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Community development banker honored

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By Ret Boney

As a banker in Chicago amid the riots of the late 1960s, Ron Grzywinski witnessed discrimination against African Americans in his hometown of Chicago.

“I had an awakening, a first-hand experience seeing how low-income people were being ripped off by merchants,” he says.  “I felt I ought to be able to do something about that.”

In the four decades since, he co-founded and built ShoreBank Corp., a $1.7 billion-asset bank that has invested more than $2 billion in communities and boasts a triple bottom line of financial performance, community development and environmental impact.

He was recognized for that work when he received the John W. Gardner Leadership Award from Independent Sector, a Washington, D.C.-based network of nonprofits, at its 25th anniversary conference in October.

“I want to believe that this is a recognition of how much our two worlds are learning from each other,” Grzywinski said in accepting his award.  “My entire career has been devoted to the idea that a business has an obligation not only to shareholders and customers, but to its communities and to society at large.”

He added that he would use the $10,000 accompanying the award to create a scholarship fund for the children of the bank’s 500 employees, more than seven in 10 of whom are African-American.

Born and raised in Chicago’s southeast side, Grzywinski pulled together a group to purchase Chicago’s Hyde Park Bank in the late 1960s.

Ron Grzywinski

Job: Chairman and CEO, ShoreBank Corp., Chicago

Education: B.S., English, minor in history, Loyola University

Born: 1936, Chicago

Family: Wife, three children

Hobbies: Flower and vegetable gardening; garden featured in March issue of Chicagoland Gardening magazine

Inspiration: ShoreBank co-founders Milton Davis, James Fletcher and Mary Houghton

Shortly after the purchase, Illinois Treasurer Adlai Stevenson III offered the bank a $1 million market-rate deposit and required that the money be used to make loans to low-income people, an opportunity that jump-started the Grzywinski’s quest.

He began lending to African Americans and other minorities, who often categorically were denied loans from traditional banks based on their race or where they lived, and discovered there not only was a market, but that the loans performed well.

The group began a concerted effort to raise mission-based deposit accounts, and with a few more large deposits, including another from Stevenson and one from Sears Roebuck, Grzywinski was able to boost the bank’s earnings and expand the program to serve more people in need, all while paying market rates to depositors.

Working with three of his early hires — a woman interested in community development and two African-American men involved in civil rights work — Grzywinski was ready to expand the scope of the effort.

“We began thinking about how we might take that experience and combine it with our banking experience into something that might have a bigger impact,” he says.

In 1973, the foursome bought South Shore Bank, which later became ShoreBank, and whose previous owners had failed in their attempts to move the bank out of the south Chicago neighborhood that was becoming increasingly African-American and low-income.

With the goal of improving inner-city neighborhoods, the group wondered if it could use the power of the marketplace to achieve social good, Grzywinski says.

“It is possible to do well – that is, to operate a profitable, self-sustaining business – while at the same time building stronger communities and creating a healthier environment,” he told the gathering at Independent Sector.

Along the way, the bank has invested more than $2 billion in communities, an investment Grzywinski estimates has created more than 10,000 new jobs for community residents and financed the purchase or renovation of almost 50,000 affordable-housing residences.

In addition to banking, the corporation now includes the nonprofit Center for Financial Services Innovation, which provides financial education around serving the under-banked, and the Nonprofit Financial Center, which serves the specific banking needs of foundations.

And over the past three decades, the bank has moved beyond its Chicago neighborhood to cities such as Detroit and Cleveland, and to the West Coast with operations in Washington and Oregon that are blazing a trail in environmental-development lending.

It has also become part of the global community, working first with the Grameen Bank in Bangladesh on its micro-lending efforts, and later training more than 1,000 bankers in Eastern Europe and creating a subsidiary that has raised more than $28 million for local community banks overseas.

In his acceptance speech, Grzywinski noted he was the first private-sector representative to receive the Gardner award, and challenged attendees to help the various sectors of society to work together in addressing the nation’s social problems.

Specifically, he urged foundations to “think of your resources more as social investment capital and less as a source for charitable giving,” and suggested program-related investments, which are loans rather than grants, as a way to do that.

“We must find a way to create liquidity for socially-minded equity investment,” he says.  “The result would be to unleash the latent power of private investment for public purposes.”

“The most effective way to address society’s problems does not come from a single source or the efforts of a single sector working alone,” he told the group. “It will come through the efforts to many sources and many sectors, working together.”

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