creating or maintaining more than 6,100 jobs.

That includes loans for supportive housing for the disabled, health clinics, charter schools, churches, arts groups and day cares for children and adults, small organizations that are often cut off from traditional loan sources.

“We saw child-care providers coming to us because they couldn’t get financing from banks,” says Laura Benedict, vice president and co-team leader for commercial lending at Self-Help.  “Perhaps because they’re largely women and minority owned.”

By providing funding for child-care centers, 348 loans totaling $25.5 million, along with significant technical assistance for the owners and oversight of the operations to ensure quality, Self-Help has helped create or maintain more than 22,000 child-care slots throughout North Carolina, most of them in rural communities.

Charter schools are a recent focus for the group, says Benedict, and an area in which it has developed some expertise.

Quasi-public independent institutions, charter schools receive the same per-student allotment as their public counterparts, but get no state or county money for buildings, creating a significant gap in funding that Self-Help is trying to fill.

In its six years of funding charter schools, the group has made 39 loans totaling almost $41 million, creating or maintaining almost 13,000 new student slots at the schools.

Self-Help is now taking that experience across state borders and has made three loans to date to charter schools outside North Carolina using a grant from the U.S. Department of Education that creates a loss reserve, making it easier for Self-Help to decide to make a loan.

Much of the lending to charters is possible because of the New Markets Tax Credit, Benedict says, a program that provides tax breaks to people who invest in low-income areas, a program Self-Help fought to make available to nonprofits.

That tax-credit program also helped the bank make its largest single loan to date, as part of an effort to revitalize downtown Durham.

That $40 million loan, which is being used to renovate four of seven dilapidated buildings that make up the American Tobacco Warehouse in Durham, will provide office space for nonprofits and businesses, and Benedict estimates about 1,850 new jobs will be created in the downtown area.

All the space has been leased and is now home to tenants like Compuware, WUNC Radio, YMCA of the Triangle and ad agency McKinney.

(The American Tobacco property is owned by the A.J. Fletcher Foundation, which publishes the Philanthropy Journal.)

Self-Help is working to revitalize residential areas as well and, in 1997, bought 30 rental homes in the traditionally African-American neighborhood of Walltown, which had become dilapidated rental housing for low-income people.

Self-Help converted those properties to single-family units in an effort to increase home ownership and breathe life back into the neighborhood.

To date, it has bought a total of 79 units and sold 59 of them, and plans to buy another 30 properties in other neighborhoods throughout the city.

And by coupling the homes it builds with housing tax credits and city and state programs for second and third mortgages, low-income people are able to become homeowners with little or no money down and lower monthly payments.

Making that home ownership possible, and helping community businesses grow, thrive and employ, are all part of the wealth-building equation and critical to ending the cycle of poverty.

“Family wealth enables long-term choices,” he says.  “Annual income enables short-term choices.”

Other stories in the series:

Part 1: Durham community development bank works to narrow wealth gap. 
Part 3: Increasing home ownership, the narrow pathway to the middle class.
Part 4: Protecting hard-earned wealth as important as creating it.

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