Investment review - Federal Reserve Bank of San Francisco

COMMUNITY D

Volume 7, Issue 1, 2011

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PERMIT NO. 752

Community Development Investment Review

Federal Reserve Bank of San Francisco

101 MARKET STREET SAN FRANCISCO, CA 94105 AU 10252

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FEDERAL RESERVE BANK OF SAN FRANCISCO

NVESTMENTS

Volume 7, Issue 1, 2011

Community Development

INVESTMENT REVIEW cdinvestments

Articles

Global Agricultural Value Chains: Sustainable Growth as a Means for Sustainable Development Patricia Lee Devaney, Root Capital

International Housing Partnership Exchange Thomas A. Bledsoe and Paul Weech, Housing Partnership Network

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

Unlocking Local Capital for Development: Shared Interest's Guarantee Fund for South Africa Donna Katzin, Shared Interest and Robert Rosenbloom, Strategic Philanthropy Advisors, LLC

Translating Plain English: Can the Peterborough Social Impact Bond Construct Apply Stateside? Drew von Glahn and Caroline Whistler, Third Sector Capital Partners

Learning Social Metrics from International Development Paul Veldman, Columbia University

Commentary

The Latest Frontiers for Financial Inclusion: Using Mobile Phones to Reach the Unbanked Tillman Bruett, UN Capital Development Fund

CRA Goes Global: A Good Idea in the United States Could Use a Makeover and a Bigger Audience David A. Smith, Affordable Housing Institute

Why Latin America Urgently Needs CRA, and Why CRA Won't Work for Latin America Tova Maria Solo

Using the Framework of the Community Reinvestment Act to Support Rural Communities in China Prabal Chakrabarti, Federal Reserve Bank of Boston

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Community Development INVESTMENT REVIEW

The Community Development Department of the Federal Reserve Bank of San Francisco created the Center for Community Development Investments to research and disseminate best practices in providing capital to low- and moderate-income communities. Part of this mission is accomplished by publishing the Community Development Investment Review. The Review brings together experts to write about various community development investment topics including:

Finance--new tools, techniques, or approaches that increase the volume, lower the cost, lower the risk, or in any way make investments in low-income communities more attractive;

Collaborations--ways in which different groups can pool resources and expertise to address the capital needs of low-income communities;

Public Policy--analysis of how government and public policy influence community development finance options;

Best Practices--showcase innovative projects, people, or institutions that are improving the investment opportunities in low-income areas.

The goal of the Review is to bridge the gap between theory and practice and to enlist as many viewpoints as possible--government, nonprofits, financial institutions, and beneficiaries. As a leading economist in the community development field describes it, the Review provides "ideas for people who get things done." For submission guidelines and themes of upcoming issues, visit our website: frbsf. org/cdinvestments. You may also contact David Erickson, Federal Reserve Bank of San Francisco, 101 Market Street, Mailstop 215, San Francisco, California, 94105-1530. (415) 974-3467, David.Erickson@sf..

Center for Community Development Investments

Federal Reserve Bank of San Francisco cdinvestments

Center Staff Joy Hoffmann, FRBSF Group Vice President Scott Turner, Vice President John Olson, Senior Advisor David Erickson, Center Manager Ian Galloway, Investment Associate

Advisory Committee Frank Altman, Community Reinvestment Fund Nancy Andrews, Low Income Investment Fund Jim Carr, National Community Reinvestment Coalition Prabal Chakrabarti, Federal Reserve Bank of Boston Catherine Dolan, Opportunity Finance Network Andrew Kelman, Bank of America Securities Judd Levy, New York State Housing Finance Agency John Moon, Federal Reserve Board of Governors Kirsten Moy, Aspen Institute Mark Pinsky, Opportunity Finance Network John Quigley, University of California, Berkeley Lisa Richter, GPS Capital Partners, LLC Benson Roberts, U.S. Department of the Treasury Clifford N. Rosenthal, NFCDCU Ruth Salzman, Russell Berrie Foundation Ellen Seidman, Consultant Bob Taylor, Wells Fargo CDC Kerwin Tesdell, Community Development Venture Capital Alliance Betsy Zeidman, Robert F. Kennedy Center for Justice and Human Rights

Community Development INVESTMENT REVIEW

Free subscriptions and additional copies are available upon request from the Community Development Department, Federal Reserve Bank of San Francisco, 101 Market Street, San Francisco, California 94105, or call (415) 974-3467.

Change-of-address and subscription cancellations should be sent directly to the Community Development Department. Please include the current mailing label as well as any new information.

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

Table of Contents

ARTICLES

Global Agricultural Value Chains: Sustainable Growth as a Means for Sustainable Development........................................................................................2 Patricia Lee Devaney, Root Capital

International Housing Partnership Exchange................................................................................ 12 Thomas A. Bledsoe and Paul Weech, Housing Partnership Network

Catalyzing American Retail Investment in Community Development Finance: What Can We Learn from Other SRI Success Stories?...................................................................28 Caroline Bressan and Eliza M. Erikson, Calvert Foundation

Unlocking Local Capital for Development: Shared Interest's Guarantee Fund for South Africa.......42 Donna Katzin, Shared Interest and Robert Rosenbloom, Strategic Philanthropy Advisors, LLC

Translating Plain English: Can the Peterborough Social Impact Bond Construct Apply Stateside?. .....................................................................................58 Drew von Glahn and Caroline Whistler, Third Sector Capital Partners

Learning Social Metrics from International Development............................................................... 71 Paul Veldman, Columbia University

COMMENTARY

The Latest Frontiers for Financial Inclusion: Using Mobile Phones to Reach the Unbanked..........114 Tillman Bruett, UN Capital Development Fund

CRA Goes Global: A Good Idea in the United States Could Use a Makeover and a Bigger Audience.............................................................................119 David A. Smith, Affordable Housing Institute

Why Latin America Urgently Needs CRA, and Why CRA Won't Work for Latin America................. 134 Tova Maria Solo

Using the Framework of the Community Reinvestment Act to Support Rural Communities in China.................................................................................141 Prabal Chakrabarti, Federal Reserve Bank of Boston

Foreword

David J. Erickson Federal Reserve Bank of San Francisco

March 2011

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.

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