Business & Personal Finance Development Center

Objective: Vermont Village CDC will forge a partnership with funders to outreach and build our capacity toward becoming a Business & Personal Finance Development center that will promote existing services being offered by non-profits to local residents of the Vermont/Manchester service area.

Goal:
Our goal is to serve 500 clients in the area of business development or enhancement, and personal finance management of income derived from a personal business venture or employment. Money management is a vital key to economic development a personal self-reliance for individuals and their families.

Implementation:
By promoting this program where participants can benefit from a micro-enterprise peer-lending program that provides graduated loans from $500 to $5,000, comprehensive business management training, and networking opportunities for self-employed and secondary income entrepreneurs of limited means.

Loan Program:
Available to micro-enterprises/small businesses in operation for at least one full operating year with IRS Tax Returns, seeking loans from $5,000 to $50,000.

Technical Assistance:
Structured technical assistance training that offers one-on-one counseling, on site or through classroom training in both English and Spanish to help entrepreneurs gain more insight to establishing a new business, preparing for a loan and developing business plans.

We would make these programs available to all of the Los Angeles area, and depending on the willingness of people to learn more about business management on their own and going to thier offices to expand or deliver programs in a more customized and convenient way.

Through this neighborhood delivery system, it affords clients programs to specific sub-groups of business owners by integrating them with existing programs offered by other non profit partners, and by building on the existing capacity of these organizations to gather people together.

After the 1992 civil unrest, foundations were forced to acknowledge their limited effectiveness at re-addressing the problems faced by low-income communities. Uncoordinated funding had resulted in isolated nonprofit efforts, minimal cooperation across groups, and a failure to tackle large issues in a systematic manner. This program addresses these issues through non-profit partnerships to enhance wealth creation for low-income individuals. By stabilizing the financial needs, this program can provide an inroad for greater self-suffieicency.

Recognizing the differing needs within one geographic community is key to efficiently and effectively helping a neighborhood. This partnership will carefully target and channel investments to people and other organizations with established reputations for neighborhood change.

Our Target Neighborhood

The Vermont Village Corridor is situated in South Central Los Angeles with a population of about 75,000 people with around 65% African American, 35% Latino. Vermont/Manchester, situated in South Central Los Angeles, is a geographic area of approximately 14 census tracks, started with tracks 2382. It is bounded by 79th street to the North, 91st street to the south, the Harbor Freeway to the East, and Van Ness to the West. Its population of about 75,000 people is transitioning from a primarily African American community to a Latino one, with the current balance standing somewhere around 65% African American, 35% Latino.

The community is low-income by federal standards, with median household income at $22,000 for households of 3-4 people. Unemployment levels hover at 11%. An above-average share of the labor force (30%) is government-employed, and a disproportinate segment of the income is derived from public assistance. Levels of educational attainment are low, with 37% percent of the local population lacking a high school diploma. Different ethnic groups experience economic marginalization differently. African-Americans are more likely to be jobless, whereas Latinos are frequently under-employed or “working poor” But whatever is from, poverty is pervasive. Historically, the Vermont Avenue corridor was a prosperous commerical district promoted as “little beverly hills of south central” Long-term residents recall five banks, a haberdashery, a children’s clothing boutique, a jewelry store, a candy shop, and three movie theaters.

The neighborhood has also inherited a legacy of quality single-family housing stock constructed before 1950 when there were segregated white subdivisions under racially-restrictive covenants. South Los Angeles was, until about 20 years ago, a community dominated by owner-occupied single-family housing. Today, over two-thirds of these homes are rented.

While Los Angeles as a whole includes many healthy, vital rental neighborhoods, the transition of 55,000 homes from owner-occupancy to rental has combined with other factors to destabilized many parts of south Los Angeles. Absentee-owned, single-family homes have proven to be a difficult management problem for owners and the city.

Presently, poverty and lack of assets are widespread in the low-and-moderate-income neighborhoods like Vermont/Manchester. According to the Los Angeles Housing Department, working poverty in Los Angeles is rising faster than the population as a whole, and it is rising faster than poverty in non-working groups. The number of households below the federal poverty line is extremely concentrated in the central and south-central portions of Los Angeles.

Los Angeles County has the lowest homeownership rate of any U.S. metropolitan area except New York. The homeownership rate is 48%, well below the California average of 57% and national average of 66%. Today, the median home price in the county has soared to $495,000, with only 17% of area residents able to afford purchasing a home. These extreme housing costs are affecting the average renter as well.

Individual Development Accounts

Other tools are the use of Individual Development Accounts designed:

  • Asset building through savings and homeownership leads to long-term economic stability for low-to-moderate-income households.
  • Increased economic stability affects the general well-being, health and quality of life of low-to-moderate-income families.
  • Financial literacy leads to increased assets and income, personal efficacy, and economy stability for low-to-moderate income families.
  • Small business development can provide a strategy for low-to-moderate-income families to augment household income.
  • Successful IDA program that demonstrate the ability of low-income families to build assets and invest in their future will attract support from public and private resources.

IDA Partnership Program

The new IDA Partnership Program will help individuals to build assets in the form of homeownership, the creation of a business, or by improving skills through education.

The program will demonstrate a new model for philanthropic practice, one in which foundation resources would be used to consolidate nonprofit efforts within a given neighborhood and connect them with regional economic opportunities. The new IDA Partnership Program will help individuals to build assets in the form of homeownership, the creation of a business, or by improving skills through education. The existing types of IDA provide a chance for purchase of a home, small business/micro-enterprise, or pursue a post-secondary education.

Participants will benefit from participation in the program by

  1. Accumulating assets from earned income
  2. Turning those assets into an income-supplementing enterprise, equity-building home purchase, or by improving their earning potential
  3. Feeling empowered to move away from day-to-day survival and toward planning for their future security
  4. Practicing sound financial behavior will demonstrate to children and family members the importance of asset accumulation in reaching economic goals

Implementation of the program will include the following steps:
Partnership selection
Program development
Application and selection process
Orientation
Establishing Savings Account
Training
Follow-up
Evaluation

Recruitment for the IDA partnership program will driven through VVCDC’s collaboration with several community and faith-based organizations and staffing from other non-profit agencies, seeking to achieve similar goals. Working directly with other organization to develop potential candidates who meet the requirements will demonstrate the wherewithal of the success of this type of program.