“This initiative has tapped into the American spirit of people helping one another.” -- Mark Pinsky, CEO of Opportunity Finance Network, Starbucks' partner in the Create Jobs for USA initiative.

By Aliza Rosen
Corridor Inc. Exclusive

On National Jobs Day, November 1, the international coffee retailer Starbucks launched its Create Jobs for USA initiative, the product of their recent partnership with the Opportunity Finance Network. The Starbucks Foundation – the charitable arm of the retail chain – kick-started the initiative with a donation of $5 million. Beyond that, visitors to nearly 7,000 U.S. Starbucks locations, as well as to createjobsforusa.org, are urged to contribute whatever they can to the fund – anyone who donates $5 or more receives a red, white and blue wristband with the word ‘Indivisible.’ The bracelets and their components are, of course, made in the United States.

The Create Jobs for USA initiative has received plenty of media coverage since it was announced at the beginning of October. However, corporate giving is nothing new. Companies – retailers, especially – are constantly looking for ways to improve their community image, and donating money to charity is a surefire way to do so. Many companies go as far as to create partnerships with specific charitable organizations, such as McDonald’s with the Ronald McDonald House Charities, and CVS/pharmacy with the ALS Therapy Alliance.

And while corporations can usually give larger amounts of money than any single individual, the combined efforts of individuals account for the majority of dollars contributed to charity. According to the most recent report released by the Giving USA Foundation, of the $290.89 billion donated to charities in 2010, 73 percent of those dollars came from individuals, while the smallest portion, just over 15 percent, came from corporations.

With such confirmation that the average consumer is still willing to donate money to a cause they believe in, Starbucks Chairman and CEO Howard Schultz has proposed a new kind of charitable giving: one in which 100 percent of the contributions benefit the same people who provided them.

Starbucks’ partner in the initiative is the Opportunity Finance Network (OFN), a national network of community development financial institutions (CDFIs) with the mission of providing affordable products and services to low-income people and communities. CDFIs are mostly non-profit lenders with very low loan default rates. The money raised through Create Jobs for USA will allow OFN to provide grants to their network of CDFIs, which will, in turn, lend money to small businesses and startups aimed at improving underserved communities.

According to OFN’s CEO Mark Pinsky, CDFIs will loan approximately $35 for every $5 donated – they do this by matching that $5 with their other sources of funding. Pinsky is optimistic about the initiative’s success, especially considering OFN’s established and growing network of more than 180 CDFIs and their 98 percent loan repayment rate. He predicts Create Jobs for USA will raise tens of millions of dollars.

“This peer-to-peer job creation initiative is a simple, high-impact solution to put America back to work,” Pinsky said. “Opportunity Finance Network has already made grants to Community Development Financial Institutions using the initial $5 million contribution from the Starbucks Foundation. They are working on loans as we speak.”

Among the first round of awardees are several CDFIs from Maryland and D.C., including The Reinvestment Fund, Inc., Partners for the Common Good, Nonprofit Finance Fund, and Corporation for Supportive Housing. Those CDFIs that did not receive part of the initial round of funding are encouraged to submit applications, and OFN will distribute the money raised through Create Jobs for USA as it becomes available, ideally on a monthly basis.

One of those applying for a share of those funds is Baltimore Community Lending (BCL), an organization focused on renewing and strengthening Baltimore neighborhoods. BCL became a member of OFN in 2005 and has since benefited from access to additional funding sources, investigative studies, and OFN’s annual conferences.

“I had been to the conferences before [BCL] became a member, because I thought they were great networking opportunities,” said Ruth Louie, President and CEO of BCL. “[They] give you access to network with other CDFIs… [and] the studies they do are really good and offer us the opportunity to do peer comparison.”

Like many CDFIs, Baltimore Community Lending is a mission-oriented organization, and thus does not lend to just anyone seeking funding.

“It is very difficult to raise capital in this environment unless you have your own,” Louie said. “What we want to see is [that] whatever loan we’re [providing] is working to restabilize and revitalize the community.”

Louie is optimistic the Create Jobs for USA initiative will help ease that difficulty.

“I think it’s a very creative way to put capital into CDFIs, especially to put the capital into businesses that generate and retain jobs,” Louie said. “And it creates visibility for us as CDFIs.”

Louie is not alone in her optimism. Lori Chatman, President of Enterprise Community Loan Fund and Senior Vice President of Enterprise Community Partners, Inc., is equally enthusiastic about the visibility the initiative provides for CDFIs.

“This is the first time that OFN is something everyone can hear about and learn about,” Chatman said. “As an industry ourselves, we would never have had the marketing machine to get the word out about the work we are doing.”

Enterprise differs from Baltimore Community Lending in that it is a national lender as opposed to a community-based one. Chatman admits it is harder for those community-based lenders, which often depend on state and local funding, when the economy drops and those budgets are cut. Still, the exposure OFN is receiving is just as valuable to her.

“Having this partnership with an organization like Starbucks, I think will create the opportunity to know what a CDFI is,” Chatman said. “It’s not just four letters strung together. These are places in your community that you can go to seek not just funding but also technical assistance in applying for funding, whether it’s for starting a business or growing a business.”

While Chatman and Louie, as well as many others, see great potential in the Create Jobs for USA initiative, some remain skeptical. When Starbucks announced the launch of the initiative on their Facebook page, responses poured in questioning the company’s true motives. A number of comments accuse Starbucks of creating a gimmick that gives people a false sense that they are helping reverse the financial crisis. Others suggest Starbucks CEO Howard Schultz created the initiative to make himself look good as a Presidential candidate.

In an interview on NBC’s The Today Show, Schultz assured Matt Lauer he has no intention of running for President, nor is the Create Jobs for USA initiative a marketing sham.

“This is not about PR. This is about Starbucks using its scale for good,” Schultz said. “This is about a problem in America and the fact that businesses and business leaders have to step up. We can’t wait for Washington.”

Despite the inevitable skepticism the initiative has prompted, Create Jobs for USA raised over $1 million in just the first two weeks. Based on OFN’s lending statistics, those donations will create approximately $7 million in loans to small businesses. In a release,  Schultz called these results “inspiring.”

“Concerned citizens are already making a difference in helping get Americans back to work,” Schultz said. “We are optimistic that this initial response will continue through the holidays and into 2012.”

Meanwhile, supporters continue to voice their confidence in the initiative via social media outlets like Facebook and Twitter.

“We’re pleased to see that this initiative has tapped into the American spirit of people helping one another,” Pinsky said from OFN’s 27^th Annual Conference.

To learn more about or donate to the initiative, visit www.CreateJobsForUSA.org. You can also find out about CDFIs in Maryland that are potential recipients of the Create Jobs for USA funds by visiting www.OpportunityFinance.net – from there, click on ‘Membership,’ and then ‘Find a CDFI locator.’

For more information on the CDFIs mentioned in this article, please visit their websites.
Baltimore Community Lending: www.BCLending.org
Enterprise Community Loan Fund: www.EnterpriseCommunity.org