Don Harris is winding his way through the crowd at Frank Fat's — the white-tablecloth Chinese restaurant where deals get done in Sacramento. But his progress 150 is stopped every few steps as people reach out to shake his hand, or stand up to slap his back, or start a business discussion. Harris is a deal maker. but he's not a legislative kingpin or a corporate lobbyist. He is founder and chairman of a Sacramento-based nonprofit called Nehemiah corporation of California. Nehemiah deals with a small problem that poses huge obstacles to upward mobility. Its ingenious program eliminates the down payment for would-be home owners who lack savings but who have good credit. It's a small differential that makes all the difference in the world.
"Eliminate a buyer's down payment, and you reverse a downward trend," Harris explains. "Having a home means equity. It means wealth creation. It means that you can put your kids through school, maybe even start a small business with a loan you get because you can use your house as collateral."
If owning a home is the American dream, then Don Harris makes that dream come true. Since 1996, Nehemiah has distributed down payments worth more than $297 million to more than 87,000 families. It is the single largest nonprofit provider of down-payment assistance (save for Mom and Dad) in the country. And it is, as Harris's lunchtime popularity attests, a player — a nonprofit that holds its own in power circles. "We have to be marketplace participants," declares Harris. "We have to be able to deal like the big boys."
Don Harris, 37, grew up in Marion, Ohio, the son of a preacher and a social worker. He says that the dinner table was filled with talk about making the world a better place and that he aspired to be a minister. But as Harris grew older, he realized, "My parents' approach was the 'servant model.' They gave of themselves because they had no money."
Harris doesn't quarrel with his parents' model of service, but by college he had begun to craft a more businesslike philosophy. He likes to tell the story of sitting in a Porsche Carrera owned by a college friend's father, who was giving him advice on life. "That good old doctor said, 'There's no such thing as a poor philanthropist.' That was a significant thought for me."
Harris didn't interpret the advice to mean that he should get rich. Rather, he decided to approach social service on a more businesslike footing: to use money, clout, and the art of the deal to make a difference.
So he headed for Washington, DC to serve as a Truman Scholar and a legislative aide. Then he headed west to get a law degree. He graduated from the University of California at Davis and spent a few years as an administrative aide to Sacramento's then-mayor, Joe Serna. Harris then took a job with a powerful Sacramento law firm, McDonough, Holland & Allen, and threw himself into deal making full-time.
The big-time lawyer also was spending a good deal of time preaching at the Sacramento church where his father had become a minister. In 1994, the church decided to buy some land to build affordable senior housing. It turned to Harris for his real-estate expertise. He created Nehemiah Corp. to fund the project, naming it after the Biblical character who helped rebuild the walls of Jerusalem. Harris expected to do that one deal and then get back to his law firm. Instead, he got deeper and deeper into the intricate real-estate strategy that would create the basis for what Nehemiah Corp. does today.
Here's the art of a Nehemiah deal: Harris realized that home owners, by the time they sell, generally reduce their list prices by 3% to 7%. The discount is even greater if the homes are in communities where there aren't a lot of buyers. So he devised a program where Nehemiah would provide 3% of the house's list price to the seller, in place of a down payment from buyers with good credit but inadequate savings. After closing, the seller then hands over to Nehemiah the sum of the 3% amount plus a processing fee, to cover paperwork and transaction costs. The benefit to buyers? No down payment. To sellers? A firm price for their houses. Plus, the process conforms to the guidelines of the all-important Federal Housing Administration, which requires a 3% down payment on transactions that it finances.
Meanwhile, the capital generated by Nehemiah's fee has become a down payment of sorts on a range of new initiatives. The organization is expanding into real-estate venture funds, urban redevelopment, and a new concept based on the Nature Conservancy: the Nehemiah Urban Land Trust Inc. As part of this growth, Harris recently turned over the daily operations to Scott Syphax, a former manager of public affairs for Eli Lilly and Co., who is now Nehemiah's president and CEO.
That gives Harris the freedom to keep thinking big and doing deals. As he drives around south Sacramento, a few miles — but a world away — from Frank Fat's, he sees the difference that his deals make. Nehemiah is the main investor in the Meadow View apartment complex, a low-income housing project that looks anything but. The apartments are painted bright yellow and are surrounded by fresh flowers and shrubs. "See that?" Harris asks, pointing across the street to where people are painting run-down houses and planting grass. "We're having a catalytic effect. People now believe that this is a community to invest in — a community to be proud of."
Fara Warner (email@example.com) is a senior writer based in San Francisco. Contact Don Harris by email (firstname.lastname@example.org).
A version of this article appeared in the November 2001 issue of Fast Company magazine.