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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 Jewish community.

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.

TZEDEC manages 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 nationwide.

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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