Volume 7, Issue 1 | March 1, 2011

March 2011


David Erickson
Federal Reserve Bank of San Francisco

Low-income people in the U.S. and abroad face similar challenges: access to credit, housing, jobs, and critical services including health and education. And yet today, those who work on international economic development and community development hardly know each other. This issue of the Review is dedicated to a simple idea: innovative ideas to solve poverty should not stop at the national border. There are too many good ideas abroad that can help inform our practices domestically, and good ideas here that can be relevant to other countries.

This issue of the Review covers a host of ideas, including: innovating how we do small business finance (Root Capital); learning about affordable housing finance from Europe, Canada and Australia (Housing Partnership Network); overcoming regulatory barriers in the U.S. to help free up more impact capital as has been done in Europe (Calvert Foundation); using credit enhancements to promote bank lending in South Africa (Shared Interest and Strategic Philanthropy Advisors); finding ways to capitalize on the UK’s innovative social impact bond concept for the U.S. (Third Sector Capital Partners); learning the best practices in measuring social metrics from around the world (Paul Veldman, Columbia University); using mobile phones to reach the unbanked (UN Capital Development Fund); thinking about how the Community Reinvestment Act (CRA) might go global (David Smith, Affordable Housing Institute); and considering how CRA might, or might not, work in Latin America (Tova Solo, formerly with the World Bank) and China (Prabal Chakrabarti, Federal Reserve Bank of Boston).

Economist Jeffrey Sachs, in his book The End of Poverty, states that “extreme poverty can be ended, not in the time of our grandchildren, but in our time.” If we are to live up to Sachs’ charge, it is essential that we share the best ideas we have from both the international and domestic antipoverty communities.

 The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or of the Federal Reserve System. Material herein may be reprinted or abstracted as long as the Community Development Investment Review is credited.

Table of Contents

Global Agricultural Value Chains: Sustainable Growth as a Means for Sustainable Development

Patricia Lee Devaney, Root Capital

Agricultural businesses in developing countries offer an opportunity for market-based economic development that creates benefits throughout global value chains.

International Housing Partnership Exchange

Thomas A. Bledsoe and Paul Weech, Housing Partnership Network

The U.S. nonprofit leaders and the European nonprofit leaders alike discovered that nonprofit housing organizations, no matter how different the policy environment, all share the mission of addressing the needs of homeless families and low-income workers.

Catalyzing American Retail Investment in Community Development Finance: What Can We Learn from Other SRI Success Stories?

Caroline Bressan and Eliza M. Erikson, Calvert Foundation

When Calvert Social Investment Foundation launched its current programs in 1995, with the mission of helping to end poverty through investment, we began our first foray into investing in microfinance. Through our increasing involvement in the international impact investing industry, we have seen a true scaling of targeted investments to the microfinance sector.

Unlocking Local Capital for Development: Shared Interest’s Guarantee Fund for South Africa

Donna Katzin, Shared Interest, and Robert Rosenbloom, Strategic Philanthropy Advisors, LLC

As the world grapples with growing income disparities that leave more than three billion of the planet’s people in poverty, and as the current recession shrinks the pool of public and private resources available to remedy the situation, investors and policymakers across the globe are seeking high-impact, cost-effective strategies and tools to reduce the cavernous income and wealth gap and create bridges out of poverty.

Translating Plain English: Can the Peterborough Social Impact Bond Construct Apply Stateside?

Drew von Glahn and Caroline Whistler, Third Sector Capital Partners

In September 2010, the United Kingdom government partnered with Social Finance, Ltd. to break new ground in financing for the nonprofit sector with its pilot program to reduce recidivism in the Peterborough prison. Dubbed the “Social Impact Bond,” or SIB for short, the instrument links private capital to the success of social programs.

Learning Social Metrics from International Development

Paul Veldman, Columbia University

This article analyzes the best evaluation methods in international development, including examples of evaluation toolkits, with the aim of helping community development practitioners apply the methods to projects in the United States.

The Latest Frontiers for Financial Inclusion: Using Mobile Phones to Reach the Unbanked

Tillman Bruett, UN Capital Development Fund

The truth is that banks and other financial service providers haven’t done nearly enough to help the poor. The good news is that this is beginning to changeand we have the world’s mobile network operators to thank.

CRA Goes Global: A Good Idea in the United States Could Use a Makeover and a Bigger Audience

David A. Smith, Affordable Housing Institute

Populist ire that arose from the credit crunch is being directed at banks from all corners of the globe, triggering a series of new laws and schemas, whose combined effect will be to impose on banks greater government control over their economics (more regulation on safety and soundness) and greater government interest in their social outcomes (inclusive banking).

Why Latin America Urgently Needs CRA, and Why CRA Won’t Work for Latin America

Tova Maria Solo

When I speak of a Community Reinvestment Act (CRA) for Latin America, I mean a mechanism that monitors and makes bank activities public.

Using the Framework of the Community Reinvestment Act to Support Rural Communities in China

Prabal Chakrabarti, Federal Reserve Bank of Boston

The Xi’an branch of the People’s Bank of China reached out to the Federal Reserve Banks of Boston and San Francisco to learn more and engage in a dialogue about how CRA might be applied in China. The discussion was a study in contrast, but also uncovered some surprising areas of commonality.