Rochester Area Foundation rep discusses
networking possibilities with Chatfield group
Tuesday, March 04, 2014 3:18 AM
Rochester Area Foundation Donor and Grant Services manager Ann Fahy-Gust spoke to a gathering of people at Chatfield United Methodist Church (CUMC) last Thursday afternoon. She told the group about the formation of the Rochester Area Foundation's (RAF) Rochester Community Finance (RCF) community development financial institution (CDFI), a seven-county collaborative that includes Olmsted, Dodge, Fillmore, Mower, Goodhue, Wabasha and Winona counties. She explained that she and the institution are striving to create a network of nonprofit organizations that can be accessed by both the organizations themselves and the individuals they serve, particularly people in need of housing.
Ann Fahy-Gust, of the Rochester Area Foundation, speaks to attendees at a meeting held to discuss how the foundation's financial branch could assist Chatfield residents. GRETCHEN MENSINK LOVEJOY/CHATFIELD NEWS
"Because of the limits that Freddie Mac and Fannie Mae place on their loans, it makes it very difficult for some low- and middle-income people to get loans to buy houses," said Fahy-Gust, "and they may have great credit, but they may be short the $5,000 to $10,000 to get a loan, and we can partner with local banks to get them the money they need through low- and lower-interest rate loans. All studies say that when you get people into their own homes, they do better, their kids do better because they have the stability of not moving place to place, and that makes the community better."
Fahy-Gust outlined that a CDFI provides financial services to underserved markets, has a primary mission of community development, is accountable to the community and is a non-governmental entity certified by the United States Treasury.
She pointed out the CDFI has received a grant of $100,000 to launch its operations and the hope is to build a fund of $600,000, which she noted is a relatively small amount in comparison to neighboring CDFIs located on the state's borders.
"We're working with other organizations to start our capitalization, and we're confident we can start with $600,000. It's not big, but I'd rather be little, tiny, but effective," she added.
Fahy-Gust observed that the RCF's name might change in the future, given that it will eventually serve people in all seven counties after networking with those counties' respective organizations is established. The RCF wishes to have overt ties to the Rochester Area Foundation's mission, which encompasses philanthropy, grant-making and community leadership.
RCF satisfies two tenets of RAF's mission - grant-making and community leadership. She stated its board hopes to have "only four products to include nonprofit loans and gap loans for non-First Homes home buyers," or people who don't qualify for the First Homes home loan program.
The RCF also plans to attain its own 501(c)3 nonprofit status over the next year, as it currently operates under RAF's nonprofit status.
Fahy-Gust explained the infrastructure RCF is working to establish would include banks, grants, economic development authorities and other CDFIs arranging to borrow low-interest loans and then offer them to home buyers at a slightly higher rate. These entities would also likely offer non-traditional loans such as a one-year loan to assist a buyer in making a home purchase, generating revenue from those purchases through interest payments and fees to create sustainability. This would impact the communities in which people buy homes and allow the CDFI to increase its capacity for loan-making and to hire staff to perpetuate RCF.
While the RCF's focus will be primarily on home ownership, its networking system will also allow members of organizations to collaborate to meet needs of people in communities.
Fahy-Gust commented, "When you see organizations come together with similar resources, they can do so much more."
Chatfield's Help Our Neighbors (HON) senior citizen assistance program director, Sue Awes, agreed, but also pointed out that resources for counties such as Fillmore are few because the county is primarily rural.
Discussion turned to how to extend services to residents of rural counties - namely, how to reach beyond Rochester - as Awes cited she is a Goodhue County resident working in Fillmore County and has found it is very difficult to convince nonprofit organizations to take action in rural areas simply because the residents are not centrally located.
Fahy-Gust acknowledged that nonprofit organizations tend to locate in cities and concentrate on specialized populations because it is easier to do so, but that RCF will be working to engage organizations and schools.
Awes said, "It would be great if you're going to other counties, especially Fillmore, because we don't have a lot of access to resources. If you could provide networking systems that could share talents we could utilize in-kind and not have to write a grant, we could start networking and connecting ourselves to small nonprofit organizations, because if we have to write grants, it usually cuts into our bottom lines. A lot of us down here could benefit...."
The Rev. Debra Collum of Chatfield United Methodist church concurred, welcoming the prospect of networking opportunities.
Fahy-Gust shared that RCF will be working on a marketing plan, building a prospectus for investors and hiring staff in the coming months. She invited attendees to provide contact information so they can be included and encouraged them to invite others to participate in upcoming meetings, which will most likely be held at CUMC or another Chatfield venue since it is centrally located.