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Starbucks Hopes To Kick-Start Job Creation

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Starbucks Hopes To Kick-Start Job Creation


Starbucks Hopes To Kick-Start Job Creation

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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And it may be one of the country's biggest coffee shop chains, but today, Starbucks is going to ask customers for donations - tax-deductible donations. The dollars will go towards a network of community lenders. The idea is to provide more support for companies so they can hire or retain American workers. NPR's Wendy Kaufman spoke to the man who runs the lending network and sent this report.

WENDY KAUFMAN, BYLINE: Mark Pinsky heads something called the Opportunity Finance Network. It's a group of about 180 mostly non-profit lenders that work in underserved communities where credit is often hard to get. Over the last couple of years, Pinsky had chatted informally with individuals at Starbucks about ways they might collaborate, but he certainly wasn't expecting the communique he got from the company a couple of months ago.

MARK PINSKY: I got an email late one Monday night saying: We're thinking of doing something. Can we talk tomorrow morning? We talked on Tuesday morning, and by Wednesday, we basically had a handshake deal.

KAUFMAN: The deal creates a new pot of money. The Starbucks Foundation is putting up $5 million and encouraging others to chip in. All the funds are slated for the Community Development Financial Institutions that are part of Pinsky's network. He explains the contributions represent equity. Lenders can use it to leverage even more financing. A $5 contribution, Pinsky says, will likely support $35 in new lending, and will be targeted at job-creating projects.

The Opportunity Finance Network was born more than a quarter of a century ago. Pinsky says Catholic Nuns were among to invest in these community lenders.

PINSKY: There were two things we learned back then that I think are still true for us today: One, when you're borrowing the nuns' community money - really, their retirement money - first of all, you better do something really important with it. You better do something that matters, right. But the second lesson is when you're borrowing the nuns' retirement money, you don't lose the nuns' retirement money. You work really hard to do that.

KAUFMAN: Many banks would shy away from the kinds of loans these community lenders make, and, in fact, their default rate is a bit higher. But Pinksy says their performance is laudable, given the populations they serve and the risks they take.

PINSKY: We are profitable institutions. Our lending is profitable, but it's not profit-maximizing. And in the space between the sort of the profit and the profit-maximizing, there's a lot you can do if you're willing to work with your borrowers, work with the businesses, get them the help that they need to make sure that they succeed. And that's key to what we do.

KAUFMAN: In Philadelphia's inner city, Pat Burns has been able to open two brand-new Fresh Grocer supermarkets in the past couple of years, creating more than 450 local jobs.

PAT BURNS: There's no way that we would have been able to build these two supermarkets from the ground up like we did without having this program. It's as simple as that.

Fresh Grocer got help from a community development financial institution headed by Don Hinkle Brown. He says community lenders like his offer a variety of financing strategies.

DON HINKLE BROWN: There are micro-lenders. There are credit unions. There are banks. There are loan funds like us. There are big loan funds and small loan funds. That's what's interesting about the field, is that we adapt to the environment.

KAUFMAN: The financial institutions can marry public and private money and get mainstream banks to partner with them on projects. Hinkle Brown is excited about the Starbucks initiative and the marketing muscle the company's putting behind it. The chief economist at Moody's Analytics, Mark Zandy, who sits on the board of directors of one of these lenders, likes the initiative, too.

MARK ZANDY: It's an effort by the private sector to really make a difference with respect to jobs. And I don't think it solves the problem. It's not a home run. But it's certainly a solid single, and if other private companies can string together a few more singles, that's meaningful.

KAUFMAN: No one knows, of course, how much money Americans might contribute to the new fund, but the Opportunity Finance Network's Pinsky envisions contributions of at least tens of millions of dollars, and perhaps much more, to help create American jobs. Wendy Kaufman, NPR News.

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