Ever since Presiding Bishop Katharine Jefferts Schori mentioned the Economic Justice Loan Fund during the church's domestic poverty conference this spring in Newark, New Jersey, people have been asking me to tell them about the fund.
The Economic Justice Loan Fund is a justice ministry through which the Episcopal Church acts to alleviate poverty. Executive Council created the fund as it exists today in 1997 when it combined two previous loan-making committees operating since the 1980s. The fund's roots, however, extend back to the church's Ghetto Loan Fund of the 1960s.
The current fund is $7 million of the church's investment assets that have been set aside by General Convention and Executive Council to be loaned to community financial institutions at less than market interest rates to support community development lending by those community institutions. These are investment assets, not operating funds, and these assets are invested, not given away, to alleviate poverty. The fund does not make grants. The Economic Justice Loan Committee (EJLC) administers the fund.
General Convention, Executive Council and the EJLC all have a fiduciary duty on behalf of the church to see to it that these investment assets are preserved and protected while they are used for economic justice mission.
Accordingly, the borrowers are legally required, by contract with the church, to pay back their borrowings and, while the loans are outstanding, to pay interest to the church for the use of the funds, albeit at below market rates. There have been no defaults in the decade the EJLC has administered the fund.
Under the current Economic Justice Loan Fund program the church lends only to community development financial intermediaries, such as loan funds, banks or credit unions. Some examples are available here.
There is one additional important principle guiding the fund: the EJLC approves no loan unless the appropriate diocesan bishop approves the making of the loan.
Why does the church make loans to intermediaries instead of end users?
Economic development lending is well within the mission of the Episcopal Church, but the church is not in that business; that business requires a commitment of resources and personnel that the church is not set up to make.
Many community development intermediaries already exist and are functioning successfully. They know how to support their borrowers with management and financial training and consulting services, to help the borrowers carry out their projects and repay their loans. For the end user borrower, borrowing from an intermediary not only provides capital, it provides valuable debt management experience and training and the opportunity to develop a record that can help the end user gain access to the regular capital markets.
The church need not and cannot duplicate the capacity existing in these intermediaries. The church has and can provide capital (its investment assets) to support these successful intermediaries. That is what the church does through the Economic Justice Loan Fund.
What can a diocese, a parish, a church institution, or an individual do?
The church and the EJLC cannot manage assets for others. However, they can help others find ways to participate. Generally, individuals and institutions interested in supporting economic justice loans can take two approaches.
First, if you have investment assets, you may be able to use them to make economic justice loans. Before doing so, institutions should consult with legal counsel. Individuals also should consult their advisors and approach making such loans with care. The church can assist you with additional information and contacts.
Second, if you know of an intermediary that might benefit from a loan from the Episcopal Church, or if you know of a project that might benefit from a loan from an intermediary funded by the church, the EJLC may be able to help facilitate that result.
The EJLC cannot promise to make a loan, but it can promise to consider opportunities brought to its attention.
For more information, contact:
Margaret Crosnier de Bellaistre
Finance Staff Liaison
Director of Investment Management and Banking
The Episcopal Church Center
815 Second Avenue
New York, NY 10017