OF COMMUNITY INVESTING
Speech By Connie Evans of the Women's Self-Employment Project
September 10, 2001
SRI in the Rockies Conference; Tucson, AZ
I am delighted to be here at this important Social Investment
Forum Conference. I want to thank my friend, Jean Pogge, for
that generous introduction, for her leadership, for her many
contributions not only to our home, Chicago, but to the broader
national financial and investment community as well. I want
to also extend my thanks to the Social Investment Forum and
the Community Investment Steering Committee, and to all of you,
investors, professionals and leaders in Socially Responsible
Investment from around the country.
I am deeply honored to have the privilege of addressing the
social investment industry's conference, and I am very pleased
to be a part of this very important Community Investment plenary
and the 1 percent campaign.
I want to use my time with you to ask you a question and to
give you a challenge. First, the question: How far are you willing
to go to change the world? That's a nice bold, embarrassing,
corny, direct question. How far are you willing to go to change
We all understand what's at stake. We all share the same planet
and that planet is changing in fast and frightening ways. Just
look at globalization. While there is raging debate about the
nature and impact of globalization, there are some essential
truths about the way it is transforming life in the 21st century.
Globalization brings opportunities and risks, thus creating
winners and losers. There is grave concern that globalization
may concentrate losses among the poorer groups and gains among
the richer groups.
Another truth about globalization is that while its benefits
may be unevenly distributed, its cost are borne by all.
Globalization while not a new phenomenon has unique characteristics
defined by technological advances achieved in the past 25 years.
The engines of globalization include the increased mobility
of capital and the steadily declining costs of transportation,
computing and communications.
Globalization is fueled, as well, by the dismantling of barriers
to trade and investments and the belief that economic growth
is the main lever to reduce poverty today.
The proposition that economic growth is key to poverty elimination
and well-being has generated widespread debate in the international
development community. Proponents see globalization as providing
a new connectivity among economic actors and activities around
the world, stimulating accelerated diffusion of technology,
skills and new economic opportunities for countries and individuals
The essence of the argument is as follows: Economic growth is
the best way to overcome poverty. In the context of globalization,
market liberalization is the best way to achieve growth. Countries
that have seized the opportunity offered by more open world
markets to increase export and attract investments and capital
have made the greatest strides in reducing poverty. Governments
could help by investing in education, healthcare and both physical
and social infrastructure.
This thinking has been very influential. It has not only shaped
the World Bank's loan conditions, but also International Monetary
Fund's policy advice and many World Trade Organization agreements.
But globalization is only one of the headlines, shall I recite
some of the others.
One in six children in the United States, 12.1 million still
live in poverty. In fact, children are more likely to be poor
today in this time of unprecedented wealth than they were 20
or 30 years ago. The overall poverty rate in 1999 was almost
three percent higher than in 1969. Nearly 11 million children
are without health insurance, 90 percent of whom have working
parents. These are not acts of God; they are our moral and political
choices as men and women, citizens and leaders.
A post welfare report produced by the Children's Defense Fund
Further, the Economic Policy Institute released a report recently
that found families need an income of at least twice the federal
poverty line in order to make ends meet. The next time you are
sitting in a dull meeting, instead of doodling, figure out how
a family of four lives off of $16,000 a year.
- More than half of a 2000-strong sample of parents seeking
services, who had left welfare since 1996 did so for a job,
but one-third no longer had a job;
- Lack of childcare was the reason most often reported for
- Nearly 60 percent of those who were working had family weekly
wages below the poverty line, and
- More than half of the employed parents had been unable to
pay the rent, buy food, afford medical care, or had their
telephones or electric service cut off.
Another headline, the DOW has broken 11,000 but a lot of Americans
are just plain broke. They have nothing to tide them over in case
of a health crisis or unemployment, much less save for college
or retirement. Nearly one out of five households has zero or negative
net worth. One in three African American children live in households
with zero or negative net worth.
The study, Economic Apartheid in America contrasts the skyrocketing
salaries of chief executives and billionaires at the top with
the growing ranks of the poor, uninsured and homeless at the bottom.
It says the media paints a rosy image of a country enjoying one
of its most prosperous eras, far removed from the reality of many
US residents. The report notes how the economic boom of the 1990s
happened alongside the decline in organized labor and civic institutions,
the battle over global trade and growing inequalities in income.
It points out that the United States is the only industrialized
nation that views health care as a privilege, not a basic human
right. Some 44 million US citizens do not have health insurance
and that was while the unemployment rate declined. As unemployment
continues to climb so will this number.
A recent survey of leading urban historians, planners and architects
for the Fannie Mae Foundation has identified "growing disparities
of wealth" as the single most important influence that will shape
American metropolitan areas over the next 50 years. Other studies
show that everything from education to health is affected by inequality
and disparities. For example, Yale sociologist Dalton Conley has
shown in his new book, Being Black: Living in the Red, if test
scores of black students are compared to the scores of white students
with the same family wealth, the achievement gap between black
and white students disappears.
Studies that have compared nations, states within the United States,
and metropolitan areas within the United States have all concluded
that mortality rises with inequality, affecting rich as well as
poor and middle class. A report in the American Journal of Public
Health concluded: "Given the mortality burden associated with
inequality, business, private and public sector initiatives to
reduce economic inequalities should be a high priority."
In recent years the western world has witnessed a revival of activism
much of it directed at the free trade organizations and specifically
at their gatherings, such as those of the WTO, the International
Monetary Fund, the World Bank, the Group of 8 and the European
Union. I believe we can point to the WTO protests in Seattle and
this year's anti-World Bank and IMF protests as watersheds for
a growing movement against the contradictions of global capitalism.
Demonstrators demanded that powerful economic actors become accountable
to democratic forces, that the processes which are generating
inequality and environmental degradation be stopped and that we
revisit basic questions about the purpose of economic activity.
The question was raised: "Is the economy to serve the people who
make it up, or is their labor for the sake of lining the pockets
of the rich and powerful?"
We've heard much about the need to mange the planet, the environment.
Manage the environment? As far as I can tell, the environment
did fine when it was left alone. What needs managing is us—people.
We have advanced at a dizzying, careening pace in our ability
to manipulate matter; we have leapt forward in our ability to
generate information; we have multiplied explosively our ability
to exploit nature, but not our ability to manage ourselves.
Perhaps it is our destiny to live life forward and understand
it backward. And today we are living on fast forward.
Let's review some facts about our fast forward period of history.
Our world population growth is still increasing. Global carbon
emissions are also on the rise.
We have been riding a rocket called straight line growth. In the
biological world, let's remember, unchecked growth is usually
pathology—cancer. But in the economic world, at least up
until now, unchecked growth is considered health, wealth and truth.
During the 1990s, it was Ivan Boesky, I believed who said, "growth
is good". I think we have come to re-understand health and wealth.
Our task, yours and mine, is to bend the lines of these facts.
We have to bend the population curve downward. One way is to do
nothing and pretend that famine, disease and war do it for us.
It won't of course. The other way is to assist communities in
improving health and living standards without injuring the environment.
We have to bend the lines on global carbon emissions. The one
and only way to do that is to reach multilateral accord on how
much carbon dioxide we will emit into the atmosphere.
We have to reverse the direction of the flow of goods and capital.
Bend the lines by converting to economic arrangements that close
the widening gap between rich and poor, North and South, and do
it on a global scale.
It is important to remember that there isn't just up and down
in these imaginary lines. There's equity and inequity in these
lines. There's survival or disaster. There's breathing room or
the big squeeze.
Shall we be inpatient? Absolutely. We had better be. We have to
begin to change things right now. We can begin today.
We can start to do it precisely because, paradoxically, because,
we are not representative of the world's 6 billion people. Everyone
in this room today is fortunate to a degree unimaginable to the
people outside our small circle. We are not the commoners of the
We are fortunate in our education, or economic self-sufficiency,
our physical ease. We have bigger bank accounts, more frequent
flier miles, more and better vacations than most people. Our hands
speak of our privilege. They are smooth and clean. The rest of
the world's hands are soiled, bent, scarred, swollen, missing
a finger or two.
But our greatest good fortune is our ability to choose. We are
Masters of Choice. Listen to the words we use: options, trade-offs,
scenarios, strategies, social venture. Listen to the words the
rest of the world still uses: hunger, sickness, sacrifice, communal
Where do we begin?
We begin with the concrete. I heard Peter Goldmark, former President
of the Rockefeller Foundation tell a story once about becoming
concrete to address global problems. It went something like this.
Conrad Hilton, who built the hotel empire, was on the Johnny Carson
show one night. Johnny Carson said, "Mr. Hilton, all America is
watching. This is your chance to tell them the secret of putting
together a great hotel chain." Conrad Hilton leaned into the camera—Peter
says you could hear all of America leaning toward their sets…
Mr. Hilton said: "Put the shower curtain inside the bathtub."
That's simple but concrete.
To make change, we have to focus on the concrete.
Gandhi asked us to adopt this simple rule as a guide to our action.
He said: Think about the face of the poorest and the weakest man
whom you may have seen and ask yourself if the step you contemplate
is going to be of any use to him. Will he gain anything by it?
Will it restore him to a control over his own life and destiny?
Those of us in this room today are uniquely positioned to answer
that question in the affirmative. If we are inclined to do so.
As professionals who educate, inform and manage the $2 trillion
plus of socially responsible invested assets, you can help your
clients make a big difference with their money. As investors in
the room, no longer satisfied with just having your portfolios
socially screened, you can maximize the impact of your dollars.
You can do it by embracing the One Percent Campaign. It is a strategy
that calls on all investors to allocate at least one percent of
their portfolios to community investments. It is simple. It is
concrete. It is action.
Community investing can play a key role in reversing the trends
I mentioned earlier, both nationally and internationally, in helping
poor communities create greater economic prosperity and allowing
low-income communities and their residents to gain greater control
over their economic situation and lives. As you have heard, such
a move to invest one percent of socially responsible invested
assets will effectively triple the real dollars available to finance
work in under-invested communities and with lower-income families.
It will create a permanent tier of capital to serve underserved
Let's be clear on what we are talking about here. We are talking
about shifting money. Shifting money. Shifting money. We all know
that socially responsible investing represents the cutting edge
of the investment industry. But it too has convention. We are
now talking about shifting money from the conventional socially
responsible investments to investments that reach down to low-income
communities and change the lives of the individuals who reside
We rallied, we cheered, we celebrated the great triumphs of the
investment industry when its socially responsible screens led
to issues like apartheid. But that was only "a" or part one. There
must be a complimentary "b" or part two. Part two or "b" is community
investing. Community investing is an integral part of socially
responsible investment. A socially responsible investment without
an allocation to community investing is simply shortsighted.
Let me illustrate. I just returned from South Africa. Literally,
I got off a plane on Saturday and back on a plane last night to
join you today. It was my fourth time in South Africa, with my
first visit occurring in 1990 during apartheid.
Back then my loose-leaf visa classified me as white in order for
me to move around the country freely with my white colleagues
from the Mott Foundation during that foundation-sponsored mission.
Yes, I am very happy that the legal system of apartheid is over
But my heart ached as much on this trip as it did on the first.
First, I had to listen to white South Africans tell me how much
better off everyone was under apartheid. My favorites were the
taxi drivers. Once they found out I was there for the World Conference
Against Racism, they would launch into a spiel on how absurd it
was to talk about racism. How South Africa was better off under
apartheid; the hospitals, schools, employment… you name
it… life for all, especially the blacks was better under
But that didn't bring the heartache. I expected such attitudes.
My heart ached when black South Africans told me the same thing.
Of course, not all blacks believe such, but do you realize how
desperate their lives must be in order for them to say such a
thing. The fact of the matter is poverty has increased in South
Africa over the past few years. There was a transfer of government
power, but not a transfer of wealth. There has been no redistribution
And as the country moves swiftly to privatize its industries,
employee wages, benefits and their very livelihoods are feeling
threatened resulting in long labor strikes and unrest.
Again, the social investment screens on issues of apartheid were
fine, but incomplete. We need to shift money. We need to raise
the investment dollars so communities and their people can use
capital to create jobs and start enterprises.
I quote Norm Chomsky, "Freedom without opportunity is a devil's
gift, and the refusal to provide such opportunities is criminal."
I ask you to go back to the video and the borrowers in South Africa.
They were able to create jobs and opportunities for individuals
in their communities with a loan from what we would call a community
development financial institution. There are tens of stories like
that in South Africa, their needs to be tens of thousands.
We certainly do not have to travel half way across the world to
find the devil's gift, that is, freedom without opportunity. It
is right here in our back yards, in our own small towns, in our
rural towns and communities and major urban centers.
I have been pleased that community investing has made it possible
for me to place new economic opportunities for low-income individuals
and communities on the front burner. As one of the oldest and
largest microenterprise development organizations serving low-income
women, the Women's Self-Employment Project has harnessed the power
of community investing.
Since its inception in 1986, while pioneering micro credit in
the United States, WSEP has successfully supported the efforts
of low-income women to increase their economic self-sufficiency,
leave welfare, create new options for their families, demonstrate
credit worthiness and launch their own businesses. With the mission
to increase the economic self-sufficiency of low-and moderate-income
women through self-employment and asset development, WSEP developed
one of the first matched savings programs in the country and pioneered
Individual Development Accounts, one of the most innovative asset
building tools created.
Serving about 1,000 customers each year, WSEP has distributed
millions of dollars for business start-up and development, facilitated
the creation and retention of nearly 2,000 jobs, created nearly
1,000 savers, and facilitated policy changes in Illinois governing
welfare recipient's access to assets and self-employment opportunities.
Microenterprise programs are among the most studied of development
strategies in the United States. The Self-Employment Learning
Project (SELP) of the Aspen Institute conducted a multi-year study
of seven leading microenterprise organizations. WSEP's borrowers
represented the largest sample of the 405 individuals tracked.
Just listen to what low-income women are able to accomplish when
given the opportunity, given the capital.
Those were all asset-building results, when we look at straight
building results, we find that 79% of the businesses were still
in operation at the fifth year; 59% reported increases in net
earnings; 41% increased profits between years one and three. And
30 percent of the businesses created at least one paid additional
- 72% reported increases in household assets, 23% reported
$10,000 or more increase
- 62% reported increases in household net worth, 35% reported
$10,000 or more increase
- 47% had an increase in business assets
- 34% reported an increase in business net worth
The WSEP microenterprise loan fund relies, in part, on loans and
investments from individuals and institutions who are looking
to see their money contribute to the economic lives of people
who support their families and strengthen their communities and
build our country into the kind of nation we want in this new
century. Indeed, it is now a commonplace observance that often
the greatest contributions, economic contributions, in our communities
come from the smallest businesses in the aggregate. They literally
can transform communities, offering a path to success for women
and others who would otherwise not have had it.
If we can spread the opportunity for microenterprise, for making
that first beginning across the country, we can offer a new path
to success for people who today are left out of the economic mainstream.
In rural America it may be a person who once worked on a family
farm. In urban areas it may be a parent who can't juggle an office
or plant job with a family, or who's been left out of the workforce
for childbearing, or who is struggling to move from welfare to
work. It might be older individuals who are retired from their
previous jobs. It might be people with disabilities who aren't
mobile, but who have a skill, an idea, a capacity to contribute.
It might be laid-off workers looking for a second chance.
There are huge numbers of people in our country, as all of you
know, who are literally brimming with initiative and desire who
are willing to be responsible and work hard. Microenterprise helps
to put such people on their feet and gives people with courage
and genius a chance to reach for the stars. To do that, they must
Micro credit is a great entry ramp to the development finance
community. One of our borrowers, Shelia, was never able to qualify
for a bank loan to finance her beauty supply store for lack of
good credit and collateral. After paying back a series of progressingly
larger loans to WSEP, she eventually moved up to secure a much
larger loan from a community development bank, the South Shore
Bank in Chicago. Benita is another WSEP customer who used self-employment
to leave welfare more than six years ago. She borrowed $1500 to
start a childcare business.
Her second WSEP loan allowed her to move the childcare business
from a day care home to a facility. Benita enrolled in the first
IDA program offered in 1995 by WSEP and used her asset account
for home ownership. Last year, Benita used her house for collateral
to purchase another building for her second childcare facility.
Benita is using micro loan funds, community development banks
and community development loan funds to build a better future
for not only herself and her family, but indeed for the greater
Here lies the beauty of the community investment field. It offers
not only an entry ramp, which indeed is important for low-income
individuals, but a whole growing highway of financing options
that deliver small businesses, jobs, affordable housing and community
These community investing opportunities run the full risk/return
spectrum, from insured depository institutions like community
development banks and community development credit unions to uninsured
high impact community development loan funds, and micro enterprise
funds, to community development venture capital.
It is a field that includes international funds, national funds
and local funds. It is a field that includes $1million institutions
and $1 billion institutions. Regardless of the size and nature
of the community development financial institution, they have
the following characteristics in common:
First, they all serve as an efficient intermediary for investor
capital, connecting low- income people and communities to the
mainstream economy. These institutions in the community investment
field are committed to spending the time, energy, and care necessary
to structure responsible financing options that match the local
needs of the communities.
Second, community development financial institutions are innovators,
R&D laboratories dedicated to the democratization of credit.
Not only do the institutions in the community investment field
devise sound programs, but programs that will strengthen both
their bottom lines and the communities they serve.
These institutions continue to develop and provide loans and other
financial services to under-served neighborhoods that bankers
have not yet figured out how to serve.
The third characteristic is the timeless power of a vision. Community
Investment institutions have created low-risk ways of extending
credit to tiny businesses owned by individuals who were not previously
served at all by the financial system. They are proving before
our eyes that credit can be extended well beyond what our current
skeptics deem feasible.
Make no mistake, community investment is real business. Of a total
of $2.16 trillion of assets under the management of socially responsible
investments, 5.4 billion represent community investment dollars.
In exchange for accepting a more modest return than some conventional
investments, investors are able to make a clear and direct impact
on the lives of economically disadvantaged people. Investors do
not need to direct a large portion of their individual portfolios
to realize this impact.
If just one percent of the total mange assets involved in socially
responsible investments were targeted to community investing,
it would triple the total dollars directed towards low-income
communities, an increase from $5 billion to $15 billion. The impact
of those dollars, in terms of lives changed and communities revitalized
would be unprecedented.
Most of you know the story of the Grameen Bank. You know about
how Professor Muhammad Yunus, an economist in Bangladesh began
handing out loans to the landless, people at the bottom of society,
the poorest of the poor. How he loan money without taking traditional
forms of collateral. How he made loans to the women of Bangladesh.
You may also know how the Grameen Bank has grown. The last figures
I have are that they have disbursed more than $3.3 billion cumulatively
to 2.3 million members. Its default rate is still about 2 percent.
Do the numbers tell the whole story? Not quite.
I have been in Bangladesh now with the Grameen Bank on about five
different occasions. I still say that the numbers only tell part
of the story. When you are there, you see that what it really
is, is subversion.
Here's what being subverted:
The belief that poor people are helpless people.
The belief that women are the most helpless of all.
The belief that poor landless people are terrible credit risks.
The belief that poor people cannot cooperate, cannot plan ahead,
cannot decide for themselves, cannot manage or service a loan.
The belief that the best form of economic development is aid for
massive, centralized projects undertaken by the state.
The belief that you build the economy by destroying the earth.
The Grameen Bank is not built on transactions. It is based on
commitment. It deals in something more than contracts. It builds
on a compact. And business sense.
It is the only bank in the world with its own birth control policy.
Its members make this pledge: We shall plan to keep out families
It is the only bank in the world with its own marriage policy.
Its members make this pledge: We shall keep the center free from
the curse of dowry. We shall not practice child marriage.
It is the only bank in the world with its own sanitation policy.
Its members make this pledge: We shall build and use pit-latrines.
Do you begin to see how much can be accomplished if we choose
to look at the world in different ways and organized according
to new principles?
Now some of you may be asking yourself, how can she stand there
and ask me to urge my clients, assist my clients move an allocation
of their assets to community investing when they're worried about
this downturn in the markets; they are worried about their returns
which they see dwindling.
Well, let's talk about returns. First, the gap isn't what it used
to be. The news is full this morning about Lucent stock. If your
clients have Lucent and a lot of others just like them, they would
be glad to have you talk about their returns through community
investing. You can talk to them about the leveraged value of financial
and social capital.
You remember that $15 billion that you raised when you moved the
1 percent of the socially responsible assets to community investing.
The return could be 4 million jobs. And that is just using a simple
micro loan. I told you, the video told you that a business can
be started with a $5,000 loan. That creates one job. You now have
created 3 million jobs.
If you just take our experience and assume that 30 percent of
those businesses create at least one additional job, that is another
900,000 jobs for a total of 3.9 or nearly 4 million jobs.
I just did the calculations on returns based on jobs and micro
loans; you can do the same with the number of new affordable housing
units, the number of day care added to communities. And you still
earn the financial return that you expected. As the newspapers
now debate whether its time for investors to throw in the towel.
We can offer people hope. We can offer people job creation instead
of thousands of jobs loss.
I started by asking: How far are you willing to go to change the
world. Well, are you willing to be subversive? Are you willing
to shift the money? How far are you willing to go to change the
If by chance I have not convinced you that risk and returns are
not real barriers, there are many people in the audience who can
assure you of such based on their own portfolios.
If I have not yet convinced you that the opportunity for maximizing
impact on the lives of human beings and restoring dignity to poor
individuals is more valuable than any commission fee you will
ever receive, come to Chicago. We are fortunate to have at least
one institution of each type of community development financial
institution. Talk to our customers, talk to our investors.
If I have not yet convinced you that we have great innovators
in the community investment field that will eventually create
new technology to further automate and make more efficient the
community investing process, then all I can say is to remember
words of Einstein that say, " Our technology has surpassed our
humanity." Don't let that be said about the state of socially
How far are you willing to go to change the world? Are you willing
to go half way around the world? To South Africa? To Bangladesh
where the Grameen Bank is? To the other side of the urban city?
So here's my challenge to you:
I want to challenge you to step into a new world organized with
new principles and create where it can make the biggest difference,
where it will affect the world your children, your neighbor's
children live in the most - $15 billion of social change.
What will it take to do that? One percent. Just one percent of
actively managed social investment dollars into community investing
by the year 2005. One percent of your client's portfolio. One
percent of your institution's portfolio. One percent of your investment
We have the power to do this. Each person in this room has the
power to organize within this new principle. The community investment
dollars are worth a lot more than they are in the conventional
socially responsible portfolio. Why not use them where they can
be most powerful. What is that power for if you don't use it?
Remember, its not either or. It's part B. Let's not stop prematurely.
"Freedom without opportunity is a devil's gift, and the refusal
to provide such opportunities is criminal.
Can we use the talent and vision and leadership in this room to
change the world? Can we begin today?
In Bangladesh, each member of the Grameen Bank makes this pledge:
During the planting seasons, we shall plant as many seedlings
Can you and I do less?
Let me close with the words of one of my favorite philosophers,
Mr. Eric Clapton:
"If we could change the world, we could be the sunlight in their
We could turn our love into something good,
People if we could - change the world
People if we could - change the world
People if we could - change the world.
Now, I need you to join me: People, if we could: I will change
the world, People, if we could, I would change the world. People
if we could, I will change the world.
For Comments, send to:
Connie Evans, President
WSEP Ventures Inc.
11 South LaSalle Street, Suite 1850
Chicago, IL 60603
Phone: (312) 606-8255
Email: [email protected]