Let’s redirect our collective buying power to open South Florida First Community Development and Environmental Banking Corporation.

My hope while writing this blog is that I would be able to channel your thinking to believe that what may seems impossible for one person is absolutely doable for a group if they become sensibly aware of the power that they possess together. We often hear the term buying power in the context of one’s ability to use their current value of available cash in relation to the quality and quantity of products that can purchased using those available assets, but in terms of investing, buying power normally refers to the value of money that is available for use in the purchase of securities on margin. Essentially, the use of the term "buying power" has to do with the ability of a consumer to use liquid assets to purchase the desired quantity and quality of products that will meet current wants and needs. Basically, when aggregating the buying power of one or more consumers, you would begin to increase the underlying ability of the group to create what is called collective buying power.

From an economic perspective, collective buying power is significant and has multi-dimensional aspects to it whereby it can viewed as a group’s ability to control or to dictate economic growth and development, business success or failure or even market’s structure. A clear example of the latter is when a group of consumers come together using the old rule of thumb, there's power in numbers, to leverage the group size in exchange for discounts. For example, Universal Dental Plan provider “UDP” has stepped in to play the middle person to negotiate dental discounts on behalf of its members acrossMassachusetts.

The aggregate number of consumers banking with for example Bank of America, like some other larger banks, creates a power house through which a significant number of goods and services are acquired; this happens every time you use a credit card or a debit card; every time you make a deposit and borrows money from the bank. Ultimately, Bank of America through the use of your buying power have been able to provide wealth management services to high net worth individuals, have been able to provide services to mid-market business, corporate banking and other large business entities. At this point, my question becomes:

Can your buying power be used to support collective purchasing power that is more in line with your core values and beliefs?

Many can argue that their existing banking relationship is mutually beneficial and practically reflexible in the sense that consumers are offered various financial flexibility, their credit needs are met while the bank provides shareholders’ value by being profitable.

On the other hand, I want to argue as Caribbean living in South Florida primarily in the service areas of Miami, North Miami Beach, Miami Shores, Miramar and the surrounding communities, we can redirect our buying power to collectively purchase and to provide the area’s FIRST COMMUNITY DEVELOPMENT AND ENVIRONMENTAL BANKING CORPORATION, committed to building vibrant communities and a healthy environment through a triple bottom line strategy:

Our triple bottom line success can be measured and evaluated as follows:

a) Traditional financial performance
b) The dollars: we invest in our own communities, in minority-owned businesses, faith-based and other not-for-profit organizations, which we will call “community development investment.”
c) The dollars: we loan to finance activities that contribute to a healthier environment, such as building renovation that reduce energy and resource consumption or sustainable business practices, which will call “conservative loans.”

First, let me define community development banking: As a community development banking we can use traditional banking services to revitalize various communities by spurring the redevelopment of real estate, financing business growth, helping residents build their own wealth, and encouraging new services while offering:

Opportunities for socially motivated people and organizations to make deposit that support community development and conservation ( Green deposits)
Money management and financial literacy classes
Financing to purchase and renovate apartment buildings (real estate loans)
Business loans and cash management services (business banking)
Loans, deposits and cash management services specifically designed for faith based and other not-for-profit organizations (non-profit banking)
Savings, checking, CD and IRA accounts (consumer banking or retail banking services
One stop financial services center: Faxing, check cashing, bill payments, money orders
Loans that contribute to a healthier environment by reducing energy consumption, rebuilding on vacant or contaminated sites, reusing existing structures or that support “green” businesses (conservation loans,, environmental banking).

*** P.S Shorebank is the country’s first community development bank. It began in 1973, when its founders acquired a bank in a declining neighborhood on Chicago’s South Side to demonstrate that banks can be powerful tools for positive community change ***

Second, let me state the following:

Communities can not achieve economic prosperity if entrepreneurial activities and residents’ health are compromised by toxins in the land, air and water, or if natural resources are consumed in an unsustainable way. Therefore, to build strong sustainable communities, we must also focus on environmental issues.
Now it is up to us to decide whether we can bring our collective buying power to institutionalize a corporation that will do both providing us with various choices of financial services while providing a return to our investments and practice safe, sound and conservative lending policies that will meet the credit needs and financial growth and development of our communities while promoting environmentally friendly practices.

How do we address environmental issues?

By adopting sound conservation principles for our own operations – reducing energy and paper consumption, reducing and recycling our waste and buying products made of recycled materials.
By providing information to customers that show how their choices have long term environmental impact. Homeowners, if they know how, can reduce their electric and gas usage, benefiting their pocketbooks as well as the environment. Businesses, if they know how, can also reduce their energy consumption, waste and potentially their use of toxic chemicals.
By providing financing for physical improvement that benefit the environment. These physical improvements can include building modifications, equipment upgrades and restoring vacant building to community by revitalizing its real estate, leading to improve perceptions and higher property values.

How do we support community development investment?

By providing residential real estate loans that strengthen communities, providing affordable housing and build borrowers’ wealth.
Loans to small businesses and faith based and nonprofit organization that create jobs and expand community services.
Conservation loans for projects that reduce energy consumption, remediate contamination, or support green business practices.
Bank deposit and retail services.


How do we come up with the capital requirements needed to institute such an operation?

Once we get to the private offering of shares of the Corporation, my hope is that a good number of us Caribbean will come together to collectively combine our buying power to raise approximately $10,000,000. In order to have certain tax benefits and other governmental support, the Corporation must be minority owned and I want to first give the opportunity for people in the community, black owned small businesses, faith based organization, other minority owned businesses, and friends and families to buy the shares. Alternatively, there are several other organizations that support this type of initiative: a) Center for Financial Services Innovation is a nonprofit corporation that provides investment capital to such start-up. b) National Community Investment Fund (NCIF) is an independent charitable trust that invests in banks that generate both financial and social returns. c) Northern Initiative, a non profit organization that also invest in such venture. d) Many large banks or financial institutions see this type of venture as a way to support their community reinvestment act examination.

See my blog on how to finance a community development bank for more details