From Pastor to Executive: Equipping Faith Leaders for Economic Development: Knowledge@Wharton

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From Pastor to Executive: Equipping Faith Leaders for Economic Development

Published : November 14, 2007 in Knowledge@Wharton

Pastor T.L. Rogers, head of a mid-sized church in suburban Maryland, calls

himself a "closet developer."
"One thing that makes my heart beat is the smell of drywall. I love to look at
something and see what it can become," says Rogers, who led his Hyattsville,
Md., Baptist church in renovating a strip mall in the late 1990s. The church
sanctuary is now a former Soap-N-Suds dry cleaners, the church administration
office inhabits a former Domino's Pizza and a former Duron Paint store is now
the church fellowship hall.
Having completed that project, Rogers and his congregation are thinking even
bigger: "We want to reach out into the community," he says. They recently This is a single/personal use copy of
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recent immigrants.
But for Rogers, whose advanced degree is in Bible studies, meeting with bank executives is sometimes a
challenge. "Finance is a whole different language. They use acronyms I've never heard of," he says. "As
pastors, the toughest thing for us to admit is when we don't know something." When Rogers met Sidney
Williams, a pastor and venture capitalist fluent in the languages of both faith and finance, he saw "how
things should be done. I realized I needed more than a Finance-101-level understanding."
Moving development-minded pastors from good intentions to executive ability is the purpose behind a
new Wharton executive education program for pastors and other faith leaders. The program is
spearheaded by Wharton management professor Bernard Anderson and Williams, who is the founding
CEO of EKOS Ministries, a Fort Washington, Md.,-based consulting group that assists churches with
development projects. "There have been many efforts encouraging clergy to engage in real estate and
economic development, but I cannot identify a program focused on equipping pastors to function in an
executive role, and that's what this one aims to do," says Williams, formerly a partner in a venture capital
fund that invested in urban businesses.
'The Right Tools and Concepts'
While "faith based" has become something of a buzz word under the Bush administration and its
Faith-Based Initiative, religious groups have long been involved in civic works. In Williams' view,
churches need to recapture a lost vision of community service.
"What's unique about American Protestantism is that when it began, faith-based economic development
was at its core. Many of the best hospitals, schools and universities we have today were established by
churches," says Williams, who is pursuing a divinity degree in urban ministry at the Wesley Theological
Seminary in Washington, D.C.
This tradition of community involvement is rooted in the First Great Awakening, an 18 th century
religious revival that made philanthropy an everyday activity for the average believer rather than "a social
obligation incumbent only on the most privileged," according to scholars John Bartkowski and Helen
Regis in their 2003 book, Charitable Choices: Religion, Race, and Poverty in the Post-Welfare Era. The
tide turned as the country industrialized, says Williams. "The anticipation was that secular capital
markets, as well as government, would respond to the needs of society. Churches were relegated to
focusing on individual piety."

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focusing on individual piety."

African-American churches, however, have been the torch bearers of this initial vision of church
involvement in community development. Scholars suggest this involvement has been born largely of
demographic reality. "Churches have taken the lead in stimulating and initiating economic development
activities in their communities almost out of necessity," says Anderson. "Many of them are located in
economically distressed areas for historical reasons and because that's where their parishioners are.
Pastors have found it necessary to attend not only to [parishioners'] souls, but also to their material
well-being."
Indeed, in urban areas, African-American churches offer more social services programs than their white
counterparts, even when they have "less educated clergy, fewer staff, and smaller memberships," notes a
2004 report on faith-based development from the Roundtable on Religion and Social Welfare Policy, a
non-partisan institute at the State University of New York. According to data from 1999 included in the
same report, between 60% and 90% of churches engage in at least one community development or social
service project.
"To be engaged with economic development, faith-based groups must be involved with banks," says
Anderson. "They don't have to become financial experts, but they need the right tools and concepts."
The goal of The Wharton/EKOS Community Revitalization Leadership Development Program is to bring
together up to 50 faith leaders who already have plans for a development project they can implement
within the next two years. With its focus on real estate, the program's goal is for 90% of graduates to
access the capital they need for their projects, resulting in the creation of 2,000 units of affordable
housing and a 10% reduction of unemployment in the targeted distressed communities.
"We want pastors to be able to have deal-level discussions with developers and investors and to
understand the risk-reward trade-offs of real estate development, so they know what they are committing
themselves and their congregations to," says Williams. "The goal is affordable housing, not stronger
churches."
In recent years, some of the highest profile faith leaders in community development have emerged from
the African-American community. Floyd Flake, who helped author legislation about community
investment while serving as a U.S. Representative from New York, is now senior pastor of the Greater
Allen A.M.E. Cathedral in Queens, which, together with its subsidiary corporations, is among the
borough's largest private-sector employers. Similarly, Kirbyjon Caldwell, who left his career in
investment banking to pastor a small church in a poor Houston neighborhood, recently led the way in
creating the largest low- and middle-income housing project ever developed in the U.S. by a non-profit
corporation.
But Williams is interested in involving more than just pastors of historically black churches. "We are
intentional in being diverse," he says, noting that EKOS is working with the Los Angeles-based
organization Korean Churches for Community Development and the Philadelphia-based Esperanza USA
to identify Korean and Hispanic faith leaders. According to Jenelle Murph, vice president of marketing at
EKOS, the program is also working with the Philadelphia mayor's office to locate urban Muslim leaders
active in development.
For Rogers, pastor of the suburban Maryland church, working closely with Hispanics and other
immigrant groups is a key part of his church's development plans. "We are looking forward to something
we don't see happening too often: Hispanics and African Americans partnering together to do great
things," says Rogers, whose congregation is largely African-American, but whose development projects
would primarily serve neighboring Hispanic and Caribbean populations.
Faith and Capital
For any real estate project to come to fruition, of course, churches will have to be able to access the right
capital, says Kenneth Thomas, a lecturer in finance at Wharton who will teach several sessions in the
program, including one that focuses on the Community Reinvestment Act (CRA), a 1977 federal law
requiring banks to service low-income communities.

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"The financing of faith-based organizations has been around probably as long as banking has, but some
banks more than others have developed expertise in lending to such organizations; they have carved out a
niche," says Thomas, noting that J.P. Morgan Chase has demonstrated leadership nationally in this arena,
as have more regional banks like the Washington D.C.-based Industrial Bank.
"The law is about community reinvestment, so the question is: Who represents the community? Is it the
mayor or some other elected official? When you need to ascertain community needs, sometimes the best
and most objective answer will come from churches because they are right on the front lines, seeing the
problems of affordable housing or lack of credit for small business," says Thomas, author ofThe CRA
Handbook: Strategies for Banks, Communities and Regulators.
Just as many banks do not perceive faith-based organizations as strong potential borrowers, so many
churches are unaware of opportunities to access credit. According to data from 1999, only 11% of
churches with community development or social services projects access outside funding. "Pastors don't
understand what's out there in terms of CRA benefits and banks that are willing to work with them," says
Thomas, noting that he believes faith-based, rather than more secular community-based organizations, do
a better job with development projects, in part because they tend to keep overhead expenses down and
have an existence independent of funding for individual projects. "There is a lot more good that
faith-based organizations can do," Thomas adds, "but first they need the right education to get together
with the banks that can serve them."
Developing the Executive Pastor
When Caldwell, a Wharton alumnus and pastor of the 15,000-member Windsor Village United Methodist
Church in Houston, was pioneering urban development projects, his education and work experience in
finance "clearly contributed" to his desire to "pursue success on a large scale," he told the Wharton
Leadership Digest last year. In the 1990s, the church's community development corporation rehabilitated
a big-box store to create the Power Center, which today offers banking, shopping, education and other
community services to residents of the underserved Fifth Ward. "When it came time for us to secure debt
and raise capital, it helped to be comfortable with the nomenclature," Caldwell says.
But Caldwell, Williams and Flake are unusual in bringing extensive financial knowledge to their
faith-based development work. Most pastors, even highly educated ones, have had to rely on informal
networks and luck to bring their projects to life.
Anderson points to the example of Leon Sullivan, the Baptist civil rights leader who secured capital in the
early 1970s to build Progress Plaza in North Philadelphia, the nation's first black-owned and developed
shopping center. "He had never had a course in accounting or banking, but he had a lot of help from
people who knew those things." The banks who invested in the project, says Anderson, "were very
nervous, but they had faith in Leon Sullivan."
Those sorts of personal relationships are not the basis for systemic economic development, Anderson
adds. "To take faith-based economic development to the next level, we've got to institutionalize the
knowledge that pastors need. Many community leaders won't have the standing of a Leon Sullivan, but if
a bank knows they have gone through an intensive academic program in community development, then it
can have more confidence that if it lends a couple million dollars, something worthwhile will come out of
it."
As Williams notes, the program is intentionally created for small to midsize churches, defined as having a
minimum of 75 members, annual revenues of $500,000 and a full-time minister. Williams estimates 25%
to 30% of Protestant churches nation-wide fall in this category. Many of them, he says, happen to already
own valuable urban real estate that they have not yet developed. Along those lines, program participants
will take courses in real estate finance, development and negotiations, and complete a workshop on how
to write a business plan. Among the speakers will be Henry Cisneros, former U.S. Secretary of Housing
and Urban Development.
Alicia Byrd, pastor of a 250-member church in Howard County, Md., will be one of the participants.
When she went ahead with a recent project to build an affordable community day care center, she needed
"to get a hold of talent from other churches, because there were some gaps in my knowledge," she says.
Byrd also relied on basic training in economic development she had received years earlier from the

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From Pastor to Executive: Equipping Faith Leaders for Economic Development: Knowledge@Wharton
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Byrd also relied on basic training in economic development she had received years earlier from the
Washington, D.C.-based Congress of National Black Churches.
Now her church is looking toward developing an affordable housing project. "In Howard County, the
median cost of housing is $400,000; how many teachers or police officers make the kind of money to
afford that?" asks Byrd. "What you don't know will hurt you," particularly when working with
contractors, she notes. "You are putting the faith and integrity of your congregation at risk. I want to be in
a position to make intelligent decisions."

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