[00:00:04] Speaker A: Welcome to Revolve, where we explore big questions from all angles.
Each season, we use one big question to dive into a topic with experts showing how perspective matters in building thoughtful solutions.
I'm Tripp Williams.
Season one, what makes an economy strong and vibrant?
Using Seattle as a case study, this season we talk with different people involved in economic development to learn how economies are built.
This episode features Sandhya Nikasi and Ryan Glasgow, co founders of the nonprofit social enterprise Community Credit Lab. Community Credit Lab is working to get capital to underserved communities on their terms.
Working with partner banks and community organizations, Community Credit Lab increases access to credit and provides education to promote financial equity.
In this episode, Sanjay Orion and I discuss their work to eliminate the poverty premium, why no interest lending is realistic, and how affordable credit can be a powerful tool in communities.
[00:01:09] Speaker B: Today we're excited to have Sonia Nikasi and Ryan Glasgow from Community Credit Lab to join us to talk about their role in economic development.
So welcome.
[00:01:18] Speaker C: Thanks, Tripping.
[00:01:20] Speaker D: Thank you, Tripp.
[00:01:21] Speaker B: Yeah, so let's jump right in. I know we have a lot to cover and I'm really excited to have you guys on, so thanks for joining. So the first thing I wanted to start with, the concept of economic development. It means a lot of things, a lot of different things to a lot of different people. I'm just curious if you can offer for us from where you sit and the work you do.
How do you define economic development?
[00:01:45] Speaker D: Yeah, so for me, I think economic development really means that people who are living in a community or an economy are supported with the tools that they need to be successful in whatever way they've defined success for themselves and that they have that power to determine their future.
[00:02:07] Speaker B: That's great. That's great. And so what have you seen in terms of where efforts, economic development efforts have either failed or succeeded? What are some of the components you've seen in essential projects or, I'm sorry, in successful projects?
[00:02:24] Speaker C: I think one of the things we talk about a lot is that oftentimes things get designed in a way that is top down from higher office buildings. And, you know, this is also something that we need to be careful of in the work that we do, but just kind of making sure that there is engagement and not only engagement, but also sort of authority at the community level, you know, at the level of the individual and the collective of the people that a lot of policies and strategies and models and solutions are trying to support. I think the other thing that we've seen is also the opposite, where ideas germinate at that level and then get really fleshed out and aren't able to integrate at the higher levels into actual policy or solutions and models at scale. So I think the balance is really essential and we try to sit in between those two worlds and help strike that balance.
[00:03:31] Speaker B: Yeah.
[00:03:32] Speaker A: So let's actually.
[00:03:32] Speaker B: Let's use that to jump into.
I want to have a chance to be sure to hear more about the work you specifically have been doing and the organization you've kicked off. So Community Credit Lab, you're working to help get capital to underserved communities. Right. And I'd love for you to just explain to the audience what Community Credit Lab is, what you've been trying to do with the organization, who you're trying to serve.
I would love to just hear a little bit more about that project in particular and that organization.
[00:04:03] Speaker D: Sure, yeah. So Community Credit Lab, we are, like you said, a nonprofit.
We are just an organization that is trying to be really nimble and address challenges that have existed and are emerging right now or will emerge in the future by using affordable credit as a tool to remove barriers.
And really what that means is we never design anything ourselves. We really try to engage and work with community members and community organizations and nonprofits to help us understand what are the challenges that these communities are facing and how can we best use a tool and design together a tool that removes a barrier to an economic opportunity for an individual or a business or a community.
[00:05:01] Speaker C: Yeah, I think that's the way we started all this. Was Sandy and I having conversations about what is a well documented problem called the poverty premium, which is in simple terms, the fact that people with fewer resources have to pay more to access credit.
And we mapped out what that looks like just based on our pre existing knowledge in terms of how financial institutions make decisions and how extractive some of those decisions can end up being, and how that leads to almost $200 billion a year in the US in fees and interest for underserved communities that could be used in, you know, increasing savings, building wealth and achieving goals.
Basic needs, basic goods, basic services are all sort of off the table in many respects as a result of that issue.
So as we thought about that problem, I think what we did is we put a lot of thought into designing what is now a somewhat complex solution. But one of the conversations we had recently was just in simple terms, our solution is actually just the reverse of that problem. It's saying, what if instead of charging a poverty premium, we offered a regenerative discount?
So for people who have fewer resources, instead of Charging them more to access credit. What if we charge them less? So that's our goal, is to kind of remain focused on charging more people and business owners who are underserved less in interest rather than more.
[00:06:49] Speaker B: Yeah. And I've been really drawn in my research about the organization, I've been really drawn to some of the creativity and broad based innovation that you both have introduced. I'm wondering if you're able to sort of, having introduced the concept and the general thrust behind the, the organization and the idea, can you share a little bit more about how this has been put into play or maybe one of the first ways that the idea has actually been made manifest? I'd be curious to know if you could share how it's been made real.
[00:07:23] Speaker D: Sure. Yeah. So one of our first nonprofit partners that we worked with was the Puget Sound Welcome Back center out of Highline College, which is a community college here locally in Des Moines, Washington.
And that organization works specifically with foreign educated immigrants, refugees who are trying to navigate their pathway back to their career. So a lot of these immigrants and refugees come resettle in the state of Washington and their credentials and their professional certifications are not always translated and not always recognized. So they start off working kind of at minimum wage jobs, even though they have the skills to be a lawyer, a nurse, a doctor.
So this organization really tries to help people navigate what that pathway is to get their credentials and their certifications recognized so they can start practicing in their career path.
So one of the career paths that they worked with, they've worked with for quite a while, is nursing. And as we know nursing, there's a nursing shortage nationally as well.
So they are really trying to get foreign educated nurses who have the skills able to actually work and earn an income that provides a livable wage for them.
So they saw that people were actually not able to complete the program because of the cost to get that certification. And so what we did was to work together with the Puget Sound Welcome Back center to Design a small $500 loan at 0% interest to provide that buffer while these individuals are taking their certification courses and they don't start repaying them until they've finished the course, taken the exam, and are starting to work as a registered nurse, having really seen a significant increase, increase in their income.
I think we estimated about 100% increase in income, which is about an increase of $25,000 annually for these individuals, which really will change their outlook on how they can spend, how they can provide for their families and provide for their communities as well.
[00:09:51] Speaker B: Yeah, that's wonderful. And thanks for drawing that up for us. And I, as I mentioned, I've come across some of the materials you and Ryan have published and I'll be happy to put up links to those because I think for a lot of listeners it's really helpful and instructive to see both the diagram you've produced and I've seen another article that you wrote. So I'll find the links to those so listeners can take a closer peek at that.
[00:10:15] Speaker C: So I'm curious, I think what's become. Sorry. Oh, go ahead, Ryan, jump in. Was just what's become interesting to us lately and really exciting actually is Sandhya and I, we also spend a lot of time just talking about how so many things are just tools.
And you know, credit itself is just a tool. And it was originally a tool that was used to help neighbors effectively.
And so kind of what does it mean to use that tool to help people or subsidize industries? Even if you're looking at kind of affordable credit as the tool, how can we use that more broadly to achieve positive outcomes? And so what's been really interesting and exciting for us lately is having other organizations reach out and say, well, we have these existing lending programs that we've been running that involve affordable credit as the tool. Would you be interested in collaborating to support the scaling of those pilot funds, those pilot programs?
And actually, what I think we both find quite exciting is just the possibilities are sort of endless when we have a relatively broad remit. When we define underserved communities, we think about who faces discrimination.
But other than that, we're able to work on a lot of different things. And some of the ideas that are coming to us relate to minority veterans, others relate to underrepresented communities in tech, others relate to black owned business owners. It's just the ideas that are now sort of starting to pollinate are really exciting and interesting. And it's just I think we both get energized by the fact that Affordable Credit really is a tool that can support a lot of different people and a lot of different ideas.
[00:12:11] Speaker D: Yeah. And the only thing that I would add to that is kind of what we're doing here is probably not new, and it's definitely not new. We've seen these concepts all happen kind of all over the world and even within our own community. We've seen kind of lending circles within the Somali community where people are able to kind of exercise their own ability to purchase things that are of higher dollar value because they're participating in these circles that don't incur any interest, really what we're trying to do here is draw upon existing models and what we think and what we are trying to understand from feedback from community members works for them to design a model and a solution that will continue to iterate, I'm sure, but will help them reach whatever goals they want to reach and be a tool and not kind of something that they feel will prohibit them or exclude them from actually being able to achieve what a lot of people in this country are able to achieve.
[00:13:33] Speaker C: Yeah, I think that's a really good point and kind of a quick plug for the organizations that we don't see as competitors, but rather sort of thought leaders in the space that we're studying and trying to learn from and iterate with respect to our own geography is RSF Social Finance in San Francisco, Mission Asset Fund in San Francisco, and the Boston Impact Initiative and the UJIMA Model out of the Northeast.
Those are three models and organizations that we have looked at quite closely and that we hope to continue learning from as we build out this work in the Pacific Northwest.
[00:14:19] Speaker B: That's wonderful. Yeah. And I'll try to include, or we will include links to those folks as well so people can check them out. I'd be curious to hear. Also, Ryan, I think you mentioned, as you were beginning to describe the organization, the idea of really turning this really lucrative industry for entrenched financial organizations trying to sort of turn on its head. Right.
And I imagine that that effort is a pretty significant one. And I'd be curious what sort of challenges you faced as you were trying to set up Community Credit Lab, and maybe some that were expected and some that came up that weren't expected.
If you could walk us through some of those.
[00:15:04] Speaker C: Sure. I think a lot of my role as COO is focused on how do we get money in the door. So my challenges are more on the funding, the incoming funding side. I'm sure Sandhya would have a lot more thoughts on how do we get money, how we get money out the door, but in terms of actually getting the resources we need to do this work, the challenge on the investment side is really thinking about a product that is low return, low risk, and really high impact. There's not a lot of demand, actually, in the world of impact investing for that type of product.
That's sort of where impact investing began 10 years ago now.
But the world of impact investing has now shifted much more towards people and advisors having a consensus around the fact that you can sort of have your cake and eat it too, in terms of return and impact. And that that's a thesis that we fundamentally disagree with. I think especially as we seek to serve underserved communities.
Our whole approach is almost the antithesis of that. We're saying if you want to support people who are at risk, who are underserved, something's got to give.
There does need to be a reduction in the target return. Otherwise you will end up extracting from them.
In simple terms, kind of simple economic terms, if we got capital in the door at 3 to 5% and then lent it out, which is a relatively typical CDFI model, you would then end up lending at terms that were between 6 to 10, even upwards of 15%, which we think is detrimental to the people and business owners that we try to serve.
So it's about how do we reduce that cost of capital for ourselves and our borrowers. And that means that there's a reduction in returns for the investors that we work with. And so we really need mission aligned at this stage, accredited investors and foundations who are able to allocate using mission related investing or program related investing and willing to kind of think about a fixed income product that is low risk when we pull in guarantees for our lending programs and then low return.
Right now the return we're offering to our investors is 1%, which is ironically now becoming high with corona Fact. Coronavirus.
Yeah. And then really high impact. So we're looking for that sort of outsized impact on people's lives. Things like what Sandhya referenced earlier with Highline College where we're doubling, trying to help people double their income.
And so we're looking for investors that's been, that's been a challenge, is just kind of figuring out what that return, what return is palatable for impact investors for this type of work. And actually that's where we've drawn from rsf.
They recently changed their returns. They actually bumped it up a bit to their investors to 1%. And that was a good learning for us since they've been around for a long time.
So that's what we ended up benchmarking against in our work.
[00:18:33] Speaker B: Yeah. I'd be curious, did you feel like the pool as you were developing the concept and you were thinking about the different institutions or funders you might approach, did you find that that pool ended up being about what you expected? Was it smaller? Have you found it's actually bigger once you look in the right places?
[00:18:53] Speaker C: Well, our existing pool is relatively small in the world of investment. So what we found is there was actually more Demand from the group of individuals that we were working with, which were members of the Seattle Impact Investment Group. And we're very grateful to those people who really did show mission alignment and commitment to the community.
But as those number and as those numbers increase and as those dollar sizes increase, that's where we will need to start talking to foundations more and family offices more and investment advisors more. And it'll be interesting to see how those conversations play out. I think the foundation piece is the other side of how we get money in the door. And just attracting individual donors is also the other side of getting philanthropic resources that cover the cost of our programs in the door. And that's another.
I wouldn't say a challenge. There's a lot of interest, but it's kind of figuring out the right timing and the right alignment with the right organization is something that we try to track very closely so we can make sure we're sustainable over the long term.
I think just to hear Sonia's side of this as well, she's had a lot of challenges and interesting learnings from getting money out the door.
[00:20:24] Speaker D: Yeah, I think I just want to start by also amplifying what Ryan's said.
I think it's when we started and we started kind of at saying, like, we want to lend at 0%.
Yeah, we got a lot of pushback, and we got a lot of questions, and we got a lot of.
Yeah, we just got a lot of feedback from people who were questioning, is this a model that would actually work, and is this a model that would incentivize people to repay?
And I think that kind of goes back to what we focus on. And we really believe in people, and we really believe in providing opportunities and supporting people to. Not just providing, but really just supporting people to access whatever opportunities that they.
That they want and just kind of having that faith that people, if given the right support, will want to repay? And I think this concept kind of like, oh, well, there has to be interest on a loan or some sort of incentive to repay.
Yeah, I think it's. We as humans maybe have been trained to believe that, but it was a really big challenge for us to kind of get across the line at the beginning that the concept of zero percent. So I think Ryan did a really good job kind of working with all the different stakeholders that we had to bring in money that work for everyone and maintaining that affordability, most importantly for the borrowers and for the community members who are taking out the loans.
So it was definitely a challenge. And I know that I Don't want to just kind of waltz in here and be like, yeah, we just started zero percent lending.
[00:22:33] Speaker C: It was definitely not that easy.
I think what's really interesting also, and also worth highlighting is like, the world of lending began by you tripping, coming to me as someone you knew and saying, hey, can I borrow some money? And me as your friend or neighbor or acquaintance saying, sure, what's it for? Oh, you need a tool for your agriculture. Yes. Here you go. Here's that tool. Or here's that money to buy that tool. Right.
And there was no such thing as interest. And now interest has become this thing that is obviously inherent in our financial system and does create the sustainability of the financial institutions.
And I think for us, we still need to figure out what that looks like in terms of a viable model over time and whether affordable interest rates less than prime still makes sense. But it's just what we're trying to do is literally not innovative in the sense that we are going back to the way lending began at its inception. So I think that's also important to recognize as well.
[00:23:47] Speaker B: Yeah.
As you're describing sort of the.
I'm coming to the recognition that you're operating in a pretty.
There's an ecosystem at play here where there's a lot of different actors involved. Right. And I'd be curious to hear if we think about stuff for a framework. If you think about public sector actors, private sector actors, nonprofit social enterprises such as yourself, other peer nonprofits that.
Other nonprofits that might be providing other services, where do you see Community Credit Lab fitting best in that ecosystem? Because obviously there's a lot of different levers to be pulled for somebody to realize that sort of agency. Sandhya, you talked about that you're endeavoring to provide. So I'd be curious where you think among all those different. The constellation of actors involved in developing a vibrant economy, where does Community Credit Lab fit in best or how does it work best?
[00:24:45] Speaker D: Yeah, I would say that. I mean, we are structured as a nonprofit. I think we honestly, I think we really kind of sit in between all of these players. We're really trying to coordinate all of these different players. I think if we had to put a label, maybe social enterprise. But we're really kind of trying to coordinate either resources or support and really shift the way that money is flowing across the public sector, private sector individuals, social enterprises, nonprofits, in a way that really does center our community members and really does center the people who are currently being underserved and aren't able to access what they need to make it from day to day.
[00:25:45] Speaker C: Yeah. I think we're not trying to do all that on our own. Right. I think a really easy example is just yesterday we presented to a group of three CDFIs that are thinking about a new lending strategy in South King county and supporting underserved communities there. And we would have most likely no direct involvement in that strategy. But we shared our research and we shared our thinking around how affordable credit could be a tool to mitigate the cost of rising rents for businesses, small businesses in that geography.
And so kind of just sharing these ideas and having conversations that are transparent and open and thoughtful is very much a part of our role. It's not about us sort of aggregating more and more resources all the time and coming up with our own lending programs. It's also about making sure we're having conversations that are constructive.
[00:26:40] Speaker B: Sure. And just because the term has come up a couple times, cdfi, could you just offer the audience.
[00:26:45] Speaker C: Sure, yeah. Sorry. We try to avoid acronyms, but I'm not always the best at it. It's community development financial institutions.
So that's a pool of government funding and a government certification that allows access to that pool of funding, which is then designed for small businesses that meet certain criteria.
[00:27:05] Speaker B: Great, great, great, great. And is there, you know, is there an actor in that constellation that we were just describing? Is there a group that you would like to work with more that you maybe haven't. It's not something you've explored yet or that hasn't really taken flight, but that you'd like to work with more?
I guess. In particular, we haven't discussed much involvement with any policy influence or if there's anything on the public sector side or anything regarding sort of that angle. I'd be curious if it's government or another that you'd be really interested in engaging with, but haven't really so much up to now.
[00:27:45] Speaker D: Yeah, you read our mind.
That was the answer that we were going to give.
Yeah.
[00:27:52] Speaker B: So I stole your thunder. I'm sorry. I'm sorry.
[00:27:56] Speaker D: No, no, no.
[00:27:58] Speaker B: Yeah.
[00:27:58] Speaker D: The public sector is one that we think has.
Yeah. We're just really interested to see, even locally, how we can either engage either informally or formally with them. We know that they have. They are connected to a lot of organizations locally and have the ability to kind of connect outwards but also inform policy inwards based on testing solutions within their neighborhood, within the neighborhoods in that community.
So we are quite interested in figuring out ways that we can partner or work with the Public sector, for sure. That's one that is at the beginning of this year, we put on our list of areas that we want to get to know more and build more relationships in.
[00:28:57] Speaker C: Yeah, yeah, I totally agree. I think.
Yeah, totally agree.
[00:29:04] Speaker B: Great.
And then I have a last question that's just for fun questions. So as we've been talking, there's a lot of different organizations and entities and actors involved in developing a vibrant economy. If we were in an instance where an economy needed to be built from scratch and you could put on any of the hats of the different sort of actors we described, from government to private sector to.
To nonprofit to a social enterprise, what would be the one you would be most keen to grab, and what would be one of the first few things you would do to set the foundation for a really vibrant economy?
[00:29:46] Speaker D: I am really interested to hear what Ryan says, but my take is I would definitely want to be.
To play the role of government. I feel like the government can play such a transformational role in setting people up for success in terms of the policies they design, in terms of the programs that they fund.
I know that we kind of think of government as being quite bureaucratic, and sometimes it does really does feel like that. But really, I think the government is there to really support all of every single member of our community.
Whether you don't have a home or are homeless on the street, or you are a bazillionaire, we're really here. The government is really there to kind of make sure that every person has what they need to be successful, and the policies are in place that support that continued effort.
[00:30:58] Speaker C: Yeah.
[00:30:58] Speaker B: Hey, Ryan, you're on the hot seat now.
[00:31:00] Speaker C: Yeah, I guess so. I think that's well said. I think we also talk a lot about the fact that we're all in this together and we succeed and we fail together. And whether we recognize that or not, over the long term, I think we fundamentally believe that to be true.
I guess where.
Where my mind goes is if we're thinking about setting up something new on the moon or elsewhere, then maybe the systems we have in place right now, maybe the different stakeholder groups that we have in place just aren't the right groups.
How is there a way to break down these silos so it's less of a choice between government and private sector and nonprofit sectors and more of a what does it look like to build a society where people can collectively thrive in a way that doesn't involve the existing institutions? I think the democracy we're in right now is somewhat of A misguided concept with a two party system and having not everyone's vote always count under the electoral college. So how do we rebuild things in a way where we are really starting from scratch?
And not in a sense that we're forgetting everything that has been built, but in a sense that we're thinking about what have we learned so far on earth and what does it look like to break down those walls and those barriers and those silos and build something new?
I don't have a good answer to that right now, but that sounds like a really fun exercise at some point to get into.
[00:32:44] Speaker B: Yeah. That deserves a six hour follow up
[00:32:47] Speaker C: conversation with a lot more people.
[00:32:50] Speaker B: Yeah.
Well, listen, thank you so much for joining Ryan and Sandhya. And before we go, if you can just offer to the audience where they can follow you or find you or even contribute to the work you're doing.
[00:33:03] Speaker C: Yeah, the Patreon page that I think if you're able to put a link
[00:33:08] Speaker B: up for that, we'll put a link up for that.
[00:33:10] Speaker C: That's, that's the place where we're planning to share a lot of our updates and anyone can join. I think the lowest contribution we have there is $5 a month. So hopefully that is affordable for most people. And if it's not, then just send us an email or sign up to our mailing list on our website.
And then if for more higher dollar foundations and donor advised funds or donors, feel free to contact us directly as well as the accredited impact investors.
[00:33:46] Speaker B: Yeah. Could you just even spell out the URL or not even spell it out. But just what is the sure for Patreon, even for just the website you just mentioned too?
[00:33:58] Speaker C: Sure. Our website is www.communitycreditlab.org and our Patreon site is patreon.com P A T.
Communitycreditlab.
[00:34:13] Speaker B: Wonderful. And I know you're on LinkedIn as
[00:34:17] Speaker C: well
[00:34:20] Speaker B: and so that's a good place to.
You put up good content there. I think people will find some value in following you there as well.
[00:34:27] Speaker C: Yeah, we try to.
[00:34:29] Speaker B: Yeah.
[00:34:30] Speaker C: Both those places. And Twitter is at a Ford Credit.
Okay. At a Ford Credit.
[00:34:36] Speaker B: Great. Yeah. And we'll put all this in the notes. Listen, thanks again so much for joining and glad to have the chance to have a conversation, hear more about the work you're doing and looking forward to watching it blossom even more.
[00:34:49] Speaker D: Great. Thank you, Tripp.
[00:34:52] Speaker C: Thanks Trip for inviting us.
[00:34:58] Speaker A: Thanks for listening.
Check the show notes for links and information mentioned in the episode and explore the other episodes in this season to learn more on this topic. Look, I've listened to them all. I'm obviously a little bit biased, but I really do think each offers a valuable perspective you'll appreciate.
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