February 2012 Volume 17, Issue 1

THIS ISSUE:

PROPHETIC ROOTS

CAIC Board Director, Fr. Paul Hansen

reconnects us with CAIC’s roots!

(Pages 1 & 3)

A BORROWER’S PERSPECTIVE

CAIC President, Rev. Brian Burch has a

unique perspective having been a

former CAIC borrower and now serving

on the board! (Page 2)

OUR PROJECTS

Find out how CAIC has been changing

the social landscape in Canada. (Page 4)

OUTREACH

CAIC goes to Newfoundland!

(Special Insert—Page 5)

INSIGHT

It’s Not Easy Being a Social Lender!

(Special Insert—Page 6)

PROPHETIC ROOTS OF THE Canadian Alternative Investment Cooperative

By Paul Hansen, CSsR

T hey were exciting times and for me personally inspirational.

The newly elected Pope John XXIII had asked that Western Europe and North America send missionaries to the Global South, especially Latin

America. Religious Orders and Communities responded positively to the degree they could.

Pope John called for a new Vatican Council. It began in 1962 and ended in 1965. The hope, dreams and struggles of men and women of this age were to be taken seriously and a new breeze and breed flowed through the aging institution. In 1967 Pope Paul VI promulgated an Encyclical – Popolorum Progressio (On The Development of Peoples). This writing will probably go down in history as his greatest moment. If you want peace, then work for justice was its main thrust. The Canadian Conference of Catholic Bishops responded in forming Development and Peace.

Pope Paul VI also asked the Religious Orders to renew their Constitutions and Statutes so that they might be in line and reflect the teachings of the Vatican Council and the signs of the times. And so they did.

In 1968 the Latin American church responded to the Vatican Council with a meeting in Medellin that birthed, reflecting the gospel mandate, a preferential option for the poor. Liberation Theology was born. The tools of social analysis were employed and the conviction arose that all budgets and financial statements were theological documents with a moral imperative. As the encyclical On The Development of Peoples pointed out the call was to move from less to more human conditions. Poverty was seen to be a scourge. Housing, health, education,

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www.caic.ca CONTINUED ON PAGE 3

CONNECTIONS:

In 2011 St. Clare’s Multifaith Housing opened up two new affordable housing projects---a 190 unit project at 150 Sudbury Street and a 20 unit project at 1120 Ossington. While neither of these projects received financing from CAIC, St. Clare’s has three times in the past been approved for CAIC financing and without such support in earlier times St. Clare’s would never have developed the capacity and confidence to continue to develop affordable housing during these times of both high need and little govern-ment support.

In 2000 St. Clare’s received $300,000 from CAIC as a 2nd Mortgage on our 25 Leonard project---10% of the value. This was St. Clare’s first project and we were unable to get a mortgage for more than 55% in the private market. While grants made a big difference, CAIC’s loan meant that the final financial piece was in place and our first 51 unit affordable housing project was built, providing housing for those coming out of Toronto’s shelters and homelessness initiatives.

In 2004 CAIC took a risk with St. Clare’s---lending us $300,000 to be used as a non-refundable deposit on the purchase of our second building, the former Avenue Road Hotel at 181 Pears. This was a short term loan, paid off in about 3 months, but the risk that CAIC took on behalf of St. Clare’s made the purchase possible. This effort provides 96 units of affordable housing, again for people coming referred by agencies working directly with the homeless and those in shelters.

In 2009 CAIC approved funds for St. Clare’s that we ended up not receiving. CAIC approved a loan for repairs and upgrades at 181 Pears, but other partners were not as flexible. CAIC’s support, though, made it easier for St. Clare’s to apply for grants and related funding which paid for most of the necessary work.

Seeking money for any effort is a daunting

and often uncomfortable process.

Applying for grants and seeking individual donations usually have the advantage of anonymity---the application package is prepared or the direct mail material assembled and sent out without having to deal directly with individuals who are making the decision to support you. Seeking support from CAIC is different---those that get a loan from CAIC have to deal directly with a board, advisory committee and staff. Organisations seeking help have to be able to make a good case on paper as well as have representatives willing and able to meet with people who ask quite challenging questions on everything from budget assumptions, to assurances that people with the needed skills and experiences are involved, to the philosophy and vision that led to the proposal being brought forward. This latter is hard to face, but is essential. Loans are secured in various ways, but the most important assurance that CAIC (and any lender) requires is the confidence that those seeking a loan are able to meet their commitments while successfully bring the project to life. A well prepared application is important, but the human dynamics are essential for CAIC as it ensures that all parties have confidence in each other.

Because CAIC was there and willing to take a chance on a new and unproven organisation seeking to provide housing for some of the hardest to house in Toronto, St. Clare’s was able to purchase its initial building. CAIC’s confidence in the board and staff of St. Clare’s lead to CAIC taking a real risk, lending money for a non-refundable deposit which enabled our purchasing a second building. With this track record made possible by CAIC St. Clare’s has been able to develop additional projects. CAIC was foundational in our effort to make a difference in the world.

A Borrower’s Perspective—by Rev. Brian Burch

Page 2

“A well prepared application is important, but the human dynamics are essential for CAIC as it ensures that all parties have confidence in each other.”

“Because CAIC was there and willing to take a chance on a new and unproven organisation seeking to provide housing for some of the hardest to house in Toronto, St. Clare’s was able to purchase its initial building.”

participation in governance among others were the call.

In the 70s things began to heat up in Latin America. In 1973 (9/11) Salvador Allende, the democratically elected President of Chile was executed in a coup. Central America was headed toward major upheavals. Missionaries returned to Canada and the U.S. These returning missionaries and others were able to influence the mainline churches in Canada to develop inter-church coalitions for justice as it was becoming very clear that many problems in the global south originated in the north.

During this time in Canada, the Canadian Bishops and the Religious Orders were caught up with other churches in this Gospel imperative to be concerned about the poor, the marginalized and the abandoned. The Bishops wrote excellent social documents. Their Labour Day Statements were prophetic. The Religious Orders took on a prophetic posture in both church and state.

In Ontario the Canadian Religious Conference founded a Social Action Committee. (CRC-O, SAC) Religious communities sent their more progressive members, filled with this prophetic spirit and the vision of the Vatican Council to be members of this effort. So religious like Frances Ryan, Noel O’Neill and Frank Maloney, to name but only three of the many, began to reflect on how as institutions living here in Canada we might respond to the so-called Third World in our midst. Treasurers of the various communities were called in. The Canadian Alternative Investment Cooperative was born. CAIC became an investment vehicle for these founding religious communities to split interest and create a pool of monies so that socially committed projects finding it difficult in securing financing for their action could have resources. In this

way, not only individual religious but also religious institutions could use their resources to further a commitment to the poor, the marginal and the most abandoned. One might say – an Institutional Pastoral Gesture. Twenty-eight years later, and although the times have changed, this commitment is still being realized.

THIS AND THAT AGM 2011—The CAIC board & staff would like to express its gratitude to the Canadian Friends Service Committee (Quakers) and especially to Judy Gilbert & Ben Bootsmas of Friends House for making us feel very welcome. The annual general meeting provides an opportunity for members to network, hear about CAIC’s activities through-out the past year and most of all ask questions! As Fr. Jim Webb pointed out in his address, CAIC is part of an international cooperative movement that has experienced significant growth (since CAIC’s inception)—a movement that you as a member of a cooperative can feel proud to be part of! Thanks again to all who attended AGM 2011– we couldn’t do it without you.

Member Investments—Thank you to the following CAIC members for reinvesting their earnings and/or making an additional investment in 2011: Basilian Fathers of Toronto, Congregation of the Sisters of St. Martha, Grey Sisters of the Immaculate Conception, Loretto Sisters, Srs. of Charity of the Immaculate Conception, St. John Neumann Foundation, Srs. of St. Joseph (London), Srs. of St. Joseph (Toronto), Sisters of Service.

THANK YOU FOR JOINING

US FOR AGM 2011

Basilian Fathers ~ Fr. Bob Holmes

CFSC—Mr. Don Alexander

Faithful Companions of Jesus ~

Sr. Lois Anne Bordowitz

Grey Sisters of the Immaculate

Conception ~ Sr. Anne O-Brien

Jesuit Fathers ~ Fr. Jim Webb

Les Soeurs de Sainte-Anne ~ Sr.

Virginia La Fleur, Carolyn Grace

Loretto Sisters ~ Srs. Pat Grant &

Doryne Kirby

Saint John Neumann Foundation

~ Mr. Marwan Al-Turk & Fr.

Paul Hansen

Scarboro Missions ~ Fr. Michael Traher

School Sisters of Notre Dame ~ Mr.

Paul Sullivan

Srs. of Charity—Halifax ~ Sr.

Geraldine Lancaster (via web)

Srs. of Mercy Generalate ~ Sr.

Nellie Pomroy

Srs. of the Precious Blood ~ Sr.

Arlene Bondic

Srs. of Providence of St. Vincent

de Paul ~ Srs. Yvette Girard &

Sandra Shannon

Sisters of St. Joseph (Hamilton) ~

Sr. Michaela Sinclair, Cal Lloyd

Sisters of St. Joseph (London) ~

Sr. Catherine Stafford & Arlene

Kubiak

Sisters of St. Joseph (Peterborough)

~ Sr. Mary Rowell

Sisters of St. Joseph (Toronto) ~

Sr. Annette Lacroix

Srs. of St. Martha~ Sr. Liz Riopelle

Sisters of Service ~ Srs. Anna

McNally & Mary Halder

Sisters of Sion ~ Deepthi Thiruchelvam

Sisters of Social Service ~ Sr.

Kathleen Kelly

Student Christian Movement ~

Rev. Brian Burch, Mr. Tristan Chapman

Trinity - St. Paul’s U.C. ~ Mr.

Don Middleton, Moira Hutchinson

Ursuline Religious ~ Sr. Joan Stafford Page 3

PROPHETIC ROOTS— (cont’d from pg. 1) CONNECTIONS:

OUR PROJECTS

A-Zone Cooperative

(Winnipeg, MB) -

The A-Zone Cooperative

consists of cooperative and

non-coop tenants of a build-

ing located in downtown

Winnipeg that houses

worker co-ops, other

worker-owned businesses and grassroots social activist

organizations. CAIC was originally approached to provide a

second mortgage after a first mortgage to be provided by the

Assiniboine Credit Union to purchase the building . There was

also discussion with regards to The Jubilee fund providing a

guarantee for the Assiniboine loan therefore potentially

eliminating the need for CAIC financing. In the end, CAIC and

Assiniboine Credit Union both provided first mortgages (pari

passus) to A-Zone Cooperative. Although CAIC has often

provided a second mortgage behind a credit union to various

borrowers, this is the first time we have entered into a

“partnership” with both parties taking on the same amount

of risk and therefore benefit. Funds (@$180,000) were

advanced at the end of January (2012).

(CBLDC) Cape Breton Labourer’s

Development Company

(Dominion, NS) -CBLDC created an

innovative and ambitious program

over 20 years ago to build 24

homes to provide both employment

& affordable housing to union

members through a “rent-to-own”

program. The construction of

these homes was financed through loans and union

member contributions (25 cents per hour). In 2008

CBLDC reactivated the program with a plan to build a

house a year and borrowed $100,000 from CAIC. This

has been paid off and they have returned for another

$100,000 to continue their program. The board agreed

to their request in January 2012.

Planet Bean Inc. (Guelph, ON) -

Planet Bean is a worker cooperative

that sells fair trade coffee through

three retail cafés and a wholesale

operation in Guelph. This worker co-

operative has been in the CAIC portfolio

since 2006. At that time we provided a loan that enabled

Planet Bean to purchase a coffee roaster. We were than

approached a year later for additional funds to pay for

unanticipated costs associated with the coffee roaster

installation. Planet Bean approached CAIC in October 2011

for a new loan to assist in the renovation and furnishing of

a larger and more advantageous location on the newly

renovated main square in downtown Guelph for their

original café . Planet Bean’s operating history has not

been easy. Just as the co-op was starting to become

profitable the recession hit in 2008. In spite of this they

have managed to grow and meet their objectives

demonstrating tenacity and good management. As a result

CAIC’s board provided a new loan of @$30,000.

Halifax YWCA (Halifax,

NS) - A former CAIC

borrower, the YWCA Halifax

approached CAIC for a

second mortgage behind

the province’s Nova Scotia Housing & Development Corporation

to build a childcare facility in the mixed income Spryfield

neighbourhood. The facility will also house the administration

offices for the YWCA thus creating an effective economy of

scale for the project. The YWCA has over 50 years of

experience operating daycare in Nova Scotia and the

Spryfield Child Care Centre will not only provide day care in a

high needs neighbourhood, but will allow the YWCA to extend

all of its programming to women and children in the

community. The YWCA first approached CAIC in September

of last year. We agreed to financing in October. Ensuring that

CAIC’s loan commitment is in line with the province’s

expectations has resulted in some delays but is expected that

funds (@$350,000) will be advanced by June 2012.

OUTREACH OUR MEMBERS: Making Connections

CAIC is committed to maintaining a close connection with those

instrumental in its success—our members.

St. John’s, NL—Beth and I had the opportunity to visit

with two of CAIC’s members this past fall—the Sisters of

Mercy Generalate and the Presentation Sisters. We had

a wonderful time sharing CAIC’s story, meeting members

from both communities and checking out Signal Hill and

even touring the infamous George Street!

Thanks again to Srs. Sharon Basha RSM, Elizabeth

Marie RSM, Sheila O’Dea RSM, Gladys Bozec RSM,

Elizabeth Davis, RSM, Patricia March RSM, Lois Greene

pbvm, Angela McGrath pbvm and Frances Molloy

pbvm for your warm welcome, enthusiastic response

and wonderful questions.

While in St. John’s, we took the opportunity to visit

Marguerite’s Place, a supportive housing project of the

St. John’s Status of Women Council. As mentioned in

the last issue of Update, this organization first came to

CAIC in 2008 for a loan to help build 8 units of supportive

housing for women. When we visited in September

2011, the facility was newly opened with several units

already occupied. CAIC advanced $40,000 in November

2011.

CAIC presentation at St. John’s City Hall— More

seeds were sown during our visit to St. John’s. Thanks to

Kimberly Yetman-Dawson, Network Director of the NL

Housing & Homelessness Network and Scott Morton

Ninomiya, Affordable Housing Coordinator, City of St.

John’s, CAIC was able to meet with potential borrowers

from a cross-section of social service & housing providers

and share the advantages of using debt as a tool for

growth, long-term stability and as a means of meeting

organizational growth from a lending partner who cares

about their vision.

SPECIAL INSERT: CAIC Update February 2012

Sr. Patricia March RSM (left) played “chauffeur” as we

(Beth Coates pictured right) visited Marguerite’s

Place—a project of the St. John’s Status of Women

Council that recently received financing to complete their

project.

Below: On the steps of Marguerite’s Place -(clockwise)

Wendolyn Schlamp-Hickey, Project Manager, Valerie

Lemieux (CAIC), Ada Kearly, Office Manager, Lesley

MacLeod, Executive Director, and Beth Coates (CAIC).

INSIGHT IT’S NOT EASY BEING A SOCIAL LENDER

by Beth Coates, CAIC Financial Manager

A t our AGM in December CAIC members voiced concern that CAIC still had $3.5M of advances not out in loans. It might appear that CAIC is perhaps a

bit too conservative in its lending practices and “setting the bar too high” which is resulting in fewer loans. These are valid concerns as providing access to capital for those generally left out of the mainstream is the reason that members have invested in CAIC. While it is true that CAIC has a rigorous and well developed due diligence process to ensure loans are credit worthy the reason that all available resources are not out in loans is a little more complicated. CAIC’s experience in lending for close to 28 years has provided good insight into what the primary hurdles are for projects requiring social financing.

Economic Environment

The sad irony is that when economic times are difficult (and the need is the greatest) social justice and charitable groups are less able to approach a lender for financing. Any group seeking financing knows that they need to demonstrate the ability to repay the loan. Tough economic times result in government and donor cut backs making it more difficult to repay debts. With this in mind, CAIC works very hard with groups to develop loan terms to deal with these realities such as lower interest rates, longer payback periods and “interest only” arrangements; moreover if groups do experience difficulty CAIC has always worked with them to restructure the loan until it is paid off. In its 28 year history CAIC has never demanded payment to the detriment of a borrower.

Nonprofits’ Limited Resources

When nonprofits, charities or cooperatives undertake a project which requires financing, they usually do so with-out “deep pockets”. In other words these projects are usually conceived on a shoestring and if the components do not add up the project cannot proceed. Through the years CAIC has made offers to groups early in the planning process. Some-times these projects do not proceed because other partners did not come to the table or some other element of the project was too costly. By way of example, in 2011 CAIC committed $500,000 to the Haliburton Community Housing Corporation to build six new units of housing. The balance of financing came from the housing corporation’s reserve funds as no

government grants were available. Haliburton’s board how-ever had to suspend the project when the builder’s quote and additional municipal fees made the project unfeasible.

Lack of Financial Sophistication in the Sector

Time and time again when CAIC staff talk to groups consider-ing borrowing they are confronted with many of the same concerns and questions. Nonprofit boards worry about the potential impact of borrowing on their the organization and the personal liability. Many small organizations do not have the expertise to analyze how financing might be used to meet objectives. CAIC’s staff work very closely with these organizations to help them formulate plans however with two part-time staff this assistance is limited. It is intended that CAIF (CAIC’s new sister foundation) will help address this issue through “finance readiness” grants to the sector.

CAIC’s Key Role as an Early Participant

The June 2011 newsletter included an article about how CAIC has been instrumental in getting and keeping projects going. Often organizations come to CAIC early in the planning process of a new project. A commitment from CAIC there-fore acts as “anchor financing” for the project. This allows the group to seek additional financing, donations and grants to realize their project. Sometimes these groups are “too successful” and a smaller loan from CAIC is now needed or in some cases— no financing is required at all.

The Bottom Line

CAIC lends far fewer dollars than it commits primarily due to the reasons cited above. In our operating year ended September 30, 2011, CAIC had made written commitments to lend over $2 M and yet only $430,000 of new loans were made. Although the board and staff would like to see more loans made, many of the groups that we have worked with have expressed thankfulness for CAIC’s existence as an important resource of support and advice, in addition to financing in early stages of project development. That being said, 2012 is already off to a good start with new loan commitments of @ $660,000 (see pg. 4) and @ $1M more anticipated over the next few months!

SPECIAL INSERT: CAIC Update February 2012