Investing

Eve Picker: [00:00:08] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich, or poor, beautiful, or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:47] For Chris Miller, it’s all about community capital. Chris is chair and one of the founding board members of the National Coalition for Community Capital, or NC3. They are leading the charge to strengthen local communities by empowering ordinary citizens through community investment and ownership. Chris has been working on community, economic and entrepreneur development in Michigan for nearly 20 years in roles as varied as city official, board chair and Innovation Fellow. As the city of Adrian’s Economic Developer, he secured millions of grant dollars and matching private investments. But he also developed a local investor group and championed Michigan’s Mile, an investment crowdfunding exemption that served as a national model. It’s all about community capital for Chris. Listen in.

Eve: [00:01:53] Welcome, Chris. Thank you very much for joining my show.

Chris Miller: [00:01:56] It is such a pleasure, Eve, and I feel honored to be among the luminaries you’re talking to. But it’s good to set the bar low for everybody else, so.

Eve: [00:02:04] Oh, come on now. That’s not the way it’s going to be. Okay, so I’ve come to know you as the chair and a founding member of NC3, which stands for the National Coalition for Community Capital. So, tell me, what is community capital?

Chris: [00:02:23] Yeah, great. And, you know, part of what we’ve had to do is, as we’ve worked through this process, is sort of identify that we had some ideas when we first got together but essentially the definition that we’ve come to is that capital is, community capital is capital that comes from investment, that comes from a broad cross-section of the community. And obviously we pay special attention to non-accredited investors, at about 90% of the population, that before investment crowdfunding didn’t have a really good mechanism to make investments in their own communities and businesses and in real estate and projects there. So, for us, again, it’s that broad cross-section ensuring that we’re reaching those folks that have traditionally not done investment as part of their world.

Eve: [00:03:14] So are there any principles in particular that define community capital?

Chris: [00:03:20] So, there are principles that we have identified that for us are part of community capital. I think that community capital being defined as a broad cross-section of the community is pretty illustrative of what we think. But for us, there are also some values there that are attached to it that are kind of core to the work we do. And those are values like it is not extractive capital, that all of the stakeholders should be foremost in the process, that there should be wealth building for everyone, that it should be fair and equitable. And in fact, we don’t work with either individual projects or communities absent alignment with those values. But I typically say if you have a head and a heart, you will be aligned with those values.

Eve: [00:04:06] Then traditional capital you find is not aligned with those values? Or often not aligned?

Chris: [00:04:12] Sometimes it is, and sometimes it is not. One of the things that we’ve often talked about at NC3 is that we have a big tent on this perspective. So, there are people sort of on the far left that really don’t like capitalism at all and there are people on the far right who don’t think there’s any other way except capitalism, and we’re really kind of middle ground. I actually had an interesting conversation with a professor at the Ross Business School at the University of Michigan a while ago who has become an advocate for our work and was running into someone and who was postulating that, well, that community capital can’t solve the problems that they have. And I agree with that. We can’t do that, especially when we look at historically underserved communities. There’s very little capital available in those communities. And those communities have typically really big problems that are expensive to solve. So, the reality is, is that while community capital is critical for us, it isn’t the answer to all the questions. So, there are certainly going to be situations where we have to find ways to blend traditional capital together and philanthropic capital together to make projects work.

Eve: [00:05:22] And maybe train traditional capital to behave a little differently from time to time?

Chris: [00:05:28] I think so. I think there’s some of that training going on. But, you know, what’s really interesting is ultimately, this kind of work is really aligned with almost anybody who thinks capitalism is a good way to do things. And, you know, we don’t mind a little selfish capital or a little guilt capital coming into projects. And I do think, though, that it’s a longer term, you know, I think that one of the fundamental problems in the American economy with the way corporate America has evolved is we’re super concerned about the next quarter or the next 2 or 3 quarters, and we’re not thinking very much at all about a decade or two decades or five decades down the road. And that certainly is a piece of the challenge, recognizing that sometimes those returns take a little bit longer.

Eve: [00:06:13] So patient capital, which I’ve always said real estate is all about patient capital. And many people don’t understand that they. It takes a long time.

Chris: [00:06:23] Yeah. I think actually all smart capital is really patient capital, right? So…

Eve: [00:06:27] Yeah, probably. That’s true. But I think that building a building takes a long time. So, you’ve got to build it and get the entitlements and then get it occupied. And it’s a long, long haul.

Chris: [00:06:43] It does which is why I’m glad you’re there doing that, so.

Eve: [00:06:45] Okay. So, what is NC3’s Mission then?

Chris: [00:06:51] So, our mission really fundamentally is to advance the movement. And so, when we initially got together, you know, uh, really about a decade ago when we first started running into each other, we were all having the exact same conversations all over the country, encountering the exact same objections and concerns, and we were all making the same mistake. So, we said, well, let’s join together and stop making those mistakes individually and maybe hopefully collectively as well. So, we just want to see more of that community investment in community projects. Our goal ultimately is for every single community to have a local fund that everyone in the community can invest in, and build wealth in, and that fund would then in turn invest exclusively in the community. But we think that should be for every business and every project in every community, and that everybody should have a chance to be a part of that.

Eve: [00:07:47] So you said you were all doing different things all over the country. Who were those initial founders and what were they doing?

Chris: [00:07:55] Yeah, it was a very eclectic group. So, we had two authors. So, Michael Shuman was one of the founders, and Amy Cortese was one of the founders who was at that point. Michael’s written a lot of books, so I think in a lot of your audience had probably read some of Michael’s. Amy wrote one book that was called Locavesting. She was writing, though a lot for The New York Times at that point in time. So those were two founding board members. We had folks from the West Coast and what was Cutting Edge Capital and is now Pathlight Law. So, Brian Beckon was one of the founders of the movement. A woman who was doing entrepreneurial work, working with entrepreneurs and helping them find funding and start businesses, Amy Pearl, who was on the West Coast up in Portland, Oregon, was part of the movement. Janice Shade who is a Yale grad who worked in big business and finance and because she lives in Vermont, figured out that wasn’t a really great way to live. And so, she turned to the startup community and other projects and actually is now teaching with Michael over on the East Coast. So, she was one of the members. I had a colleague in Michigan who was an investment advisor, and she was in one of the big investment houses, and her clients were all saying, we want to make local impact. How do we do that? So, she founded an independent investment advisor firm. Angela Barbash is her name.

Eve: [00:09:25] I know most of these people.

Chris: [00:09:27] Exactly. Sure. Right. And then me, I was the on the ground economic developer and was kind of working firsthand on the ground in communities. And so that was really the group that came together initially, so.

Eve: [00:09:40] How long ago was this? Was this pre–Jobs Act 2012 or post Jobs Act 2012?

Chris: [00:09:48] It was post-Jobs Act. And I think we first started bumping into each other in conferences in 2014. So, 2014 and 2015 and 2016. Amy Pearl, I referenced who was in Portland, she had a really good funder helping her with the startup world. And so, she was able to put a conference together and all of us, I think, who founded the organization, were at that conference. And then the following year was when we did our own conference, really in 2017. And that was in Monterey, California. And it was there we officially became an entity, but we had actually decided in 2016 at what was Comcap16. We decided then at that meeting that we needed to form together and so we did a little bit of work and in 2017, at the end of the conference, we sat together and elected officers and started becoming official.

Eve: [00:10:50] So tell me about the work that NC3 does today.

Chris: [00:10:55] Yeah, we’re an education 501c3. So, what we started to do initially was really around education. And that ranged from producing materials. We produced an e-book on community investment funds and did a deep dive, we got a grant and did a deep dive into the Community Investment Fund Act of 1940, which I know you love. Yeah, right. And, uh, don’t we?

Eve: [00:11:20] Don’t we all, right?

Chris: [00:11:21] Yeah, don’t we all? That’s right. Yeah. And we produced some materials that were available. We also did conferences and workshops, and we would go and do roundtables in different places. So, we were basically putting the word out, speaking at our own conferences that we were attending about this. In 2013, Amy Cortese came to visit Adrian and inspired me to create a state-based investment crowdfunding exemption, which we got done in 2013. So, we were one of the very first states to do that. And it was a particularly good law. But I spent the next year speaking all over the state and then ultimately elsewhere about investment crowdfunding and why communities should be doing this and how great it was going to be for real estate. No one figured that out until you came along, no thank you, and did that. That was one of the major surprises. So, yeah.

Eve: [00:12:14] You mean that no one was doing it in real estate?

Chris: [00:12:16] Yeah, yeah, all of us that were talking together at that point in time, we figured real estate was going to be like the first thing that was going to be up.

Eve: [00:12:22] Yeah. Interesting.

[00:12:23] Yeah, it was a surprise. I remember having, I’ve had a lot of conversations about that saying I’m just really surprised that we haven’t seen that done in the space very much. Now, there were a couple of exceptions, but even they didn’t really stick with it in the way that you have done, so.

Eve: [00:12:41] It’s because my middle name is tenacious.

Chris: [00:12:44] That’s great.

Eve: [00:12:45] Or stupid? One of the two.

Chris: [00:12:47] No. Tenacious. No question. What you’re doing is like the other end of the spectrum from stupid. So, it may be hard, right? And it is hard, there’s no question, you know. And it’s complex. And doing real estate is always challenging and when you add in what you do, it’s more challenging. But I’m super glad you’re doing it.

Eve: [00:13:07] All of this is really hard because we’re trying to disrupt the status quo. And the status quo is a huge money machine, really enormous. I mean, how long have we been at this? And we’re just kind of nibbling at the edges, right?

Chris: [00:13:21] Yeah, we are, and I think, on the other hand, we’ve also made significant progress when you look at, you know, the investment crowdfunding world nationally. What, we’re $2.5 billion and yeah, that that’s not chump change but you’re right, in the grand scheme of things, it is a small amount. I remember having lots of conversation with Angela Barbash, my colleague from Michigan, the investment advisor, and she was always giving me grief appropriately because I was having lots of one-on-one conversations and I referred to it as seed planting. And she said, you know, we have to find ways to scale up. And I said, yeah, I think that we do too, but we have to have advocates around doing that. And we have those, and we have stories to tell, you know, just like you at the front end, everything was a theoretical conversation. You know, we think this is going to happen. We think this is how this is going to look. And now we have concrete examples. And every time you do another project, or some entrepreneur raises money and does another project, we have another story to tell. You know, I talk a lot with local units of government, and they all love the idea. And then the first question they ask when we’re done with the with the conversation or with the presentation is who else has done this? You know. So, they want to know that. And fortunately, we’re getting those game-changers, those innovators and leaders who are willing to do it and some are embracing it. We’re working with the local unit of government in Pennsylvania right now. They want to be the first local unit in the country to have a diversified community investment fund housed within the local unit of government, and we want that to happen everywhere. So, we’re thrilled because then we can say when they ask us that question, well, look at this community in Pennsylvania.

Eve: [00:15:00] Pennsylvania is also one of the most conservative places [inaudible].

Chris: [00:15:04] Exactly.

Eve: [00:15:04] Except maybe Philadelphia. We’ve seen a lot of activity in Philly. So, yeah, it’s interesting. So, you mentioned the Diversified Community Investment Fund, which I know is something you’ve worked on for a while. What is that?

Chris: [00:15:19] Thanks for the question. When we did the deep dive into the Investment Company Act, and wrote our eBook about it, which, by the way, a small plug is on C3’s website and you can get it for free. So essentially what we’re looking at was ways that people had done a work-around or stretched what had been established in 1940, in a way that maybe the original writers of that didn’t anticipate. You know, Boston Impact Initiative is my favorite example of that. Deborah Frieze up there hired a couple of attorneys, and they spent a year looking at that charitable loan fund and figured out a way to do many positive things with it, which had never been envisioned before. As we move forward in this space, and we were hearing from lots of folks a real desire to have a fund, we took basically another deep dive and looked at it because there are, as you know, some exceptions or exemptions in the rule and some ways to essentially keep out from underneath the heavy regulatory burden that is introduced whenever we had non-accredited investors in the mix.

Chris: [00:16:28] And so really, the DCIF or Diversified Community Investment Fund is a series of strategies that keep us out from underneath that and allows a fund, which is a real estate fund, and this is, of course, the golden part of this. It has to be real estate, because the SEC doesn’t think of real estate as securities in the same way they think of all that other stuff as securities. And so, by investing the majority of the fund in real estate, we can also facilitate investment by that fund into community businesses. Really anything else where there’s an opportunity to do debt service and get something accomplished for the community. And that is what, as you know, a lot of folks have kind of suddenly figured out they need housing. And so, it’s not difficult to spend money on housing or commercial real estate or whatever, and then still have some dollars available to invest in small businesses. And that ratio right now is pretty good because real estate is awfully expensive. We have two funds that are close to being launched right now, and then a couple more that are going to come later on in the year, including a couple of really big projects, one in Detroit and one in Cincinnati, that are looking at a lot of real estate in their projects, so.

Eve: [00:17:43] Okay, just to be clear, I always find the word fund to be confusing. I believe that this fund still can’t be a passive investment company. The investments made have to be managed by the manager of the fund, right?

Chris: [00:18:00] That’s correct. Yeah.

Eve: [00:18:01] Okay. So that’s a really, I think, an important distinction. You can’t just create a fund and then go and say, oh, I like that project over there we’re going to invest $30,000. You’ve got to actually own and manage the buildings in the fund, which is actually great for communities.

Chris: [00:18:16] Yes.

Eve: [00:18:17] So it’s an interesting concept, but how do you raise money into a diversified community investment fund?

Chris: [00:18:24] So a part of the beauty of the design of the fund is that you can raise money the same way you can raise anything else. So obviously for us, the most fundamental part of that is that you can do an investment crowdfunding campaign that non-accredited investors can invest in. So again, our goal is to get as many people invested. And also, wealth building, you know. We feel like if people are investing something and there’s not even an opportunity for wealth building, then that’s not really going to support the community in important ways. And we recognize right now in real estate wealth building is very challenging and it’s also long term. So, that’s a piece of it as well. So, you can do direct public offerings into the fund, you can do private offerings into the fund, you can do any investment crowdfunding. So basically, any way you can create a co-op, you can do a lot of different things.

Eve: [00:19:16] So the regulatory burden comes when you want to actually do an offering into the fund. Right? Then you’ve got to follow the SEC rules however you’re raising money.

Chris: [00:19:25] Yeah, exactly right.

Eve: [00:19:26] Okay. Well, I can’t wait for us to raise money into our first DCIF. So, I’m looking forward to that. Is there a minimum size for a fund like this that makes sense?

Chris: [00:19:40] We’re not 100% certain that there is a minimum size. We know that definitively there isn’t in terms of regulation or that kind of thing. So, it’s a matter of how the business plan works. But we like to say this will scale up or scale down because, you know, the reality is, if you take the Investment Company Act, any of the structures within there, sort of at face value, apart from a charitable loan fund, you need a community of about 50,000 people to sustain a fund at the kind of giving we could expect to get or investing we could expect to get. So that eliminates 80% of the communities in the country, probably a higher number than that. So…

Eve: [00:20:20] That’s actually interesting, yeah.

Chris: [00:20:21] Yeah. And what we’re talking to in places where we’re looking, you know, much smaller communities, we’re looking at, we’re talking about leveraging the administrative costs and the regulatory costs and the attorneys cost among entities within the community. So, if we can get a traditional bank or a credit union involved or a traditional law firm involved, if we can get some philanthropy involved, we can offset some of those administrative costs for it. And there are several funds right now that are essentially structured the same way as what we’re putting up as DCIFs, that have volunteer committees of people that have expertise, that are doing the fund management part of it. So, if you can imagine a small community, they’re going to do a project every year. One year, they’re going to do a real estate project the next year they’re going to do a small business in their main street downtown. You know, there’s not a tremendous amount of due diligence there or management there involved. And also, you know, what certainly happened in investment crowdfunding with platforms is software and kind of the back-office stuff became automated and manageable. So, the idea of having 100 investors is not this daunting by hand work that you have to do any longer. And there’s a lot of really interesting innovations still going on in that space. So, we think as there’s more demand, we’re going to see more innovation on that management side of it that’s going to help that piece, so.

Eve: [00:21:46] How are you working to implement this idea?

Chris: [00:21:50] Thank you for the question. So, we really learned some lessons through some mistakes that I made, which is a really great way to learn lessons. A couple of years ago I received a fellowship from Michigan State University, and the goal was to advance the community capital movement in the state. And so, I talked to over 100 communities during that time.

Eve: [00:22:09] Wow.

Chris: [00:22:09] All of whom had done donation crowdfunding campaigns. So, in Michigan we have a really wonderful program that our state EDO does that matches community donations, dollar for dollar for creating new public spaces. And it’s a terrific program. It was actually the first of its kind in the country and so I talked to all those folks, many of whom were entertaining doing something but using investments from the community as opposed to donations from the community. And what I learned was that after we talked to those folks and encouraged them to go forward and kind of gave them a road map, when we came back and visited later, they had done nothing and/or very little. And typically, that was because they’d reached out to a local attorney or a CPA or an investment advisor or a banker and told them about this great idea. They were going to do this really cool project, and they were going to raise all this money from just the regular folks in the community, and they were all told, well, that’s a terrible idea, or it’s illegal or those kinds of things, so.

Eve: [00:23:13] We run into that a lot, too.

Chris: [00:23:15] Yeah, exactly.

Eve: [00:23:17] These new ideas aren’t really, haven’t been absorbed yet.

Chris: [00:23:21] No question. And in terms of sort of the infrastructure around them, they are also so, you know, we have folks like you that are pushing forward, but the legal side that you need or technical assistance or training help, very little of that. So, we ended up again stealing really an idea from the human service community doing a wraparound bringing legal help with us and technical assistance and training help with us when we work in communities. So, we introduced this as a community capital accelerator a couple of years ago. And pretty shortly after that, we were recognizing we need to come up with a fund structure of some kind of a workaround that we could do. And that’s when we introduced the DCIFs. And now it’s, there’s a lot of word of mouth certainly happening. As you know, this field is still relatively small. We as you noted when I talked about our initial founding board members, oh I know all those people, right? So, we you know, we do. We know we know each other pretty well. And we’re speaking at conferences and presentations. Brian Beckon, who is on the board and from, again, what was Cutting Edge Capital and now Pathlight Law, and I did a presentation at the neighborhood economics conference down in San Antonio last month to several hundred people from all over the country that are working on the neighborhood level in their communities. And, of course, we talked about the DCIF, had a couple of reps who are working on implementing a DCIF in Detroit and Cincinnati there as well, so.

Eve: [00:24:48] You’re very busy.

Chris: [00:24:49] Yeah, yeah. Well, but it’s all good. I, you know, I don’t regret a day or a conversation that I’m having right now because we’re really making important headway in getting, I think, important things done. And we’re developing some additional educational materials. We were very fortunate to take part in the EDA funded IEDC Economic Recovery Core program, which was just I don’t know if you’ve heard about that, but it’s a fellowship program, sort of like Peace Corps or AmeriCorps, but about economic recovery. So, Cares Act funding, $30 million was given to the EDA, and the EDA has passed that on to the IEDC, the International Economic Development Council, and they’ve partnered up with six national organizations and created 65 fellowships that are going to go into communities for two and a half years to work full-time on their problems. And we proposed, because they were all place-based projects. We proposed that we would do a fellow in the state of Michigan, and we were awarded one of the 65 fellows. So, she is working full-time now on advancing the community capital movement in Michigan. And because of her life experience and expertise, really focusing on the entrepreneurial ecosystem. So, those organizations that help start entrepreneurs down the business path.

Eve: [00:26:12] So you’re picking up steam, it sounds like.

Chris: [00:26:14] We are, no question. Yeah. People are more familiar with us. We’re getting more visibility. And that’s a good thing because as you know, when you start from zero, it takes a long time to get up to enough speed where you can actually start moving forward.

Eve: [00:26:30] Yeah, a long time. So, you’ve had some various and interesting day jobs throughout your career. Walk us through most, you know, some of the most memorable ones and how they’ve shaped this intense relationship you have with community capital.

Chris: [00:26:44] That actually begins before my first job. It was my first volunteer job. My mom, when I was a kid, and we did Halloween, instead of going around and collecting candy, although I did collect some candy as well, I also had a little milk carton, that had UNICEF on the side of it and I collected pennies for UNICEF that then went to kids all over the world in depressed communities. And so that the ethic that I grew up in my house was that we work to help others. And so that really invaded all of my life and my work choices. So, I worked in education for about a third of my life, all in private schools. Ended up internationally working in Korea at an international school there. I worked in the business community for about a third of my life, and a nonprofit community for about a third of my life. My wife and I moved into this small community we live in in southern Michigan, Adrian, Michigan, in 1999. And neither of us were from the area, and we both had two kids and families that lived a long way from each other. And so, we picked a community kind of halfway between where she lived in the middle of Ohio and where I lived up in the Port Huron area to southern end of Lake Michigan or Lake Huron. And we didn’t want to be in a big urban area. We wanted a more rural feel and smaller community. And we also were interested in a vibrant college kind of community.

Chris: [00:28:16] And so we moved to Adrian, which had three post-secondary institutions in a community of 22,000 and an opera house that operates full time as a theater that was the fourth oldest one in the country, and a symphony orchestra. And when we got here, they had this beautiful downtown, historic buildings that we didn’t really notice initially, but that turned out to be largely vacant. And it turned out that none of the college kids left the campus, at least not to go somewhere else in the city, they left it and went home or to big cities on the weekends. And so instead of a college town, it was a very quiet downtown. And I walked into the local economic development office, like the first month. And I said, I don’t know if I can help you, but this downtown should be thriving. You got, you know, 3000 college students a half mile away and none of them come down here. So that guy never called me, but I ended up volunteering and ultimately got appointed to the Downtown Development Authority and then appointed and elected to become a City Commissioner. And it became really clear that if I wanted to have an impact in the community, I needed to be on the ground doing economic development. And so, I resigned as a City Commissioner and instead went to work for the guy who was working for me as an elected official and became the city’s economic developer. That was in 2009. You may remember, that was a really lovely time when the.

Eve: [00:29:43] Oh yes, a really great time to take that job. Yeah.

Chris: [00:29:46] Recession was murderous, yeah. So, I became an economic developer with no economic development training, no business training and no finance training. So, the perfect recipe for disaster. But so, I started reading immediately ways that communities found atypical ways. And that’s where I read Michael Shuman and Amy Cortese. And we invited Amy to come to Adrian. This New York City young woman and she did, very surprisingly and spoke at an economic development conference that we had. And, you know, I mentioned she set me aflame with this idea of, so the jobs Act, she came in 2013, Jobs Act had passed the previous year. I was made aware of that and was really excited about it. And then it was really clear that the SEC was in no hurry at all to write the rules around it. And in fact, there were a lot of rumors going around that it’s not even going to happen. They’re going to find a way to completely defang this because we’ve taken their reason for living and they’re going to going to let all these people unwashed masses, you know, make investments, you know, that’s crazy.

Eve: [00:30:54] From experience, they found plenty of reasons in there. So…

Chris: [00:30:59] Oh yeah. Oh yeah, they did. And so, then I really had a parallel path. So, I started working on the political side to get legislation done, written, first of all, and then passed, and then I started talking about it. At the same time, doing a lot of projects in the city. So, during the 11 years I was the city’s economic developer, we leveraged millions of dollars of public money and private money to do projects. And we even did some crowdfunded projects, even before we got Michigan’s law done in 2013. But one of the things that happened when Amy came and spoke to us was that a group of potential investors who’d been talking about buying a building in downtown Adrian and fixing it up, many of which were being foreclosed and so they were really good bargains coming on the market. They said, let’s stop talking about it, and let’s do it. So, she was inspirational, even though she’s five foot two and 110lbs. And she just, quiet voice stood in front. Everybody was completely silent for 45 minutes while she told her stories. So, that group ultimately pulled together a couple dozen local investors and they bought a building and fixed it up. Started cash flowing right away because they got it for a ridiculously low price from the bank and the business that was going to be booted out, who was operating successfully in the main floor, instead became one of the investors in the building.

Eve: [00:32:22] That’s community capital, right?

Chris: [00:32:24] Community capital. And that group ended up doing that with three separate buildings. And we got them grants to add more rental apartments in them and fix up the facade and all that kind of thing. So that happened. And then I took off on the legislative side and got the bill done. And it was a particularly good, so, as the state-based exemptions goes, it was really generous. So, in Michigan, non-accredited investors can invest up to $10,000 in a project. And so don’t have the same burden of a, of a small number. So, we did a number of projects. I actually worked with the very first one that was, not surprisingly, a microbrewery and they raised $175,000 from a couple of dozen members of the community, including a group of us really regular folks that invested in that. And so, then it was doing both the economic development work here in the community and also moving forward and talking about this investment crowdfunding. And again, I started by meeting with local units of government all over the state because we have a state-based organization, the Michigan Municipal League, that basically contracted with me to speak at all their events in 2014. And we did that. So, so that’s big picture.

Eve: [00:33:41] Cool, so, I have one final question. And that is, what do you think it will take to move the needle to a country full of community capital?

Chris: [00:33:50] Actually, Deborah Frieze did a really interesting Ted talk on this of Boston Impact Initiatives. She talked about bottom-up change and that’s certainly what I see this as doing. And so, I think more of the kinds of work that you’re doing and the kinds of work we’re doing is going to happen. At the same time, there are some things that we can do on the policy and legislative side that would make this easier. You know, some of the things which just passed on the House side, I think, on a federal level are going to help. We need to remove impediments, and we need to make it a lot easier. You know, if you’re wealthy, you walk into an investment advisor’s office, you sign a couple of forms and you’re all done, and all your money is invested. And we need to create mechanisms that make that more possible on a local level. So, one of the things that we’ve done on that front is proposed to the SEC, what we call the 21st Century Community Investment Fund that would do all the things we all want funds to do. So, you know, be able to be housed anyplace, be able to build wealth for non-accredited investors, not a heavy regulatory burden, invest in whatever the community may want or need to invest in, and not be a workaround and a compromise, therefore.

Chris: [00:35:00] So we have no confidence that the SEC is going to move that forward, largely because the investment management division has gotten a lot more conservative instead of visionary. There was a very visionary woman leading the investment management division at that point in time, and we were excited about how she might receive it. Then she got poached, or left, and so the leadership is not really looking to expand what they do. So, we’ve also proposed that to the Senate Banking Committee, where they’re writing the Jobs Act 4.0. But that’s been two years in the making. We don’t see much happening there. So, we’re actually rallying partners from across the country right now because we want to take a clean bill and really do it legislatively. Because one of the things that we’ve seen, we now have 35 states that have state-based exemptions that all happened between 2012 and 2016. And those were all overwhelmingly bipartisan. There’s not a state where there was a significant partisan divide. So, we know the people on the right like this and people on the left like this, maybe for different reasons, but they like the idea. So, we think there’s enough political energy around this, and I think enough stress. You know, when we look at the political division, the social division we have right now, there is a longing for compromise and wisdom. And so, we think that we can find that and we’re having a lot of conversations with folks about putting that together and taking something up and getting that created.

Eve: [00:36:32] So I’m going to plant one more idea with you. I’ve always thought that when big money gets it and invests alongside small investors, instead of saying, oh no, I don’t know who they are, I’m not going to invest there, that will be a sea change.

Chris: [00:36:48] I agree completely, and that is definitely a part of what we do. We’re always talking about, especially in the larger projects we’re doing, leveraging other assets and bringing in traditional lenders. And the good news there, is a lot of those folks are looking for this way out, because a lot of people, if you talk to investment advisors, a lot of the folks they talk to, they want to have an impact on their own communities. They’re recognizing that we need to have an impact. People have sort of figured out having 3% of the population control, 70% of the economy is not a good long-term strategy, right?

Eve: [00:37:22] No, it’s not.

Chris: [00:37:24] So there’s growing acceptance of that. I expect that to happen kind of alongside this. But you’re right, we’re always looking for those opportunities and finding more and more of them as we go forward, so. And I think there’s also a growth of community banks. We’re seeing more conversation around that. And land trust. There’s a lot of things that are sort of in the movement that folks are identifying and recognizing as important, but I think what you identified is definitely a big piece of the puzzle, and certainly we’ve got.

Eve: [00:37:51] So, Chris, this has been delightful and full of tech speak, which I really like. It’s a pretty heavy lift and I really admire what you are doing, and I hope it just keeps picking up.

Chris: [00:38:06] Well, it will Eve, as long as you keep doing your work and all the other people who are aligned with us keep doing theirs, and I expect that to happen. One of the fun things has been watching as the movement has evolved, the kind of technical support around it, you know, growing. I’m looking at what Crowdfund Professional Advisors is doing now, and you know, how more visible and more active they’re getting. So, we are getting an ecosystem around this, and certainly on the sort of human service and community side, this message resonates powerfully with them. And so, we’re going to see a lot of people keep pushing forward. So, I’m super excited. I think we’re over the tipping point, and it’s a matter of just being smart and strategic as we go forward. Telling our story. We’ve got to be great storytellers. You’re a great storyteller, and the people you’ve had on are great storytellers, and every one of your projects is a great story. And that cumulative effect is, again, go back to Deborah for a second, she talked about suddenly that all crystallizes and we’ve got, bam, a network. And we are close to that place, I think. So, I’m looking forward to it.

Eve: [00:39:16] I agree, I’m looking forward to it too. Thank you so much.

Chris: [00:39:19] Thank you, Eve, keep doing your great work.

Eve: [00:39:30] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.