New Initiatives

SRI in the Daily World

by George Kenefic

In a world filled with genuine immediate need, it tasks the soul when trying to decide how to help, how much to give, what to give. It is so hard to witness the suffering of the inhabitants of Port-au-Prince, people trying to cope with the devastating aftermath of a major earthquake. It is so hard to imagine the financial devastation facing people who have been engulfed by the economic tsunami of the Big Recession. However, one needn’t travel far to experience tribulation first hand, in all our communities there are people methodically facing life’s challenges each day. And just as these who struggle occupy their place in the economic spectrum, there is also a place for those that provide assistance and support.

Although socially responsible investing (SRI) as a concept incorporates several challenging aspects and viewpoints, the benefits of SRI, and its motivation, are well known by all, so I’d like to focus instead on the value obtained for such investments. Socially responsible investors should be as interested as anyone in obtaining the highest value from their investments, value defined in this particular instance as the measureable benefit to a select cause or to specific populations. If the measure of this value is the level of effective results obtained and their proximity to the desired outcome, how does one proceed? Prudence would dictate that recipients of investors’ funds have transparent operating processes, high accountability and adhere to generally accepted financial management practices, all immediate or short-term; effectiveness, on the other hand has a much longer view, and will rely more on maintaining long-term relationships and commitments. After all, nearly all the community issues these kinds of investments intend to mitigate have been around for a long time, they didn’t develop overnight and neither will the solutions.

Regardless of philosophies, no one can deny that SRI is a vital component of the fabric of philanthropic involvement. Whether an investment will be made personally, directly to a particular person or entity, or whether it is to be a part of a resource pool intended for broader application, is the investors’ prerogative. What needs to be kept in mind is that the level of effectiveness, the impact of the investment depends on the ‘social leveraging’ that can be attained; consider as well that sustainability, or consistency, plays a large role in the delivery of meaningful impact at any level. Doing the most good possible requires not only placing money wisely but finding the right partnerships to complement the investment’s intention.

Charitable organizations which address social development, educational services or provide other forms of assistance to the community can undoubtedly be the socially responsible investor’s best friend and ally. Contributing through direct investment in the sustainability of community development organizations whose missions is to develop and promote sustainable economic development opportunities represents perhaps the investors’ best recourse for delivering positive impact within the community. It stands to reason that local challenges are probably best handled by organizations with proven capacity, experience and capability, rooted in the communities they serve and committed to administrative best practices and transparency. Returning for a moment to the long-term relationship matter mentioned previously, depending on which organization is involved, direct investment may allow the investor to easily choose the nature of the relationship, including duration, and may provide the investor with the option to take an active role in the deployment of her investment.

I spoke earlier about the economic tsunami that has engulfed us all, bringing on changes we can only speculate about at this time. We all are being affected, each of us in the manner most critical to our survival, yet in this time of crisis we must not lose sight of the big picture nor the little picture nor the linkages between them, and be prepared to act upon opportunities that may yet present themselves. As an example of this, the non-profit organization I’m associated with, The Loan Fund, promotes community development through financial and technical assistance provided to micro businesses, small businesses and non-profit organizations working in underserved areas throughout the state of New Mexico, with a special emphasis and focus on communities in rural areas. Nobody in the capital markets would confuse us with a serious actor in the field! Yet, as a direct result of the financial meltdown and the resulting strange environment the nation’s banks have been living in for the last year, in the local market The Loan Fund has been thrust into a much larger and more complex role, attempting to serve and manage the financing needs for larger businesses than had been the norm. This is a case I’m very familiar with where the conditions at index funds, the stock market, the capital markets and the different levels of government have had real world consequences in the daily world operations of our small organization in New Mexico.

A social enterprise founded nearly 21 years ago, funded initially by faith-based organizations that provided seed capital to the New Mexico Community Development Loan Fund (now known simply as The Loan Fund) is an example of early SRI. At the time, the mission for the New Mexico Community Development Loan Fund was broadly stated: to alleviate the causes of poverty in New Mexico; although the words and the spirit remain intact, the methods employed to meet the mission requirements by the organization today have become more focused and refined. To this day the faith-based community remains a strong financial supporter of The Loan Fund’s mission. The organization is fortunate to count on a number of long-time family and individual supporters who for years have had the confidence in the abilities of The Loan Fund to perform priority community work. While few supporters actually restrict or designate the permissible uses of their funds, historically the organization has prepared specific programs aimed at addressing socio-economic issues compatible with the supporters’ stated or implied wishes. These programs have included assistance to affordable housing projects, outreach to marginalized urban populations, financial literacy associated with asset building initiatives, to name but a few examples. Although it has been difficult to quantify the actual value of these programs to the recipients of the services and assistance, the qualitative benefits are readily apparent to anyone familiar with prior conditions; whatever the measure of the outcome, nothing might have occurred except for The Loan Fund’s program.

The Loan Fund’s programs, partially described by the examples above, have historically been rather long- term efforts, some lasting years. We believe that in today’s fluid environment, with uncertainty running high and unknown demands yet to be made on a finite pool of resources, the secret to success and survival lies in adaptability, prudent use of resources and maximum social leveraging. While adherence to the organization’s core business competency is key, Loan Fund staff has identified over the past few years adjacent areas where potential activities could occur, provided such activities are compatible with Loan Fund core mission and values statements. Current programs under development and upcoming future initiatives will build on these commonalities to derive the maximum positive impact for the constituencies represented in the areas where the programs will be implemented. In this way, Loan Fund staff, investors, supporters, all will be able to participate in the actual delivery of meaningful assistance to people in need and witness first hand the return on their investments of money, time and effort.

The Fantastic Four: Success in Northern New Mexico

Four Area Providers offered complimentary, one-on-one assistance to entrepreneurs in the Taos, Rio Arriba, and Mora areas.

Local business experts Bruce Ross, Mark Amoriello, Margo Covington, and Mark Yaravitz recently completed a pilot project that offered intensive one-on-one consulting to local business owners in Taos, Mora, and Rio Arriba counties in an attempt to extend The Loan Fund’s business consulting services to the rural and under-served communities of New Mexico.

The Loan Fund is based in Albuquerque, but every attempt is made to cater to businesses and nonprofits elsewhere in the state. So, under the supervision of Director of Enterprise Empowerment George Kenefic and made possible through a grant from the United States Department of Agriculture, the Building Business Acumen in Northern New Mexico pilot project targeted the communities of central-northern New Mexico.

Ross, Amoriello, Covington, and Yaravitz were hired as Area Providers in July of 2009. For the next two months, the Area Providers offered their expertise in the areas of marketing and promotion, business planning, business growth strategies, and improving sales margins to 108 small businesses.

Ranging in everything from food-related and tourism to retail, childcare, agriculture, and even health and wellness, the businesses benefited from the program’s “house call” approach. That is, rather than making the business owners come to the Area Providers for assistance, the Area Providers brought their expertise and know-how to the business owner’s place of business.

This simple approach equated into big change. Over 100 businesses hadn’t ever used the services of business consultants to enhance their business’ performance; some didn’t know what questions to ask, others perceived such a service to be beyond their reach. Of the 108 businesses, 61 hadn’t availed themselves to similar services offered by Small Business Development Centers, and 59 of the participants said that they hadn’t utilized programs offered by Colleges because they hadn’t heard about anything of interest or were too busy to attend.

Kenefic summed up the project by saying, “The success of this pilot project confirms the value of personal relationships in business, the effective use of appropriate technology applied in a widely diverse environment.”