Cooperative Banking as the Catalyst for Community and Economic Development FAQ's

Greater Cleveland Cooperative Federal Credit Union (Co-sponsored by NLEH, Inc.) FAQ’s

Q. Why is owning and controlling a bank so important?

A. Because having access to capital is the best way to enfranchise yourself. Without access to capital, you cannot turn your plans into institutions, businesses or acquire the “means of production” or raw materials necessary to produce or deliver services to the market.

Q. Why is a “Cooperative Bank” the best form of bank for low income, underserved areas or new markets?

A. Because a “Cooperative Bank” lowers the “Cost of Capital,” meaning that the interest rate and profit margin normal banks add to the principle a borrower may borrow, is lowered or eliminated, thus making the total debt less. This makes all loans issued by the bank easier and quicker to pay off, which increases a small businesses success rate. Additionally, a “Cooperative Bank” distributes any profits it makes to its depositors/members. Further, “Cooperative Banks” are missioned to prioritize the financial and economic needs of its membership.

Q. Why should I support the Greater Cleveland Cooperative Federal Credit Union? It will not be located in my area.

A. There are several reason why supporting this particular “Cooperative Bank”/credit union is worthwhile to local and non-local residents;

1.       Intrinsic Good. It is a good cause and a not-for-profit business that will help low income and underserved persons build wealth.

2.       Personal Savings Plan. Any donation $25 and over receives either a non-member (non-resident) or a membership deposit certificate which can be redeemed for the opening of a savings account of equivalent value.

3.       Competitive Investment. Investment in the “Pre-Small Business Development and Investment Fund” is a short-term, higher interest loan with a double principle payoff.

4.       Rhizomic Growth. This project and business unit is an economic kernel that will grow by funding the duplication of itself in other low income and underserved areas across the country. The respective parts of; a Cooperative Bank, a Small Business Investment Company and a Risk-Mitigated Fund, while autonomous, will work as one economic unit to jump start development in even the most economically depressed areas. This is because capacity-building, technical and financial support is built into the business model and therefore it facilitates any individual or group anywhere, willing to serve their community and their own economic  interests through entrepreneurship. So although this project may not START in your area, because of you support, this project will soon BE in your area.

"IN ORDER TO 'PULL YOURSELF UP BY YOUR BOOTSTRAPS' ONE FIRST NEEDS BOOTS."

Please click the link to find out how you can support this project (Donate, Invest or Volunteer); http://anddirect.net/current-events/community-and-economic-development-as-a-private-placement-memorandum-type-investment-vehicle/

AND Direct, LLC as Small Business Investment Company for Fund Development and Management: FAQ's

AND Direct, LLC as Business Development or Small Business Investment Company (SBIC) FAQ’s

Q. What is a Small Business Investment Company (SBIC)?

A. An SBIC is a Small Business Administration designation for “a privately-owned investment company that is licensed by the Small Business Administration (SBA). Small Business Investment Companies (SBICs) supply small businesses with financing in both the equity and debt arenas.” The SBA guarantees the loans and investments of the SBIC and in some cases allows them to leverage their capital at 3:1.

Q. Why is being designated as an SBIC important to the project and business plan?

A. There are important reasons and for seeking an SBIC designation, all of which have the purpose of creating a more competitive offering and expanding the capital base for investments;

     1. SBIC’s private capital can be leveraged or borrowed against (from the SBA) up to 3 times the amount. This means more money to invest in the community's small businesses.

     2. SBIC’s investments (loans or stock purchases) are guaranteed against default or bankruptcy. These guarantees lower risk and gives investor/partners security, which makes our offering more competitive and private capital easier to raise.

     3. SBIC’s, because they invest in low income, underserved areas and new markets, qualify as Community Development Financial Institutions or Community Development Entities (CDE’s) and can thus offer investors/partners tax credits or deductions, like Low-Income Housing Tax Credits (LIHTC), New Markets Tax Credits (NMTC) Business Energy Investment Tax Credits (BEITC), ect. These tax credits and deductions increase the effective rate of return for investor/partners which makes our offering more competitive and private capital easier to raise.

Q. Besides being a vehicle for attracting and leveraging capital, what does an SBIC do?

A. An SBIC is essentially a business development, investment and fund management firm. The 1st function of the SBIC is to DEVELOP an "Investment strategy." The “Investment Strategy” is the methodology and plan for Fund construction and management;

     1. Identifying the types of businesses to include (Industry and Sector)

     2. Establishing the company-level requirements for inclusion

     3. Risk mitigation

          a. Unsystematic (Diversification)

          b. Default (Aggregate and Individual Risk, Market Planning)

The 2nd function of the SBIC is to MARKET the “Investment Strategy” to potential investor/partners. This means developing a Private Placement Memorandum (PPM) or “the Offering.” This PPM will outline the “Investment Strategy,” highlight the expertise and track record of the Fund Manager and emphasize the security, rates of return, terms and any other value-add or investor services, so as to attract interest and ultimately secure capital.

The 3rd function of the SBIC is to EXECUTE the “Investment Strategy” and actively MANAGE the fund, so that all purposes, requirements and operational compliance issue are met while delivering ROI to the investor/partners.

"Our communities need impactful projects like these to re-enfranchise themselves, and AND Direct, LLC hopes to be "their Partner In The New Economy." 

Please click the link to find out how you can support this project (Donate, Invest or Volunteer); http://anddirect.net/current-events/community-and-economic-development-as-a-private-placement-memorandum-type-investment-vehicle/

Community and Economic Development: A Solutions Conference

NLEH, Inc. and AND Direct, LLC would like to invite you to a community meeting to hear about and participate in the next community and economic development movement. 

Neighborhood Leadership for Environmental Health (NLEH, Inc.) in partnership with AND Direct, LLC is sponsoring the development of a financial institution (a credit union) and an investment fund (small business investment company) to provide direct access to capital to start or expand local businesses and programs for the development of an economic infrastructure our community so desperately needs.

So come hear about this new direction, ask questions and find out how you or your organization can collaborate and contribute.

For more information, contact me @ (330) 576-5425 or email me anddirectllc@gmail.com

                                 “Facilitation Is The New Leadership Model.”

WHEN

Thursday, June 2, 2016 from 6:00 PM to 7:30 PM (EDT) - Add to Calendar

WHERE

United Methodist Church - 5246 Broadway Avenue, Cleveland, OH 44127 - View Map

REGISTER AND GET *FREE* TICKETS HERE;

https://www.eventbrite.com/e/community-economic-development-a-solutions-conference-tickets-25248345481

Community and Economic Development as an Investment-Grade Portfolio: The "Assemblage Model"

Preface: Purpose and Use of Funds;

We will apply monies raised through this pre-development offering to do 3 things;

1. Pay all expenses involved with developing “AND Direct’s ‘Impact SBIC’ organizational requirements and application.”
2. Pay all expenses involved with developing the organizational requirements of the “Credit Union’s Charter Application and Commitments” as well as its brick and mortar establishment.
3. Pay all expenses in the development and marketing of the “Private Placement Memorandum.”

The resulting structure of the Private Placement allows us to mitigate default risk through SBA guarantees. The structure also mitigates unsystematic risk through the sponsored lending institution’s ability to increase the investment funds available through a loan (scale). More investment funds allow for an increased diversification of the portfolio (scope).

The Hypothetical Investment Portfolio

The proposed portfolio that AND Direct (as an "Impact SBIC") and/or the Greater Cleveland Cooperative Federal Credit Union (as a CDFI) would be investing in or lending to will be a diversified set of small businesses within the Education, Communications, Agriculture, Manufacturing, Housing, Energy and Healthcare industries. This mitigates unsystematic risk. To mitigate default risk, these companies must be members of either a cooperative or a trade association which guarantees through executed contracts, pre-purchase of a minimum 80% of each individual company's production or service capacity.

Portfolio Qualifications

Each company, to be considered for inclusion into the investment portfolio must be;

1. A viable company (feasible business, operations, marketing and financial plan),
2. Incorporated and organized as a for-profit entity,
3. Have executed business contracts matching financing requirements, and
4. An active member of and in good standing with a designated cooperative or trade association

Each cooperative or trade association, as an Advisory Board member to AND Direct, and GCCFCU must;

1. Have complete "Sector Coverage," or feasible plan to achieve "Sector Coverage,
2. Have a feasible "Sector Market Plan" based on standard "econometrics,"
3. Have Community Development Entity “CDE-ompliant” Bylaws, and
4. Have executed Member Subscriptions, which include Service Level Agreements (Purchase Agreements)

The Advisory Board as a collective (the presiding Board of NLEH, Inc. through its Executive Director) must deliver to the Fund Sponsor (AND Direct), the following;

1. A complete Marketing Plan for all sectors
2. Commiserate Financing Requirements
3. Updated Operating Agreement or "Collective Agreement" (aggregate Member Subscriptions and Service Level Agreements)

Funding Mechanism(s);

AND Direct will lend to NLEH, Inc, which will lend to the individual cooperatives and trade associations. The cooperatives and trade associations will then issue convertible debt instruments to individual portfolio companies. This funding structure and mechanism mitigates default risk and maintains CDE, SBIC and CDFI missions though community oversight, market analysis and pre-approved econometrics.

Reporting;

All financial and market data will be collected from all parties just-in-time (JIT) or on-demand for reporting to oversight and governing bodies as well as for public records, such as

1. SEC,
2. IRS and the
3. Treasury Department (CDFI compliance)

The financial and market data must be formatted to conform to standard econometric used by the oversight and governing bodies. There will also be available to the public, the economic and community impact outcomes in a format easy to read on the websites of AND Direct, NLEH and GCCFCU under the heading "Impact Reports."

Summary

The purpose of the investment and funding structure is to develop an investment-grade fund that accomplishes on the sponsor's collective mission of community and economic development while delivering to partners and other investors a competitive return.

For Credit Union and Investment Fund Proposal, read plan at http://anddirect.net/services/investments

To donate, go to; http://igg.me/at/8SGY2yZp3CE

Are You A Caring Professional? Please Volunteer Your Time and Expertise To A Great Cause...

NLEH, Inc. and AND Direct, LLC are co-sponsoring the charter of a cooperative bank called The Greater Cleveland Cooperative Federal Credit Union (GCCFCU). This credit union has already received a pre-approval to charter, so we are in the business planning and initial funding stages. Because the credit unions mission is business lending and direct investment in small businesses in low-income and underserved areas, it's lending policies must be commiserate with the respective industry sector markets. This is why we need expert and professionals in these various fields to help the credit union create lending policies based on deep knowledge of the best practices in each industry, so that we can mitigate lending risk and increasing borrower success, by setting reasonable guidelines, requirements and terms. This group of "Subscribers" would also work with  AND Direct, LLC to help construct the "hypothetical investment portfolio" (details HERE), to be filled with qualifying small businesses. 

We are looking for professional in the following industries; Housing (Construction), Energy (Green Alternative), Education (Charter Development and Curricula), Transportation (Multi-modal and Logistics), Banking (Commercial and Investment), Food (Agriculture and Processing) and Manufacturing (Light and Heavy).

To see the duties of the Volunteers we're looking for, click HERE. 

If interested, please sign up HERE.

RECRUITMENT FOR SUBSCRIBERS/BOARD MEMBERS

The Greater Cleveland Cooperative Federal Credit Union

“Subscriber”/Board Member Recruitment and Requirements

Each "Subscriber" has a four-fold duty;

1. To be a part of the team that works on the administrative aspects of the Greater Cleveland Cooperative Federal Credit Union (GCCFCU) chartering process.
2. To build capacity and/or render other technical support to a specific industry, its individual business entrepreneurs through a cooperative entity (which the Subscriber will develop, incorporate.
3. Act as Executive Director for the cooperative entity.
4. In the capacity of Executive Director of his/her specific cooperative, Serve on the Board of Directors for the GCCFCU and on the Advisory Board for the partner Community Development Entities (CDE's) or Small Business Investment Companies (SBIC’s).

1. A "Subscriber" for the purposes of the chartering process of the GCCFCU involves the  following responsibilities;

1. Becoming knowledgeable about credit unions in general and specifically, the mission of the GCCFCU.
2. Working with the NCUA “Organizer” to develop a business, marketing and financial plan.
3. Serving as the ad hoc Board of Director to promote, fundraise and otherwise support the chartering and physical establishment of the GCCFCU and its commencement of operations.
4. To serve initially (or as needed) as managers or other positions in the GCCFCU, until full/part time personnel is put in place.

2. A Subscriber for the purposes of “Capacity-building” involves the following responsibilities;

1. Apply the sector-specific expertise for the mentorship of the member business operators
2. Management training
3. Operational Planning

3. A Subscriber for the purposes of Cooperative Development involves the following responsibilities;

1. Help develop, organize and incorporate, a cooperative entity focusing on the specific industry expertise and serve as the executive director of that newly incorporated entity.
2. Research, create and file appropriate documentation to the appropriate government and business authorities to establish the cooperative entity.
3. Build the Board of Directors
4. Market to and recruit membership.
5. Perform all administrative duties of cooperative entity status compliance.

4. A "Subscriber" for the purposes of Executive Directorship involves the following responsibilities;

1. Must serve on the Board of Directors of the GCCFCU until Low-Income Community (LIC) Representatives replace them per GCCFCU Bylaws, and
2. Must serve on the Advisory Board for any partner Community Development Entity (CDE), CDFI or Small Business Investment Company (SBIC).
1. As a Board Member, each subscriber must;

1. Promote
2. Advise1 and
3. Fundraise (or personally contribute a minimum $10k)
1. As an Advisory1 Board Member, each Subscriber must;
1. Collect (or cause to be collected) market data from its membership
2. Develop (or cause to be developed) market and financial reports
3. Make investment recommendations

“Subscribers,” apart from being “fit2,” should (but not necessarily) have Experience, Skills and Education in the following industries. Based on need and qualifications and interest, a Subscriber will be assigned to 1 of 8 sectors respectively.

I. Food Services

  A. Urban Agriculture

  B. Food Processing

  C. Food Distribution/Retail

II. Health Maintenance Organization

   A. Prevention

   B. Maintenance

   C. Therapeutic

   D. Holistic/Alternative

   E. Billing

III. Communications

    A. Infrastructure (IS)

    B. Software (IT)

    C. Provisioning

IV. Housing

    A. Development

    B. Construction

    C. Management

    D. Financing

V. Banking

   A. Management

   B. Investments

   C. Retail

   D. Commercial

VI. Energy

    A. Systems

    B. Management

    C. Installation

    D. Utility

VII. Education (Head Start thru Post Graduate & Technical)

    A. International Baccalaureate Program

    B. Montessori

    C. Methods (Curriculum)

    D. IEP/Intervention

VIII. Supporting Organization (NLEH, Inc.)

    A. TBD

ALL INTERESTED PARTIES SHOULD CLICK THIS LINK AND FILL OUT THE "SUBSCRIBER FORM” HERE.

(or cut & paste this address into you browser; https://docs.google.com/forms/d/1-GYk7XMD0QaM8sz2tnzvxvp3SswQqnwtWF8M_oyiZ3w/viewform)

So what does a Subscriber get for all this energy, time and monetary investment?

The Subscriber when they become an Executive Director of a cooperative, will earn a commensurate salary ($30-50k/year). The Subscriber will also benefit from the business and community development opportunities their position will offer.

1 Advise: Collect market data and make recommendations to the investment and lending committees of GCCFCU and AND Direct, LLC.

2 Fit: Of good to excellent personal credit-worthiness, no bankruptcies or felonies.

How To Mitigate Investment Risk: Collaboration On Steroids

The structure of our organization, the operational policies, goals and performance metrics are holistic in nature. We combine what current institutions in the community do separately. Our "Assemblage" approach more directly links funding to outcomes and with higher efficiency. This is because we combine a Small Business Investment Company ("Impact SBIC") that has business development expertise, with a Nonprofit organization that has community capacity-building experience, to a portfolio management logic that inherently mitigates unsystematic and default risk, because its construction is geared toward self sustenance as a complete local economy. To that we add a nonprofit cooperative banking institution that lowers the cost of money as it increases the potential scale and scope of the portfolio through its lending capacity. This mutually symbiotic collaboration is based on a strong set of affinity missions, contractual obligations, regulatory compliance and public accountability. We believe this kernel model will change community and economic development nationally and world wide.

Read the complete plan HERE.

A “Hypothetical” Investment Portfolio Construction: For Community and Economic Development

Preface: Purpose and Use of Funds;

We will apply monies raised through this pre-development offering to do 3 things;

1. Pay all expenses involved with developing “AND Direct’s ‘Impact SBIC’ organizational requirements and application.”
2. Pay all expenses involved with developing the organizational requirements of the “Credit Union’s Charter Application and Commitments” as well as its brick and mortar establishment.
3. Pay all expenses in the development and marketing of the “Private Placement Memorandum.”

The resulting structure of the Private Placement allows us to mitigate default risk through SBA guarantees. The structure also mitigates unsystematic risk through the sponsored lending institution’s ability to increase the investment funds available through a loan (scale). More investment funds allow for an increased diversification of the portfolio (scope).

The Hypothetical Investment Portfolio

The proposed portfolio that AND Direct (as an "Impact SBIC") and/or the Greater Cleveland Cooperative Federal Credit Union (as a CDFI) would be investing in or lending to will be a diversified set of small businesses within the Education, Communications, Agriculture, Manufacturing, Housing, Energy and Healthcare industries. This mitigates unsystematic risk. To mitigate default risk, these companies must be members of either a cooperative or a trade association which guarantees through executed contracts, pre-purchase of a minimum 80% of each individual company's production or service capacity.

Portfolio Qualifications

Each company, to be considered for inclusion into the investment portfolio must be;

1. A viable company (feasible business, operations, marketing and financial plan),
2. Incorporated and organized as a for-profit entity,
3. Have executed business contracts matching financing requirements, and
4. An active member of and in good standing with a designated cooperative or trade association

Each cooperative or trade association, as an Advisory Board member to AND Direct, and GCCFCU must;

1. Have complete "Sector Coverage," or feasible plan to achieve "Sector Coverage,
2. Have a feasible "Sector Market Plan" based on standard "econometrics,"
3. Have Community Development Entity “CDE-ompliant” Bylaws, and
4. Have executed Member Subscriptions, which include Service Level Agreements (Purchase Agreements)

The Advisory Board as a collective (the presiding Board of NLEH, Inc. through its Executive Director) must deliver to the Fund Sponsor (AND Direct), the following;

1. A complete Marketing Plan for all sectors
2. Commiserate Financing Requirements
3. Updated Operating Agreement or "Collective Agreement" (aggregate Member Subscriptions and Service Level Agreements)

Funding Mechanism(s);

AND Direct will lend to NLEH, Inc, which will lend to the individual cooperatives and trade associations. The cooperatives and trade associations will then issue convertible debt instruments to individual portfolio companies. This funding structure and mechanism mitigates default risk and maintains CDE, SBIC and CDFI missions though community oversight, market analysis and pre-approved econometrics.

Reporting;

All financial and market data will be collected from all parties just-in-time (JIT) or on-demand for reporting to oversight and governing bodies as well as for public records, such as;

1. SEC,
2. IRS and the
3. Treasury Department (CDFI compliance)

The financial and market data must be formatted to conform to standard econometric used by the oversight and governing bodies. There will also be available to the public, the economic and community impact outcomes in a format easy to read on the websites of AND Direct, NLEH and GCCFCU under the heading "Impact Reports."

Summary

The purpose of the investment and funding structure is to develop an investment-grade fund that accomplishes on the sponsor's collective mission of community and economic development while delivering to partners and other investors a competitive return.

For summary Credit Union and Investment Fund Proposal, read plan at http://anddirect.net/services/investments