All 400 of California’s redevelopment agencies are required to close by February 1st. I sat down for an interview with Toby Lieberman, Opportunity Fund’s Affordable Housing Loan Program Director to find out what this means for affordable housing in our state.

How big of an impact is the closing of redevelopment agencies having on affordable housing in CA?
The effect will be huge overall. But the public won’t see the change fully for several years. Housing developments that are already funded or have loan documents will go forward. So there will still be projects opening up for 2-3 years – but the pipeline is contracting. This means that even when the recession lifts, we’ll be years behind.

Transparency, accountability and measuring return-on-investment are three important values that guide our work at Opportunity Fund. We know these are also important to you, our donors, investors and supporters. On January 26th, Marc Rand, Chair of Opportunity Fund's Board of Directors, and Eric Weaver, CEO, led our annual Investor Conference Call.

During this call they shared social impact results, reviewed Opportunity Fund's financial health, and discussed new partnerships and initiatives undertaken in 2011. Eric also talked about some of the challenges ahead, both for us and for the field, and laid out our goals for 2012. You can download the full presentation here.

Some highlights from 2011 and projections for 2012:

Good financial decision-making doesn’t occur in a vacuum. Neither can effective financial education. In a recent paper on the state of U.S. financial education “From Financial Literacy to Financial Action”, Barbara Kiviat and Jonathan Morduch make the connection between successful financial literacy efforts and the actual products available to consumers. Essentially, you can encourage people to live healthy financial lives, but when they live in a reality with few good options and too many bad financial products - like check cashers and pawnshops on every corner - it’s hard to make a change. It’s like learning about good nutrition and the merits of eating whole grains and broccoli, but living in a ‘food desert’ neighborhood without a grocery store and your only option is a cup-of-MSG-noodle-soup at the corner market. But even worse - it’s a cup of soup you have to keep paying back for months and months.

This may seem obvious, but it has long been a pet peeve of mine that discussions of financial literacy focus almost exclusively on the content, format and timing of the education itself, rather than on the products available in the marketplace. The authors explore three critical elements of financial products – access, design and appropriateness. Access and design focus on making sure that people can obtain and successfully use quality financial products, such as the widely touted Bank On initiatives which connect the unbanked to low-cost checking accounts. But what is really groundbreaking is their discussion of appropriateness. 

I’m thrilled to serve as Opportunity Fund’s first employee dedicated to promoting sensible public policies – here in the Bay Area and Los Angeles, as well as in Sacramento and Washington, DC. After more than 15 years providing financial products and services to underserved communities, you might ask – why is Opportunity Fund getting into policy work? And why now?

The reality is that, while Opportunity Fund has always advocated for the people we serve and programs we run, in this recession there is more need than ever to show why investing scarce public resources in microloans, microsavings, financial education and affordable housing makes sense. Equally important, we need to speak out against overly negative portrayals of the hard-working people we serve – single mothers, immigrants, young people, folks with bad credit scores. For every person making irresponsible decisions, there are many others who are working responsibly to overcome financial challenges that are, quite often, more about unequal opportunities and bad luck than bad choices. These are the stories we are in a position to share.

Here are three concrete reasons why I believe we need to advocate –frequently and loudly:
1. To expand, maintain and protect public funding for small business lending, individual development accounts (IDAs), and affordable housing. Policymakers need to understand how our clients create jobs, build assets and give back to their communities.

Last month, Opportunity Fund launched our 1,000 Jobs Challenge – a fundraising campaign which aims to raise $300,000 in 60 days to create 1,000 jobs.  Check it out here:1000jobs.opportunityfund.org. So far, we’ve raised enough to create 276 jobs. Along with the dollars they send us, donors have also submitted some fascinating comments.  Take this one: “I contributed to the 1000 Jobs Challenge because I’m tired of Congress' inaction and feel my dollars are better spent in direct aid.  I have stopped all political contributions and will re-direct money in this manner.”

I found this striking because it pretty much echoes the opinions and actions of Starbucks CEO Howard Schultz.  In August, Schultz called on others to stop making any political contributions until our political leaders work out a serious long-term budget deal that includes job creation strategies.  At the time he said, “Our economy is frozen in a cycle of fear and uncertainty. Companies are afraid to hire. Consumers are afraid to spend. Banks are afraid to lend."

New products.  New places. That’s what the past year was all about for Opportunity Fund.

Our 2011 fiscal year ended on June 30th.  During the year, Opportunity Fund launched new products to help working families, and we engaged audiences in new places in our efforts to build the domestic microfinance movement. As we close the books on another great year providing financial services to our community, here are some of the highlights of our work that your investment helped us to achieve.

New Products

In 2011, Opportunity Fund launched Start2Save, our new microsavings initiative that helps underbanked families build emergency savings.  Start2Save gives hardworking people—like Felicia, who supports her husband and grandson on a job that was cut back to 15 hours a week—a chance to build their own safety net by matching their savings in a rainy day fund.  Through Start2Save, Felicia is taking the first step toward long-term financial stability.
 

The Clinton Global Initiative America meeting, held last week in Chicago, focused on job creation in the U.S. I was inspired by President Clinton’s continued engagement on solving our nation’s problems, and just generally blown away by his command of the issues. One of Opportunity Fund’s most successful clients, Simonida Cvejic, CEO of Bay Area Medical Academy, was on the opening plenary panel, and more than held her own up on stage with Haley Barbour, Laura Tyson and other heavyweights.

Simonida is a leader in the area of workforce training; her school is an example of how to successfully move people into jobs that turn into long-term healthcare careers. While up on stage, Simonida represented not just her own institution, but carried the flag for Opportunity Fund and the U.S. microfinance movement, demonstrating the impact of a good loan, at a fair price, at the right moment for a small business that goes on to reap dividends in the community for years to come in terms of creating jobs and stimulating the local economy. Simonida embodies what a small loan in the hands of an amazing woman can accomplish.  It was humbling to sit in the audience and watch Simonida charge full force into the issues of job training and expanding economic opportunity with luminaries on this contemporary and critical issue.

Last night I went to the nationwide screening of To Catch a Dollar: Muhamad Yunus Banks on America.  The film and panel discussion that followed reminded me of what powers microfinance: people.  

Vidar Jorgenson talked about the power of group lending; Suze Orman talked about investing in people who need a chance; and Premal Shah talked about the power of the internet community.  The tool they praised is a very small sum of money. And the belief they shared is the faith in people to borrow it, lend it, grow it, earn it, and return it. 

What struck me is that Shah compared the microfinance movement to solar and wind energy, a small but high-impact tool that can change the world.  But microfinance in the U.S. isn’t about new technology or a new way of doing things- it’s about a sustainable and responsible way of doing business that is older than Kiva, Grameen, or the idea of microfinance.  It’s as old as banking. Microfinance is relationship-based banking that harkens back to an era when bankers knew their customers, their businesses, and their community. So in some ways, what’s old is new again. (And cool.)

There are no easy solutions to California’s budget problems, but some proposed fixes could wind up deepening our state’s crisis. One key element in Governor Brown’s budget proposal is the elimination of Redevelopment Agencies across the state. While there are many political and practical reasons to consolidate redevelopment work, affordable housing development would suffer tremendous losses – in terms of dollars, housing units and jobs. Redevelopment agencies are required to set aside 20% of their funds for affordable housing development. This amounts to hundreds of millions of dollars a year for the construction of affordable rental housing throughout California, making the California Dream a possibility for thousands of low-income families in our state.

Has microfinance run amuck?  Perhaps. News headlines of late have reported: suicides in India linked to over-indebtedness; SKS's record-breaking IPO profits; and, most recently, the potential sacking of Professor Mohammed Yunus from the very Grameen Bank which he founded thirty-plus years ago.

A thoughtful conversation
Yet through these headlines, a thoughtful conversation is finally starting to take shape. Gone is the notion that microfinance is a "magic bullet." And the public has begun to learn that "microfinance" is far more than small loans to help women buy sewing machines. Leading voices have provided thoughtful commentary, including Felix Salmon, David Roodman, Elisabeth Rhyne, and Jonathan Lewis.