Center For Community Self-Help
Martin Eakes doesn't have to look far to see the impact of his work. Outside his office window, high above downtown Durham, North Carolina, there's a stretch of old bank buildings that, after years of abandonment, are finally occupied by nonprofits and small businesses. Next door, at the Latino Community Credit Union, immigrants line up every Friday, payday, to access their bank accounts. For most, it's the first account they've ever had.
Across the railroad tracks, at the gutted red-brick tobacco warehouse, Bobbie Lucas, a 54-year-old mason who built his first house when he was in high school, is finally in business for himself, leading a large team on the construction site. And not far away, first-time home-owner Brenda Ruffin, a 47-year-old sharecropper's daughter, settles into Durham's Walltown, a home-ownership project that is transforming a high-crime area.
Eakes's brainchild is the Center for Community Self-Help, a kind of action tank for economic justice and a lending institution for the country's poor. Through the center's financial arm and policy institute, it makes capital accessible to people who have been left out—minorities, single mothers, rural families—and helps those same people protect the wealth they build. "We translate the civil rights gains of the 1960s into the economic area," says Eakes. "Without economic gains, the legal gains will be somewhat meaningless."
Take home ownership, which Eakes calls the most important source of wealth. Home ownership in the United States may be at an all-time high, but minorities still lag: 48% of blacks and 46% of Hispanics own a home, compared with 76% of all whites. "My mother used to say that any person who has a vision to see a problem has the duty to help solve it," says Eakes, 49. "I view that as both a challenge and curse." To date, Self-Help has provided more than $2.6 billion in financing to small businesses, nonprofits, and home buyers.
Consider the evolution of Eakes's 23-year-old organization, and you see how it answers unmet human needs with direct action. Operating out of Eakes's car with $77 in seed capital from a bake sale, Self-Help began setting up worker-cooperative businesses in minority communities. It didn't take long before lending became the real focus of the operation; people needed money more than advice. So the Center opened a credit union to make loans available to businesses that were turned away by banks and finance companies.
That same year, the center opened a venture to fund higher-risk small-business loans. Next came a home-ownership project and then a community-redevelopment arm. When Self-Help realized it could not go it alone to effect large-scale change, it joined with Fannie Mae and banks to create a multibillion-dollar "secondary-markets" lending program for underserved borrowers. Self-Help tracked the loans and then took the lending data, which proved poor people are good credit risks, to the country's largest banks in order to open up their lending practices. "We're an R&D lab for the financial industry," says Deborah Momsen-Hudson, who manages the program.
In 1998, Self-Help began taking its "R&D initiative" national. It forged an innovative alliance with leaders from Fannie Mae, Bank of America, and other major banks to use money from a $50 million Ford Foundation grant as a kind of insurance policy for mortgages issued to low-income families. In the past five years, that has unleashed over $2 billion in mortgages, opening up home ownership to 27,000 families. Recently, Fannie Mae signed on for another round, pledging to purchase an additional $2.5 billion in loans.
Now Self-Help is working to protect that wealth. In 1999, it denounced Citigroup and some of the country's other large banks, which Eakes says were targeting poor people for high-fee loans. Self-Help led a coalition in North Carolina to fight for legislation to change such predatory lending practices in the state—and a bill was passed six months later. In North Carolina alone, Eakes estimates that the legislation will save the homes of some 5,000 families. Today, 27 states have already passed similar bills.
For Self-Help, such complex problems demand more than one approach—and a clear-eyed view of their changing context. Says Eakes: "Any entrepreneur needs to be 80% focused on the external world and 20% focused internally to make sure that you have an organization that's strong enough to make a difference. Flip that scenario and the organization will rot from the inside out. It can't survive, because it can't adapt to the challenges that are changing every single month. If it can't adapt, how can it be relevant to its mission and the people it serves?"
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