Claire: [00:00:00] Welcome to the latest installment of the curious capitalist brought to you by the conscious business collaborative board in Connecticut. The curious capitalist is a series of podcasts where we take the opportunity to speak with a wide range of guests, including board members, business owners. Our purpose is to engage, educate and inspire business leaders at all stages in their careers to think and work more collaboratively and sustainably.

Claire: Please subscribe to this podcast, wherever you get your podcasts from. Welcome along to the latest episode of the Curious Capitalist brought to you by the Conscious Business Collaborative, known as the CBC board in Connecticut. On today's episode, I'm going to be speaking with Diane Smith, who is the CEO of Capital for Change based in Wallingford, [00:01:00] Connecticut.

Claire: Capital for Change has been delivering financial capital and impactful change to Connecticut's Underserved communities for more than 50 years. I'm excited to find out more. So Diane, welcome to the Curious Capitalist.

Diane: Thank you very much. I'm happy to be here. It's

Claire: great to have you on board. So come on, Diane, tell me, first of all, a little bit about yourself, how you got to this point in your career, and then we're going to dive into Capital for Change.

Diane: So I would say community development as an industry or as a discipline is sort of something that people generally get into accidentally. So I started with. With working for the state of Connecticut, I worked for the state of Connecticut for over 30 years, and I started in public policy, which included, you know, investment in economic development and housing development, community development, and went on to Work specifically in the financing world of economic development and community development.

Diane: So that's been [00:02:00] most of my career working with the state. I left the state in 2020, retired from that that business and worked for a short period of time in a non profit development organization in Massachusetts. The role of the state, The CEO became apparent to me having served on the board of capital chain for many, many years.

Diane: When the previous CEO left, I was encouraged to apply for this position and I did. So that's how I got here.

Claire: Wow. What an amazing journey to date. And I mean, you guys have been doing so much good for, for so, so long, and we're going to dive into some of the huge success stories. I think that it's fair to say you've had a Over the last 50 years.

Claire: First of all, let's take a little bit of a look into conscious capitalism in Connecticut. What has been your sort of understanding of it? How have you come into contact with it? Conscious capitalism, Connecticut chapter is now the conscious business collaborative, obviously. That's why I'm here. Uh, tell me a little bit about your [00:03:00] involvement with them to date.

Diane: Well, actually there hasn't been our, uh, Former board chair has been involved in a various numbers of, uh, philanthropic and investment communities and had introduced us to the conscious capitalists back in about a year ago. And I just started, so I didn't have any idea what that was about. The, our development officer, however, continued to have the conversation about being engaged.

Diane: So this is our sort of our first foray with this organization.

Claire: It's fabulous. You know, I've interviewed so many people over the years. Who have worked in all different areas of business, sometimes startups, entrepreneurs, very established businesses. And quite often they stumble across conscious capitalism as a, as a theory or as a, a framework for doing business for good.

Claire: And they're like, well, we've been doing that for years. And it's kind of nice in a way to have a, a name. For it and and an ability to kind of belong to something that you were actually doing [00:04:00] anyway, which leads me on to some of your huge success stories. I did a little bit of reading. We don't just throw this together.

Claire: Over the last 50 years, you've invested over 425 million. of mission driven capital into Connecticut's most vulnerable communities. Like, that's a round of applause for a start. But what could be done at state or federal level to, to maximize the positive impact that you guys are having?

Diane: I would say to recognize the community development finance institutions as an industry all, all together.

Diane: So what this happened, at least at the federal level, is there is in the Treasury Department has established CDFIs as a certified organization, a body of organizations, and have funded it through something called the CDFI Fund. As the, uh, Pandemic happened and the feds really needed to get a lot of money out on the street.

Diane: They realized that the CDFI industry was a great [00:05:00] network through which to deploy capital directly into communities, because more so than state governments, the CDFIs had relationships right on the ground. I would encourage the state governments as well as the federal governments to continue to leverage that the industry, because of the nature of, of the industry being very close.

Diane: to small business, to community organizations, to the folks who actually represent the neighborhoods, really just to be able to, to be able to touch those, those people more directly than the federal government or the state government can do on its own. Both of the, You know, those government sectors are really important to the work that we do.

Diane: And they're really big machines that the communities really just don't have access to. It's too expensive to work through those processes and complicated. So using CDFIs as a network to deploy their capital and to implement the policies that are underneath that capital, I think is a really good partnership.[00:06:00]

Claire: Absolutely. Something I just thought of is you've been doing this for a very, very long time now as a, as an organization. Tell me about some of the success stories or highlights that you've gone, wow, that's amazing. Ones that you're like really proud of, the ones that you take home and share around the dinner table at Thanksgiving, the ones that you, you know, that you're really chuffed

Diane: about.

Diane: I'm not sure that I share them around the Thanksgiving dinner table. However, it, what's really good about the work we've done. Really more recently in the last, I would say five to 10 years is understanding the value of unrestricted affordable housing in communities, the state government, the federal government have lots of programs where they provide affordable housing.

Diane: And restrict the rents for a long period of time to make them affordable for a very long period of time. And that is really valuable. And there are property owners who are also have properties in the same sorts of communities where there aren't any restrictions. [00:07:00] And they are responsible property owners.

Diane: They really want to be able to maintain their properties and provide good housing to the neighbors. And what we've been able to do over the last few years is to find capital to help those owners maintain their properties in good condition, as well as providing affordable rents without the, the, uh, the public restrictions.

Diane: So here, you know, we, we call it that naturally, naturally occurring affordable housing, NOAA housing, but over the period of time, you know, That we've been available, we've made these dollars available through a relationship with a state agency. There's been an awful lot of, of work been, been done with these investor owners, and not only has it provided this affordable housing to folks, but it's also reduced the costs for the owners themselves who were getting money from more expensive lenders.

Diane: So we've been able to find low cost money. And [00:08:00] lend it to them at a, at a really low cost, which means that their prices, their, their costs go down and that's really passed on to the residents as well. So I'm really, really excited about that. It's the type of housing actually I personally grew up in. And I knew that that was a whole untapped segment of our industry that we really need to pay attention to.

Diane: You

Claire: do so much more than just assisting people with home ownership and home development though, don't you? You work with a lot of businesses as well. Give me the full umbrella of, of capital options that you can offer all walks of life within the community.

Diane: So we are what is described on our website as a full service CDFI.

Diane: And what that means to us is that we have a fairly vertical um, representation of products. So we are able to provide energy efficiency lending to homeowners so that they can improve their energy efficiency. We can do, we can also do energy efficiency lending [00:09:00] to, to landlords in the same way I talked about the small multifamily owners.

Diane: They can also benefit from energy efficiency lending from us. We can provide energy efficiency lending to larger property owners who have, you know, you know, 50 unit apartment buildings. We can provide lending to folks who are looking to acquire property, to create affordable housing, to improve affordable housing, to plan for the development of affordable housing.

Diane: Those are called pre development loans. We provide loans to small businesses. So we do that in partnership with the state. And we also provide lending to nonprofits for their businesses themselves. So whether they're looking to purchase a property or to expand their business line in providing services to the community in terms of working capital or to purchase equipment, we can also do that.

Diane: So what I've been [00:10:00] describing to our new partners, as we've been described talking to, to folks over the last year, is that. Where what I see is the opportunity to invest in a community in it in a really complete way so we could help someone purchase a building and fix up, you know, the unit the units on the top as affordable rental housing as well as to occupy the first floor with a business who could also get a loan from us and, you know, to the to the nonprofit that's next door that provides a daycare, right?

Diane: So we can do all of that in the same community and and really be able to We hope to be very impactful in our investment strategies,

Claire: huge, hugely impactful and changing communities and lives. You mentioned the, the environmental and sustainability. Tell me a little bit more about the homeowner loans specifically in terms of solar, geothermal, improved insulation.

Claire: You know, one of our tenants, you know, is closely aligned with sustainability [00:11:00] and that, you know, I'm quite passionate about it myself and I think we should be doing a lot more and this gives people. Low income, underserved communities, the opportunity to access that new technology. Tell me a little bit about your successes there.

Claire: So

Diane: what we've done primarily is to work with homeowners who are looking to improve their energy efficiency. So we live in New England and there is a lot of dependence even now on oil and gas. So we do provide opportunities for those homeowners to repair and improve those systems if they're dedicated to keeping them.

Diane: And we also provide them lending to install something called heat pumps, which are electric driven. We are just starting our work with solar. Um, we're doing that in partnership with the Connecticut Green Bank. And we're getting that just, just started. Um, so those installations will probably begin, you know, during the, during the late spring.

Diane: So we're doing that as a [00:12:00] pilot program to see how people are responding to that, um, here in Connecticut. Uh, as you know, the, the, Federal government has created a program called solar for all right here in Connecticut. That is being managed by the Connecticut Green Bank. So we're looking to understand what we can do to participate in that initiative.

Diane: And there are other, there are other federal funds that are coming through. The greenhouse gas reduction fund where we're expecting to be able to work with, you know, wherever those those dollars flow in making energy efficiency and environmental sustainability more accessible to low and moderate income households, where it's been, you know, a bit of a challenge to to penetrate some of those markets because of the Because of the cost.

Diane: So creating affordable products so that, um, owners and landlords, um, and residents can get access to energy [00:13:00] efficiency solutions. It's really important to us. We're also looking at where we've been having conversations recently about electric, electric vehicle stations and, you know, solar arrays, you know, and community solar arrays.

Diane: Uh, and solar parks. That would be really, that would be really helpful. That requires a larger community conversation, including the municipality and the state around how those things are cited and how they're financed. But that's just an enormous amount of opportunity that's in front of us in terms of environmental sustainability.

Claire: I'm excited to see what you come up with there. It sounds very exciting with the technology that's, that's being developed as we speak. Now, you've done a huge amount of good for the communities at which you serve, which is commendable. Tell me a little bit about your team. Tell me about the team and what motivates them and puts fire in their belly to come to work every day.

Diane: Well, you know, we're a mission driven organization and they wouldn't [00:14:00] be here if they didn't believe it. And I would say I'm inspired by them regularly, challenging me to go deeper, to work harder. They themselves go deep and work hard in making sure that our products are meeting the folks we're looking to serve.

Diane: We're putting together a strategic plan right now, and it's been really fascinating working with my team and having them ask me questions and ask each other questions and challenging our board of directors on, on pushing harder to really be clear on what it is we're trying to accomplish. And that really is true neighborhoods to stability, stability, sorry, neighborhood stability and revitalization.

Diane: We want to make sure that folks are living where they want to, where they choose to in, in comfort and joy and commitment to their own communities. And, and anything we can do to help make that possible is really important to us. So the team has [00:15:00] been working really hard and we've been talking a lot around what is it that we need to be doing and how do we, how do we help, how do we stay focused on mission and make sure that we are doing what we say we're planning to do.

Claire: It's always such a difficult one, isn't it? And one of the tenets, one of the vital tenets of conscious capitalism is about conscious culture and that leadership, you know, you're all so entrenched in, in your common higher purpose and what you're trying to achieve. It's, it must be, it must be really sort of heartwarming to know that you've got an entire team supporting you and there for all the right reasons and hopefully pushing forward and delivering on what you're, you know, you're hoping to achieve.

Diane: Well, when it comes to lending in particular, you know, there is the, we actually borrow, we borrow a lot of our funds in order to lend. And the financial markets being what they are, we're subject to those, those shifts and changes. So staying focused on mission becomes even harder. Because, you know, [00:16:00] when you're doing lending, we are borrowing, we're expected to pay back what we borrow, we are lending, we expect our borrowers to pay back what they borrow, and we need to make it affordable to them so that they can be successful.

Diane: So, it is our challenge to be able to find the mix of funds that allow us to do that. To provide that capital so that the communities we're serving can afford to, to absorb it, to do the work that they're trying to do the work that they're trying to do and accomplish what they're looking to accomplish and be being successful and being able to, to repay it and whether that's in a community, you know, if that's community work through a nonprofit.

Diane: Or through a developer or through a small business, it's important to them to be able to do the work that they're looking to do with a partner that is supporting them. And that's really what we're, we're looking to accomplish. So we're constantly at out, out there looking for, for funding partners who are aligned with what we're trying to accomplish and can provide us the capital [00:17:00] at a cost that makes sense to the work that we're doing.

Diane: So that's, you know, it's, it's. It really is. It's a, it's very interesting work. It's very satisfying work. And as we double down on our mission and making sure that we are doing what we say we're going to do, having partners in the work who understand it and are willing to stand beside us is also very satisfying.

Diane: I bet.

Claire: I bet. And increasingly, you know, I guess the financial markets and the financial world that we sort of find ourselves in today can be a bit of a challenge, you know, in many ways.

Diane: But what we found, which is really also getting very sad, I feel if I find myself using the word satisfying quite a bit, and maybe it's because coming from government, the work that I'd done in the past, we could, we could use our, the funds we had available in multiple ways.

Diane: It was very elastic and we could provide it as grants and provide it as loans [00:18:00] or 0%. And, you know, there were lots of ways that we could manipulate those dollars to, to meet a policy objective. In the finance world, however, because you're borrowing that money, there's very, there's very little you can do to manipulate it.

Diane: You have to, at the very least, make those dollars available at the cost at which you borrow it. What we're also finding these days is that there are some funding partners who are willing to provide us a lending at their cost or below cost because they have some version of internal subsidy or external subsidy that allows us, allows them to give it to us at a lower rate.

Diane: And that You know, finding partners like that. It just, they're game changers for us because it allows us to reach markets. We wouldn't have been able to serve without that lower cost of funds.

Claire: Absolutely. It's just absolute proof that doing business for good is possible, but working together, you know, you're, you're all achieving.

Claire: There was a question I just thought of say I was, um, an entrepreneur or a small [00:19:00] business working in Connecticut, looking to get a bit of extra support. How easy is it to apply to you guys for any kind of assistance?

Diane: Well, really it's a phone call. So some of our, some of our work is online. You can apply online.

Diane: For the most part, we still deal sort of face to face. We do webinars to get folks up and up and running, understanding what our work is and how they can, how they can be improving their own work, their own businesses and getting access to capital. And they can just call us and we'll send them a link to a, an application or send them an application.

Diane: Some of our small businesses aren't as computer savvy and tech savvy. So we sort of meet them where they're at. Wherever they're at, we can go to meet them directly at their places of business and help them complete an application. They can come in to us, um, they can fill it out and upload it and send it to us.

Diane: So there are lots of different ways that they can get access [00:20:00] to us. Generally, it starts with a simple phone call or referral. And we take it from there.

Claire: That's great to know. And also something we should highlight, perhaps in this podcast, I will put a contact telephone number and details of how you can get in touch with the guys in the show notes of this podcast.

Claire: If you're listening now, have a great idea, need a bit of financial support and think that you've got the solid business plan you need to make sure all of those details are in the show notes for you. Diane, what do you hope for the next one year to five years? What's the plan? What's the big plan for Diane Smith?

Diane: I want to do what I said I was going to do. During the interview process, I told the board of directors and the interview panel, which also included staff, that we should always be focused on mission. And that policy is, is how you make decisions, and it's easy to fund lots of things when you have lots of money, [00:21:00] but policy and mission help you decide what happens when you don't have lots of money.

Diane: Where do you put that one dollar when you only have a dollar? And that always needs to lead with mission and, and policy that this is our behavior. You can always count on us to focus. On our mission. So in the next year, the next five years, I want us to be really clear about those objectives to be able to find the financing that helps us to meet those objectives and the partners to help meet those objectives.

Diane: I want communities and borrowers to understand who we are and how we can help and that we're always willing to be at the table to do some collective problem solving around community

Claire: solutions. I commend you. Kudos to you really and your team. You're doing some amazing work and I urge anybody listening to this podcast, do check out the website capitalforchange.

Claire: org. There are some case studies on there which are [00:22:00] phenomenal and you can see the difference that Diane and her team are truly making in underserved communities. Um, thank you so much. for coming on today, Diane. I really appreciate

Diane: it. Thank you so much for inviting me. This has been an awful lot of fun.

Claire: Thank you. Well, we'll see. I'm not sure about fun, but um, I hope that we get word out there and, and get more people aware of what you guys are doing so that you can actually help more people. That would be fabulous.

Diane: Well, thank you so much for your time today.

Claire: It's a pleasure. Thank you for being a part of the Curious Capitalist.

Claire: Until next time, Diane, thank you so much. Thank you for taking the time to listen to this episode of the Curious Capitalist. If you'd like to find out more about the cbc, the Conscious Leaders Network, or even join us, visit the website, conscious business collaborative.org. That's Conscious business collaborative.org.

Claire: If you have enjoyed this episode, please subscribe and share this podcast today. [00:23:00] This podcast was created and produced by Red Rock Branding. www.redrockbranding.com