Good morning. I want to thank Brian Dabson for that kind introduction - I believe deeply in the power of our Program Related Investments, the Corporation for Enterprise Development being a fine example. I do so because I have absolute confidence in the leadership and good judgment of Debra Schwartz, who directs our efforts, and in the fine work of Marshall Eldred, who works closely with Debra to find good, mission-driven organizations worthy of investment. I take great pride in our PRIs and the work they support, but it is Debra and Marshall who make the program what it is.
I am delighted to join Michael Moskow in welcoming the Corporation for Enterprise Development's Local Capital Markets Investment Fund Institute to Chicago. Mike has made the Fed a force for fairness and opportunity in Chicago and beyond. Under his leadership, the Fed has set ethical norms for the development of financial instruments, guiding by example and establishing standards of conduct for what Tocqueville called the pursuit of "self-interest rightly understood" - standards that go beyond the mere minimum of legal obligation.
I also offer my congratulations on CFED's twenty-fifth anniversary. Having just celebrated MacArthur's silver anniversary, I know that this is a time to take stock of accomplishments and to generate a vision for the future. It is my privilege to be here as you do that today.
And it is a pleasure to have you in our city, where the work of community development finance is helping transform Chicago - as it is doing in communities across America.
Let me start with a concrete, local illustration. It may come as no surprise to you that Chicago's North Michigan Avenue, home to high-end stores like Marshall Field's, Saks Fifth Avenue, Ralph Lauren, and Burberry, generated the largest volume of retail sales in the city in 2001, weighing in at a hefty $1.7 billion dollars.
But would you care to hazard a guess at the second most successful area? One hint: the answer runs contrary to conventional wisdom. The place? 26th Street, in the predominately Latino, inner-city neighborhood of Little Village, bringing in almost $1 billion ($975 million). There, mortgages and small-business loans have assisted families build up their credit and helped get businesses off the ground. MacArthur is proud to be supporting organizations like Shore Bank, Neighborhood Housing Services, Illinois Facilities Fund, Chicago Community Loan Fund, and the Community Investment Corporation, all of which are investing around Little Village.
Stories like this can be told in communities around the country: evidence of the progress that can be made when multiple sectors of the economy work together for all Americans. From Chicago to Atlanta, from Baltimore to Seattle, a mix of public investment, private incentive, and non-profit partnerships are energizing markets and bringing forth local commitments, connecting some of America's poorest communities to the economic mainstream.
Little Village's 26th Street is but one example of the many pleasant surprises awaiting those who take a deeper look inside our nation's low-income neighborhoods. For decades, talk about urban and rural poverty has been dominated by the perception of decay and skepticism about the potential for development. But new research by organizations like Shore Bank's MetroEdge show a different reality: neighborhoods brimming with assets and untapped potential - buying power, land, infrastructure, people willing to work.
That more accurate portrait of urban neighborhoods, together with the real progress we can see, makes me optimistic about the future.
Fortunately, I am not alone in that feeling. There is a growing consensus across the political spectrum that the best way to pull low-income communities out of poverty is by connecting them to markets. And we have better tools than ever before to empower people to help themselves by harnessing market forces to address social problems.
We know that government has a role to play, that it can provide essential resources, tax incentives, and information. We know that private philanthropy can help build capacity, as well as provide initial capital. And in a country where business and free enterprise are the engines that fuel the economy, the private sector is an indispensable third partner with government and civil society. But there is no substitute for local initiative, local imagination, and local responsibility. That is why community development finance is so important.
Making risk capital available to local institutions and entrepreneurs has been critical to demonstrating the potential of low-income areas and to attracting other commitments. With more than $10.2 billion in assets under their management, community development financial institutions are helping meet essential financial needs for thousands of low-income Americans and strengthening neighborhoods that are often resource-poor, but talent-rich.
Early on, MacArthur recognized community development finance as an indispensable part of its larger goal of rejuvenating cities and opening opportunity for inner-city residents. Since the mid-1980s, the MacArthur Foundation has made grants and Program Related Investments of $150 million in CDFI's.
Although we work nationally, our deepest commitment is in Chicago. We have supported eight CDFIs here - the five I mentioned earlier, as well as LISC/Chicago, Accion Chicago, and the Corporation for Supportive Housing. Over the last 5 years, they have invested about $450 million in support of affordable housing, commercial real estate, community facilities, and business development projects. Their monies have, in turn, leveraged at least $1 billion in additional private and public capital to support work in under-served communities.
We can see some promising results in places where these CDFI's have invested. For example, loans provided by the Illinois Facilities Fund helped stimulate additional money for the construction of two childcare facilities in North Lawndale, serving 500 children and creating over 100 new jobs. Or the Chicago Community Loan Fund's support for capital improvements at the Industrial Council of Northwest Chicago. Improved truck-docking and other facilities will allow it to better serve small start-up businesses and industries on Chicago's North West side.
Examples are powerful, reassuring, and hopeful. But knowing what works for making capital accessible to individuals and communities - and knowing why - is crucial. Future gains in our poorest neighborhoods will be dependant on the ability of CDFIs to connect people and markets even more profoundly, and at scale. That is why we are so pleased to be supporting The Corporation for Enterprise Development's Local Capital Markets Investment Fund. The Fund recognizes the value of risk capital for leveraging other investment from public and private sources, and the importance of disciplined product development for maximizing resources and social returns.
Over 5 years, the LCMIF has invested $2 million in eleven pilot projects. Following rigorous testing at the local level, they have yielded some $15 million in additional investment to bring at least five products to scale, including one with great national potential, the "Integrating Savings and Credit Initiative," which links Individual Development Accounts to credit access: as your account grows, your ability to borrow improves.
Programs like these help individuals and communities create their own solutions and seize their own destinies. We know from years of experience that building social capital is important, but that economic development is a critical ingredient to self-sufficiency and sustainability. Community development finance must play a role if we are to unleash the human and economic potential of America's underappreciated communities. Working together - public, private, and non-profit alike - we can reach a threshold of fairness and opportunity worthy of the richest society in the history of world.