Microlending, crowfunding, & alternative financial tools tormoen
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Microlending, crowfunding, & alternative financial tools tormoen
- 1. Microlending, Crowdfunding, & Alternative Financial Tools for Underserved Entrepreneurs and Communities Outreach Department Sandra Tormoen February 4, 2014 https://https://www.richmondfed.org/community_development
- 2. The views expressed in this presentation do not necessarily reflect the views of the Federal Reserve Bank of Richmond or the Federal Reserve System. DISCLAIMER
- 3. 3 Helping to strengthen the economy and communities by: Conducting and sharing research Identifying emerging issues Bringing public and private sector practitioners together The Federal Reserve Bank & Community Development Finance
- 4. 4 We strive to improve the availability of credit and information for small businesses through: Events Resource-sharing Initiatives to raise awareness and increase access to information Small Businesses
- 5. 5 Virginia Microbusiness Network Conference Community Development Financial Institutions (CDFIs) Community Development & Microlending
- 6. 6 Directory of CDFIs CDFI Fund and OFN partnerships for training Roundtables in Baltimore and West Virginia Webinars https://www.richmondfed.org/community_development Our Work with CDFIs
- 7. 7 West Virginia Loan Fund Collaborative Peer group of CDFIs and alternative lenders
- 8. 8 Today’s Panelists Josh Branfman Fundrise Jen Giovannitti Federal Reserve Bank of Richmond
Editor's Notes
- -Good morning! And welcome to the session on “Microlending, Crowdfunding, & Alternative Financial Tools for Underserved Entrepreneurs and Communities”. -I am Sandy Tormoen, the Community Affairs Officer for the Federal Reserve Bank of Richmond and I manage our Community Development Department. -We are excited to be participating in this year’s VCEN conference and want to congratulate and thank you all for the role you play in strengthening Virginia’s communities.
- -A question you may be asking yourselves is “Why is the Federal Reserve Bank interested in community development finance?” -It’s a good question, and it gets to the heart of our commitment to strengthening the economy and communities. -This means we see the important connection between the application of various tools including CD finance that are used to help ensure a stable and sound economy. -To better understand the economic landscape and provide value on the community level we: -We conduct and share research, providing policymakers and practitioners with objective analysis on economic challenges. -We gather and analyze information that allows us to identify emerging issues that affect underserved communities. -And we bring practitioners together from public and private sectors to collaborate on community and economic development initiatives and to identify both key challenges and promising practices to address them.
- -One example of this is our work to help improve the availability of credit and information for small businesses. -As many of you already know from your own experiences, there is a real need to foster better coordination between small business technical assistance providers, lenders, and other support organizations. To that end, the Federal Reserve Bank hosts and supports events such as this VCEN conference here today to provide that essential networking to make connections and share best practices We also share resources to help financial institutions and nonprofits better understand the range of public-sector small business lending programs and encourage them to use entrepreneurship and small business development to support local economic growth. - Community Development staff also create initiatives to introduce lower-income small business owners to new sources of capital and at the same time raise awareness of potential risks associated with non-traditional financing options, such as those offered by alternative lenders and encourage the small business owners to make sure they do their own due diligence to understand and mitigate those risks.
- -Now I would like to get even more specific and talk about what the Federal Reserve Bank of Richmond through its Community Development Department has been doing with respect today’s topic. -When we talk about “Microlending, Crowdfunding, & Alternative Financial Tools for Underserved Entrepreneurs and Communities” there is a lot of ground to cover with a lot of interesting and innovative work being done. -In this broad landscape, the Federal Reserve Bank of Richmond has specifically focused on developing partnerships, programs, and research around micro lending and supporting capacity building for Community Development Financial Institutions (CDFIs). -Let me start with the micro lending piece. -In Virginia, the Federal Reserve Bank of Richmond has had a multi-year commitment to hosting the state’s micro business conference. This is the Virginia Microbusiness Network event – a conference, aimed primarily at Virginia microbusiness lending organizations. We cohosted this event at our Richmond office in 2011 and 2013 with state and local organizations – several of the organizations that are here today – -including Virginia Microenterprise Network, -VA Department of Housing and Community Development, -Virginia Community Capital, -Empowered Women International, -and the Association for Enterprise Opportunity (AEO). -The conferences shared best practices, tools, and practitioner-based information on micro-lending. -These events were valuable partnership and learning opportunities for us at the FED, and we worked hard to bring in national experts who could speak at these events. -In 2013 we hosted Andrew Verstein of the Yale School of Law, one of the nation’s foremost experts on crowdfunding and corporate law, who gave a thorough update on the state of the Securities and Exchange Commission’s rules around Crowdfunding. -These events are, from our perspective, a valuable way to share information and bring people together to discuss industry trends and needs. -The Federal Reserve Bank has also devoted time and effort to supporting capacity building for Community Development Financial Institutions (CDFIs). As mission-based community lenders, CDFIs fill a need in the community finance landscape. By directing resources to underserved areas, CDFIs have a unique role to play in our low- and moderate-income communities that works in tandem with traditional lenders.
- -Our way of contributing to this sector has been in providing information on the industry, as well as hosting training and learning opportunities for CDFIs. We have done this in three ways: -First - by creating and maintaining a Directory of CDFIs in the Southeast. This directory helps to create more peer networking and relationship building. -Second - by partnering with the CDFI Fund and Opportunity Finance Network (OFN) to co-host training for CDFI’s. And by hosting CDFI Roundtable meetings in Baltimore and West Virginia. -And third - by developing our own capacity building webinar series that included four webinars. These webinars can be found on our website RichmondFed.org under the Community Development Tab. - Going forward we plan to continue to play a role in supporting community development financial institutions and the great work they are doing to direct resources to underserved communities.
- -Lastly, another way that the FRB Richmond has been involved in the micro lending world is in a pilot project we are leading in West Virginia. -Over the past 3 years we have been convening a peer group of CDFIs and alternative lenders (community loan funds) to develop data around their lending patterns. -This project, called the West Virginia Loan Fund Collaborative, is what we would consider to be a deep dive into learning more about the challenges and successes of alternative lenders in a way that maps lending activity and leverages that information to build stronger and more strategic peer relationships. Jen Giovannitti, our Regional Community Development Manager for Appalachia, will be speaking more about the Collaborative shortly as a panelist.
- -Now that you have heard more about the Federal Reserve Bank of Richmond, I have the pleasure of introducing two panelists who are working in the world of crowd funding and community finance. -Our first panelist is Josh Branfman from Fundrise. Fundrise is a crowd sourcing web platform that lets communities invest in local real estate projects. Josh is the Director of Finance and he works with investors, real estate developers, and financial institutions on investing into securities offered on the Fundrise platform. Previously, Josh was the Director of Finance at WestMill Capital, leading their EB-5 financing practice. Prior to this, Josh worked at Morgan Stanley as an analyst on the Equity Swaps and Financing desk within the Institutional Equity Division. He focused on pricing and structuring equity swaps and other synthetic financing products. He received his B.A. in History from Columbia University. -Our second panelist is Jen Giovannitti from the Federal Reserve Bank of Richmond’s Community Development Department where she is Regional Community Development Manager for the Appalachia region. Prior to joining the Richmond Fed, Jen served as the Executive Director of the Randolph County Development Authority where she worked with real estate development, Brownfield redevelopment, business recruitment and retention, regional marketing, workforce development, and strategic planning. Jen managed a best practice training and business incubator facility and was part of the leadership of the West Virginia’s Hardwood Alliance Zone, a seven county organization dedicated to promoting the wood products industry in the central highlands of West Virginia. She obtained a Bachelor Degree from the University of Pittsburgh, and a Masters Degree in Community and Regional Planning from the University of British Columbia.