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STUDY: AMERICANS BANKING ON MORE AFFORDABLE CHILDCARE AS "COMMUNITY INVESTING" RESOURCES NEARLY TRIPLE

Growing Childcare Crisis Sees Parents, Others Switch Where They Bank, Invest; "Community Investing" Financial Institutions Put Greater Emphasis on Childcare.

WASHINGTON, D.C.///JUNE 5, 2002///As quality childcare that is affordable becomes increasingly difficult for American families to find, more and more parents, grandparents and other investors are "voting with their dollars" by moving their checking, saving and investment accounts from traditional financial institutions to "community investing" banks, credits unions and investment programs with a major emphasis on creating more childcare opportunities, according to a new study from the Social Investment Forum (SIF) Foundation and Coop America, both of which are nonprofit organizations. The report, "Community Investing in Action: Childcare," finds that childcare financing by community investing institutions surged by 191 percent from 1998-1999 to 2000-2001.

"Through community investing, parents, grandparents and other concerned individuals and organizations are directly supporting the creation of childcare facilities, jobs, and slots for toddlers in the very communities that need these services the most," said Deborah Momsen-Hudson, vice president of Self-Help Credit Union, Durham, N.C. "Many of the options that people can exercise to directly support the wider availability of affordable childcare are as simple as opening a checking or savings account at a community development bank or community development credit union."

"Many traditional financial institutions do not understand the childcare market and are leery of providing financing to new facilities precisely where funding is most needed in struggling middle- and low-income communities," explained Shari Berenbach, executive director of the Calvert Foundation. "This is the gap that community investing financial institutions fill today. Individuals who want to be part of the solution need to know that where they bank and invest can make a direct contribution to easing the childcare crisis in America. In addition to community investing credit unions and banks, individuals also can support childcare through certain mutual funds and pooled investment programs."

The new report's data is consistent with SIF Foundation data published in 2001 showing that overall assets going into community investing grew by 41 percent between 1999 and 2001. Assets held and invested by over five hundred community investing institutions in the United States totaled $7.6 billion in 2001, up from $5.4 billion in 1999. Community investing is financing that generates resources and opportunities, such as childcare, for economically disadvantaged people in urban and rural communities in the U.S. and abroad that are underserved by traditional financial institutions.

KEY FINDINGS FROM REPORT

There is growing crisis today in American childcare today, according to the SIF Foundation/Coop America report. Nationwide, 14 million children under the age of six - including six million infants - are in some type of childcare arrangement every day. In 75 percent of two-parent families, both parents work. Particularly in low-income communities, parents are finding that two incomes are needed to make ends meet. In particular, it is becoming increasingly difficult for parents to find childcare that is both of high quality and affordable. Full-day quality childcare can cost $4,000-$10,000 per year - as much as college tuition at a typical public university.

In order to gauge the impact that community investing is making on the American childcare crisis, the Social Investment Forum Foundation/Coop America conducted a survey in May 2002 of 15 representative Social Investment Forum institutional members that take part in childcare financing. The organizations encompassed by the SIF Foundation/Coop America survey included the major credit unions involved in childcare financing as well as a number of smaller organizations. The survey of this cross-section revealed the following:

  • Childcare financing by community investing institutions nearly tripled from 1998-1999 to 2000-2001. A comparison of the two-year periods showed a jump from $6.141 million to $17.849 million, an increase of 191 percent. This money was lent specifically for childcare initiatives to create and expand facilities, as well as to provide staffing and other operating costs.

  • The number of childcare facilities supported by community investing institutions rose 189 percent from 1998-1999 to 2000-2001. Community investing dollars allowed for creation, maintenance or expansion of 176 facilities in 2000-2001, versus just 61 in the 1998-1999 time period.

  • Childcare financing by community investment created 212 percent more childcare slots in 2000-2001 versus 1998-1999. A total of 12,528 children benefited from childcare slots created or maintained by community investing in 2000-2001, up sharply from the 4,009 created or maintained by community investing support in 1998-1999.

  • It takes $1,306 in community investment support to create or maintain a slot in a childcare facility. The Social Investment Forum data demonstrate how relatively small amounts of investment create a high impact. The data shows that for each $5,079 invested a permanent employment slot was created or maintained, and for each $1,306 invested a permanent childcare slot was created or maintained.

COMMUNITY INVESTING IN ACTION

At the heart of community investing are the lending institutions that best know the communities to which they lend. Community investing institutions take the time to learn the needs of a community and work closely with their borrowers, often providing technical assistance. Through this careful research and relationship building, community investing institutions are able to provide loans to entrepreneurs in low-income communities that traditional lenders often overlook, and are able to do so in a manner that benefits the borrower, the community, and their investors. Consider the following examples of community investing solutions to the American childcare crisis:

  • Tom and Christy File of Wilson, N.C. founded the Land of Learning Center for children through a loan from Self-Help Credit Union. They were not satisfied with available childcare options for their three children, so they decided to start their own center. "No bank would talk with me without the support of Self-Help," says Christy. Their loan from Self-Help helped them leverage additional lending from a traditional bank. Together, these loans financed the construction and expansion of their center, which nurtures 272 children ages six weeks through 12 years. The loan to the Land of Learning Center is part of an overall Self-Help effort to serve childcare providers in North Carolina. To date, Self-Help has provided loans to providers that have created or preserved almost 14,000 childcare spaces across the state.

  • Ezzard Charles of Chicago, IL., was able to found the Ezzard Charles School thanks to assistance from the Illinois Facilities Fund (IFF). The school serves infants, toddlers and school-age children from low-income families in the Auburn Gresham and Englewood communities of the city. The agency owns and operates two childcare centers (located across the street from one another). One site serves 73 children and the other serves 24 infants and 26 toddlers. IFF's first loan to Mr. Charles allowed him to purchase and renovate a facility to serve an additional 50 children and provide infant care.

HOW CONCERNED INDIVIDUALS CAN GET INVOLVED

Community investing institutions use consumer deposits and investments to provide financing to communities that are overlooked by traditional lenders, creating resources and opportunities for people who need them most. In addition to checking and savings accounts, CDs and IRAs can be provided through a community development bank or credit union. It is easiest to look locally for a community development bank or credit union. If such an organization is not nearby, it is easy to bank at a community development bank or credit union in another neighborhood or state using ATMs, mail, and online banking. A partial list of SIF Foundation institutional members that carry out childcare financing includes:

For a fuller list of Social Investment Forum member organizations that engage in childcare financing go to http://www.communityinvest.org/childcarelist.htm. A listing covering all types of community investing alternatives can be found online at http://www.communityinvesting.org/search.htm.

ABOUT THE SIF FOUNDATION/CO-OP AMERICA

The Social Investment Forum Foundation is a national nonprofit organization providing information and educational programs on socially responsible investing. It provides cutting edge research on the trends, practices, performance, and impact of social investing. The Forum also provides information and resources for investors interested in community investing, shareholder advocacy, and portfolio screening for social and environmental impact.

Co-op America is a national nonprofit consumer, business and investor education resource that helps people use their money to promote social justice and environmental sustainability. Co-op America harnesses the power of consumers and investors through marketplace strategies to address some of today's most pressing social issues such as sweatshop labor, deforestation, and other threats to the health and well-being of people, communities, and the planet.

The Community Investing Program began in 2000 as a joint venture between the Social investment Forum Foundation and Co-op America, The five-year goal of the Community Investing Program is to encourage all investors to direct at least 1 percent of their assets to community investing, tripling the assets available to create new jobs, homes and vital social services in communities that need it most.

Funding for the Social Investment Forum Foundation/Coop America report was provided by the Packard Foundation, the MacArthur Foundation and the F.B. Heron Foundation.

CONTACT: Stephanie Kendall, 703/276-3254 or [email protected]

EDITOR'S NOTE: A streaming audio replay of the news event at which the community investing/childcare study was released will be available as of 6 p.m. EDT on June 5, 2002 at http://www.hastingsgroup.com/childcare_solutions.html.

TO LEARN MORE ABOUT COMMUNITY INVESTING, VISIT:
http://www.communityinvest.org