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November 07, 2011
Crowdfunding to Help Small Business Development in Underserved Communities
    by Robert Kropp

Opportunity Finance Network and Starbucks collaborate on Create Jobs for USA, which will leverage donations to fund small business job creation in communities hit hardest by the recession.


Crowdfunding is a relatively new concept, yet it has captured the imagination of the collective online community to such an extent that the US House of Representatives recently passed a bill amending the Securities Act of 1933 to exempt crowdfunding from the Act's prohibitions.

The proposed bill, which would allow start-ups to receive investments of up to $10,000 via the internet without first gaining Securities and Exchange Commission (SEC) approval, received the endorsement of the Obama administrations, which said in a statement that its goals are "broadly consistent with the President's (jobs) proposal. This bill will make it easier for entrepreneurs to raise capital and create jobs."

Opportunity Finance Network (OFN), the nationwide network of more than 180 Community Development Financial Institutions (CDFIs), recently launched one of the more ambitious crowdfunding initiatives to date, collaborating with Starbucks Coffee on Create Jobs for USA.

According to an OFN press release, the initiative, which has been seeded with a $5 million contribution from the Starbucks Foundation, "will help create and sustain jobs in underserved communities throughout the US."

"Create Jobs for USA pools donations from Starbucks customers, partners (employees) and concerned citizens into a nationwide fund, held and managed by OFN, for community business lending," the press release continued.

Every donor of five dollars or more receives a wristband with the word "indivisible" inscribed on it, but that's the least of the rewards of even so small a donation. For every five dollars donated, CDFIs will be able to leverage $35 in investments from other sources. With leverage as a multiplier, Create Jobs for USA estimates that every $3,000 in donations can create one job for a small business in underserved communities.

OFN president and CEO Mark Pinsky said, "This peer-to-peer job creation initiative is a simple, high-impact solution to put America back to work. 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."

Through 2009, OFN has provided more than $23 billion in financing to underserved communities, both urban and rural. CDFIs in the OFN network have an average 98% loan repayment rate.

 

 
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