February 27 2012
About The Capital Good Fund
The Capital Good Fund (CGF) is a non-profit, 501(c)(3) financial empowerment organization whose mission is to provide equitable financial services that empower our clients to climb the ladder out of poverty. We offer small loans, financial coaching and free tax preparation to those in need either directly or through social service agencies. Since our founding in January 2009, we have made over 175 loans totaling $174,947 and graduated 125 people through business and financial coaching. In 2010 alone we saved or created 39 full and part-time jobs and increased the credit score of over 50 people. Our model and success have gotten the attention of policy makers all over the country, including the Mayor of Providence Angel Tavares, RI General Treasurer Gina Raimondo, US Congressman David Cicilline, U.S. Senators Reed and Whitehouse and the founder of the Consumer Financial Protection Bureau, Elizabeth Warren.
About the Coaching Fellowship
Coaching Fellows are highly passionate, motivated and committed college students looking for a unique way to learn about finance and change the lives of those living in poverty in Rhode Island. Fellows are expected to commit to at least two consecutive ‘terms’; either summer and fall, or fall and spring. During these terms they will receive extensive training on the topics covered during coaching, provide coaching to low-income clients and assist in the refinement and improvement of the Coaching curriculum. We also expect that coaches will be open to forming a more lasting relationship with the borrower. CGF will train Fellows to identify needs outside the scope of Financial Coaching and refer clients to additional resources.
In addition, Fellows will spend a portion of their time working on a project or sector of our business. This can range from being a part of the marketing team, to working on an underwriting algorithm. We do our best to work with you on finding something you are interested in!
CGF provides Fellows with an opportunity to apply for funding through CGF for any professional development or individual projects through our ‘Innovation Fund’. During the summer, Fellows are expected to be able to work 25 hours/week; during the school year, Fellows must be able to commit up to 15 hours/week, depending on client demand.
Applicants for the Fellowship do not need to have a deep understanding of or background in finance; indeed, CGF values a diverse set of skills and experiences from our Fellows. Instead, we are looking for creative thinkers, people that are fast learners, confident in their ability to deliver material in a one-on-one setting and comfortable in an entrepreneurial environment. Extensive training and management of each Fellow is provided to ensure that they are able to deliver a high-quality service to the client.
About Financial Coaching
Financial Coaching consists of three (3) weekly, one-on-one sessions of an hour and a half, during which we cover debt, credit, banking, saving, budgeting, etc. We charge the client $150 for the service, which they pay back in 12 monthly installments of $12.50 and we report to the credit bureaus as a loan. Fellows are expected to be able to deliver the material, but also to quickly understand the problems and concerns of clients and make actionable recommendations to the client. Because Coaching clients are often seeking a loan, upon completion of the 3 coaching sessions we re-evaluate the client’s application using an algorithm we built that is based upon outcomes they achieve during financial coaching. Outcomes include actions such as opening a savings account, setting up online banking, paying off a collection and applying for a new job, as well as on ability to pay, attendance and the financial coach’s judgment. Thus Coaching is both a means of improving social impact as well as of underwriting for loans and increasing our earned income. This model only works if the Coaching is superb and meets the needs of the client so we invest heavily in the training of our Fellows.
How to Apply
If you are interested in applying please complete the application on our website (on the About Us: Employment page) by March 9, 2012. If you have further questions, email Kate Lyons, Director of Operations, at .(JavaScript must be enabled to view this email address).
February 15 2012
Providence-based microfinance nonprofit Capital Good Fund announces the appointment of two new members to its board. The non-profit, which has been making national headlines for its innovative approach to local economic growth and sustainability, has relied on the Ocean State’s most talented young minds to become one of the fastest growing microfinance organizations in the nation.
Part of that growth involves the addition of Jessica Ricci and Randy Rice to Capital Good Fund’s Board of Directors. With them comes decades of experience, contacts and insights that are sure to enhance Capital Good Fund’s efficiency and efficacy.
Jessica Ricci, of Jessica Ricci Jewelry, has local roots. She went on to study English Literature at Holy Cross College, and Journalism at NYU. She has worked across the globe, from Montana to Italy, where she developed a passion for the art of jewelry making. Returning to Rhode Island with her own line of Jewelry, Ms. Ricci is excited to bring her expertise into play for Capital Good Fund. While the world of Finance is often looked upon as a realm of coldly calculating minds, innovative new firms like Capital Good Fund are recognizing the importance of creativity and flexibility in solving economic problems, and look forward to working with Ms. Ricci and her creative faculties.
Randy Rice, of Trillium Investments brings years of financial expertise to the table. He has served as Trillium’s Community Investment Manager, its Senior Portfolio Associate and Member of its Board of Directors. In addition, he has done work on the Advisory Board of CEI Investment Notes and for CERES, a national network of investors, environmental groups and public interest organizations addressing sustainability challenges. With both his experience, and demonstrated passion for community-level investing as a tool for social change, Mr. Rice promises to be a valuable addition to the board.
November 26 2011
May 16 2011
FOR IMMEDIATE RELEASE
Contact: Andy Posner, (401) 339-5437
.(JavaScript must be enabled to view this email address)
The Capital Good Fund Celebrates 100th Loan, Representing Over $121,000 Going to the Community
Organization begun by Brown University students makes 100th loan to low-income Rhode Islanders, one of nation’s fasting growing microlenders
May 17, 2011-(Providence, RI)---The Capital Good Fund, a financial empowerment nonprofit based in Providence, has made its 100th loan to a low-income Rhode Islander after two years of operation, making it one of the fasting growing microlenders in the US. Capital Good Fund was founded in January 2009 by a team of Brown University students headed up by Mollie West and Andy Posner.
Capital Good Fund now has a staff of four full-time employees and 14 student interns from Providence College, Brown University, Bryant University, Johnson and Wales University and University of Rhode Island. In addition to having made 100 loans totaling over $121,000 with a 95% repayment rate, Capital Good Fund has also graduated 80 participants through its Exploring Business Basics workshop and prepared 26 free tax returns through the IRS Volunteer Income Tax Assistance (VITA) program.
The hundredth loan, a business loan of $3,600, went to Damon Fowlkes, a Rumford resident who is now the proud owner of snow removal and landscaping business ‘Helping Hands.’ Fowlkes started with a $2,000 loan just over a year ago, which he used to purchase essential supplies for the business, as well as a used van in which to carry them. This most recent loan will be used for additional tools and equipment that will enable him to better serve his booming client base.
In addition to the loan, Fowlkes has graduated from CGF’s Exploring Business Basics class and received financial coaching—learning how to budget, use a savings account, build an emergency savings fund and repair his credit. In fact, Damon’s credit score has rocketed from unscoreable to 640 in the year since he came to Capital Good Fund, opening him up to the financial mainstream.
“Capital Good Fund gave me a chance when no one else would,” says Damon. “Not only did they help me learn how to better run my business, but they gave me a loan with no collateral, so that I could take Helping Hands to the next level. Over the last year they have become like family to me: always there to help me out, give me advice and so on. I don’t know where I’d be if I hadn’t met them, but I am truly thankful that I did.”
“This milestone marks a turning point for the organization,” says Andy Posner, Executive Director of Capital Good Fund. “After two years of hard work and experimentation in providing equitable financial services to the poor, we believe that we have hit upon a suite of products and services that has transformative impact. We hope to serve not only our borrowers and their families, but also the Rhode Island and national economies. Combining financial coaching with small loans—ranging from $200-$5,000—is a powerful tool for changing lives. In our first 100 loans we’ve been honored to work with hard-working immigrants, determined single parents, and inspiring formerly incarcerated men and women, and we look forward to the next hundred.”
In this challenging economic climate, access to credit and capital, combined with training on business and personal finances, is more important than ever. There are several hundred microlenders throughout the United States, including several that operate in Rhode Island. However, Capital Good Fund is considered be one of the best and most innovative in terms of the products and services it offers, as well as its high repayment rates depsite lending to ‘risky’ populations. As a case in point of their unique loan products, Capital Good Fund clients have taken out loans to purchase a computer or vehicle, apply for citizenship, and weatherize their homes. As banks and credit unions have tightened their lending standards since 2008, those in need of credit have increasingly turned to fringe services such as check cashers and payday lenders. By providing one-on-one financial coaching to clients before or at the time of distributing a loan, Capital Good Fund ensures that they will be able to not only pay back the loan in full, but also develop a plan for achieving financial stability through budgeting, building assets and entrepreneurship.
About The Capital Good Fund
The Capital Good Fund is a non-profit financial empowerment organization based in Providence, Rhode Island. Founded by Brown University students in January of 2009, its mission is to create a poverty-free, inclusive green economy. They provide small, unsecured loans and financial coaching to individuals unable to access capital through traditional sources. These products and services go to entrepreneurs seeking capital for income-generating activities and low-income individuals for a variety of purposes, including purchasing a computer, applying for citizenship or investing in residential energy-efficiency. For more information, please visit www.capitalgoodfund.org.
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March 14 2011
As I walked into Whole Foods, I grabbed a cart that was still wet from the mist outside. After denying my first impulse buy, I continued through the store uneventfully. Pasta, bread, more pasta, some – but not enough – vegetables and fruits. I sauntered up to the check out line ready to finalize my purchase. Mentally, I knew I was around my budget. Yet another successful trip to the grocery store. Three weeks until I had to reengage in America’s favorite sustenance chore.
As the customer in front of me swiped her card, an alarm in my now buzzing head went off. After several mental expletives, I reluctantly admitted to myself that I didn’t have enough money to make the purchase. You’re thinking, “Really, that’s Shopping 101!” How could I not know my own personal financial status well enough, even after an hour of meticulously analyzing prices to find the best deals? The shopping experience screams spending money from the get go (unless you get those free samples!). How careless of me…
What I had forgotten, prior to loading up my cart with calories, was that I had taken my credit cards out of my wallet to curb my spending. Admittedly, I am a penny-pincher who checks his online bank account and Mint.com account more than his Facebook (Really, is that possible?). But going without a credit card is an interesting experiment. Try it sometime. It is a lot harder to spend “real” money than swipe a card for that afternoon coffee or Coke.
This Has A Point…
I looked at the cashier and said, “I’m going to be honest, I don’t have enough money for all this stuff, what would you like me to do?” Either she had done this before or was really nice, “just put what you want up here and leave the rest in the cart.” I watched the total increase, trying to maximize my food purchase and minimize my embarrassment, and stopped with cottage cheese. $47.85. Yes! Under the $50.00 that I have!
Declined.
Mental expletives. “Lets take away the milk – gotta keep the eggs – nuts, and the oranges. $35.00.
Declined.
Round three was a success. After narrowing it down to $17.57 I passed the debit card test. In an attempt to assuage my situation the cashier lightly added, “sometimes checks don’t go through or clear in time, I’m sure that’s what happened.”
I replied, “and sometimes people just don’t have money.”
Bringing It Together
By this point, it may seem like a foolish story. What does this have to do with microfinance? What I realized as I strolled out the doorway with a considerably lighter cart than I would have liked was how applicable this was to many low- to moderate-income Americans: It’s a cash flow issue. When I went into the store all I had was “real” money. I didn’t have a line of credit with me. With the current economic situation, many Americans have felt their ability to maintain or obtain credit shrink considerably. This shopping scenario goes unnoticed for those with credit: for them to attitude is “swipe away and pay in a day.” With a credit card and other sources of financing, it is easy to navigate the world, especially if you know how much money is coming in from work or a business and you’ll simply pay off the purchase (hopefully) very shortly, thus increasing your economic power and utility (for any microfinance nerds out there). You’ve overcome the Cash Flow Quandary.
However, it becomes very difficult given the fact that “Pay Day” and “Grocery Day” may be more than a week apart. 61% of Americans, regardless of income, are living paycheck to paycheck and are strained to meet basic needs. While higher-income individuals, with greater access to credit, mitigate this cash flow issue, low- to moderate-income individuals and families are struggling more severely than ever.
Low- to Moderate-Income Solution
Unfortunate as it is, the cash flow issue has a costly solution: Pay Day Loans. Easy, accessible, and opaque vis-à-vis terms, conditions, fees, and APR and you’ve got your solution to Grocery Day! While credit card users gripe about 25% APR, convenient online bill pay, and 24 hour a day/7 day a week customer service representatives in Utah (or India), Pay Day users face limited business hours, hurried transactions, “small and misleading fees” that are explained away with a “just sign here, it’s really only $25 per $100 you want to borrow” and a negligible 216% APR!
But, if you’re a mother of two or three, this sounds like a better deal than hungry kids. If you’re making minimum wage and can only make it to the store once every three weeks, a Pay Day Loan might seem reasonable. Or, if you have little savings, like most Americans, and your tire goes flat, your dog gets sick (don’t ask), the holidays sneak up quicker than expected, a relative needs help, ad infinitum: the only option may be a Pay Day Loan.
Final Comment
If credit card companies altered their risk-analysis models to account for the described credit-less Americans, they would surely realize a huge untapped market segment. Namely, the people utilizing credit to buy groceries instead of a new set of golf clubs are as likely if not more likely to pay their bill on time. Why? The grocery shopper will need that credit in two weeks for more groceries more than the golfer needs another set of clubs. This may seem over simplistic, but seeing as 1 in 7 Americans fell behind in the last year on at least one line of credit, I’d take that risk (and opportunity). Not to mention how much it would alleviate the need for high-cost and ensnaring Pay Day Loans or the millions of Americans who stand to benefit.
February 25 2011
February 23 2011
Fewer Banks for the Poor
The NY Times today reported on a recent and troubling trend that has negative ramifications for America’s poor trying to gain access to mainstream financial services. The article points out that Bank Closings Tilt Toward Poor Areas; what’s more, at the same time that banks are closing branches in low-income communities, they are opening new branches in wealthier areas. This points toward a major hole in traditional banking: an estimated 30 million Americans do not have a bank account, according to the F.D.I.C. Now, even fewer Americans—those that most need them for savings, cashing checks, etc.,--will have access to banks.
In fact, more bank branches were closed than opened in 2010, a 15-year record. While banks struggle to cut costs and rebuild from the financial crisis, Mark T. Williams at Boston University points out that “it’s not as if those needs [for financial services] go away”. Low-income households still need to manage their money in some way, especially with tight budgets where every dollar counts.
Attempts at Legislation
This kind of action should be illegal under the Community Reinvestment Act (CRA), a law enacted in 1977 that discourages discriminatory behavior by requiring banks to announce branch closings. However, this act has been weakly enforced so far. Raymond H. Brescia of Albany Law School cannot recall a case in which banks faced punishment for closure violation in recent years.
Other Options?
With fewer banking opportunities available and increasing banking fees, it is no wonder people get fed up and consider storing their cash under the mattress, or tunring to payday lenders, loan sharks, pawn shops and other predatory financial service providers.
An increasingly popular strategy is the Rushcard, a prepaid VISA debit card created by Russell Simmons in 2003. This card allows users to bypass credit cards and traditional banks by depositing and storing funds directly onto the card. Users spend exactly what they have in a safe, secure manner. The card can also be used for online shopping and bill payments, services that were once only accessible to credit card holders.
In addition to the problems associated with credit cards (approval, debt, and poor credit scores), the Rushcard may provide an answer to the disappearance of bank branches across the U.S. However, these alternatives do not provide the solution. For one thing, many prepaid cards have hidden fees that can burden the cash-strapped, and these cards cannot replace the numerous services offered for free and at low-cost by mainstream banks. Lawmakers need to be serious about enforcing the CRA to protect those living in low-income communities, and banks need to consider the social implications before they close more branches in 2011.
Article written by Capital Good Fund intern Sophie Fuchs
