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April 27, 2001
Jewish Foundation Promotes Community Development
by Mark Thomsen
Jewish individuals and organizations are supporting communities through investments in community
development financial institutions.
A Jewish foundation is helping boost community investing by encouraging American Jews and to invest
in community development financial institutions (CDFIs). TZEDEC, the community investment program of The Shefa
Fund, is spearheading an effort to educate Jewish organizations about the financial returns and
social impact of community investing. The Shefa Fund is a national public foundation that, in
addition to running TZEDEC, makes grants that support social justice, Middle East peace and the
Since the program's inception in 1997, TZEDEC has catalyzed more
than $10.25 million in investments in CDFIs for the purpose of low-income community development.
This total includes both funds organized through TZEDEC's loan funds and funds invested directly in
CDFIs by Jewish organizations and individuals.
"CDFIs continue the self-help tradition of
the Hebrew Free Loan Societies, which helped American Jews create wealth and gain access to capital
in the 19th and 20th centuries," said Amanda Joseph, Director of TZEDEC.
nearly $2 million in assets through the TZEDEC Economic Development Fund, a wholly-controlled
nonprofit subsidiary of The Shefa Fund. About a third of these funds are used as "matching" or
"challenge" investments to leverage increased CDFI investing by local Jewish communities
Last year in Boston, for example, the Jewish Community Relations Council and
the Combined Jewish Philanthropies worked with The Shefa Fund on a TZEDEC initiative. The Combined
Jewish Philanthropies approved a $100,000 investment in Boston Community Capital's loan fund.
Among its other programs, Boston Community Capital helps stabilize Boston's low-income
neighborhoods by creating decent, affordable housing.
Joseph stressed investors also gain
important intangible benefits from supporting TZEDEC programs. "To investors, TZEDEC offers the
opportunity to fulfill Jewish values of tzedakah, which is righteous giving, and tikkun olam, which
is repair of the world."
Investments in TZEDEC loan funds are at terms of 3-10 years, and
pay interest rates of 0-2 percent. Joseph said zero percent loans are in the tradition of Hebrew
Free Loan Societies. Investments made in CDFIs are also typically over 3-10 year periods.
To date, TZEDEC has invested funds in two national CDFI intermediaries, the National Community
Capital Association and the National Federation of Community Development Credit Unions. As part of
a $1.8 million TZEDEC campaign in Washington, DC, TZEDEC has invested directly in several
Washington, DC-area CDFIs.
Looking toward the future, TZEDEC is launching local initiatives in areas that
feature both large Jewish communities and significant pockets of poverty. Cities where programs
are underway include Baltimore, Boston, Los Angeles, New York, Miami, Philadelphia, Chicago, and
South Palm Beach. "We've found that these local initiatives provide a tangible and meaningful way
for people to support the cities in which they live and do business," Joseph remarked.
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