Douglas Bystry Interview with Mark Pinsky - Part I of II

Clearinghouse CDFI President/CEO Douglas Bystry discusses the birth of the CDFI industry and its evolution over the decades with Mark Pinsky—one of the nation’s leading strategists and experts on CDFIs, and co-author of the book Organized Money: How Progressives Can Leverage the Financial System to Work for Them, Not Against Them.

Transcript

Douglas Bystry Interview with Mark Pinsky – Part I of II

Douglas Bystry: [00:00:00] Welcome to CDFI Central. I'm Doug Bystry, your host, and today we have a special guest, one of the nation's leading strategists and experts on CDFIs: Mark Pinsky. Mark, welcome to CDFI Central. 

Mark Pinsky: [00:00:14] Thank you. It's good to be here. 

Douglas Bystry: [00:00:15] Yeah, I'm really excited to talk to you, Mark. You and I have known each other for a number of years and we've had great conversations over the years, and so you were absolutely one of the first guests we wanted to have on CDFI Central.

Mark Pinsky: [00:00:26] That's very nice. I was thinking. So almost 25 years, I think we've known each other. Does that seem about right?

Douglas Bystry: [00:00:31] Yeah, that seems about right. 

Mark Pinsky: [00:00:32] Yeah.  

Douglas Bystry: [00:00:32] And do you remember what our first sort of early interaction... 

Mark Pinsky: [00:00:35] It was a fight. We had a disagreement. That's what I remember. 

Douglas Bystry: [00:00:38] Do you? Yeah, there was maybe that, there was a few other ones, too.

Mark Pinsky: [00:00:41] Did we get along well? I only remembered the trauma of arguing. I remember...I remember it was around the time the CDFI Fund was starting and you were trying to figure out how to access it. 

Douglas Bystry: [00:00:50] Right. 

Mark Pinsky: [00:00:51] And I think you were, I think you were successful in accessing Bank Enterprise. Was that right? Enterprise Investment. But you hadn't been successful, at least in the first year in CDFI. 

Douglas Bystry: [00:00:59] Getting financial assistance. 

Mark Pinsky: [00:01:00] Right, and I just remember being in Vermont at the conference in 1996 and you were frustrated. 

Douglas Bystry: [00:01:09] That's right. 

Mark Pinsky: [00:01:09] And I felt like you were suggesting somehow—maybe it's just me—that I had done something wrong or made it hard for you, or wasn't listening to you, or wasn't being helpful...and that probably was true, but what I remember is we talked it out. We agreed that we would look at your business plan and talk about it and I gave you some feedback.  

Douglas Bystry: [00:01:26] Well, that's what I was going to bring up is that you actually took a look at our business plan. 

Mark Pinsky: [00:01:30] I do you remember that. 

Douglas Bystry: [00:01:31] You read it.

Mark Pinsky: [00:01:32] I remember the business plan. I remember sitting there reading it. 

Douglas Bystry: [00:01:33] Yeah, you read the whole thing. Gave us great feedback. You were very helpful and instrumental to us in getting going. And it's funny that you remembered Vermont. I did too. I didn't remember what year it was. You said 1996? 

Mark Pinsky: [00:01:43] Well, my life got measured by where the OFN conferences were because they defined my life so much. 

Douglas Bystry: [00:01:48] I know. And it's, it's wild to think that was my very first conference. Mark, tell me a little bit about what it was like in the early days, and I know people talked about it being sort of a movement versus an industry and what are your thoughts on that now as you look back and reflect on where we've come? 

Mark Pinsky: [00:02:03] So I came into the industry in 1989. And I sort of stumbled my way into the industry and it wasn't that I was setting out wanting to do community development finance, but I had been working in public policy areas and was frustrated. I didn't think that there were new ideas or people trying to push in new directions to achieve social, economic, and political justice. And when I came in, I, I call myself sort of Generation One B because there were a bunch of people before me. 

Douglas Bystry: [00:02:29] Right. 

Mark Pinsky: [00:02:29] So I stepped in and it was, you know, four or five years after the movement or the industry had formed, and it felt incredibly advanced and mature and sophisticated to me at the time. 

Douglas Bystry: [00:02:40] Even at that time? 

Mark Pinsky: [00:02:41] Yeah, because these were brilliant people who just had this vision. And somehow they came together at that time, and they hit on just an exceptional way of approaching what they were trying to get done. What was interesting was none of them were financing people. They just had this idea that there was a problem they needed to solve and somehow they all jointly and independently came to this idea that providing financing was really key to that. 

Douglas Bystry: [00:03:04] Which is unique in and of itself because providing financing is not the easiest thing in the world to do. 

Mark Pinsky: [00:03:10] It's not the easiest thing. I don't recommend it for most people. It's a hard thing to do. It was counter to prevailing ideas on the progressive left, whatever you want to call it. It was a bunch of people who were really interested in—at the time—in sort of what they called alternative finance. When I came into the industry, I don't think anybody seriously thought that this would become as conventional as it is sort of seen now.  It was alternative in the sense that the mainstream economy, mainstream capitalism was never going to be working for the things that they wanted it to work for; and so they wanted to create an alternative economy outside the mainstream. A lot of this was stirred by Chuck Mathay. And Chuck was the inspiration for people. He was the person who really brought everybody together. 

Douglas Bystry: [00:03:53] How many CDFIs do you think there were and what do you think that the total asset size was roughly? 

Mark Pinsky: [00:03:57] Now, by 96. Um, well, let me work this forward. So the first time people got together in 1985, there were 17 CDFIs in the room.  They managed, I think $27 or $29 million. That was the total assets. 

Douglas Bystry: [00:04:10] And so that was in '85. 

Mark Pinsky: [00:04:11] That was in '85. In early '93, we had to do a count because Bill Clinton had gotten elected and there was this chance that there'd be something that's now the CDFI Fund, and we were going to Washington for the first hearing on what was going to be the CDFI Fund legislation. We realized we had to have some numbers. I can't remember how many CDFIs there were then. Maybe, maybe a hundred, and the total assets we estimated were about $2 billion.

Douglas Bystry: [00:04:34] Wow. 

Mark Pinsky: [00:04:34] Now, I can admit now they weren't really 2 billion, but I thought—

Douglas Bystry: [00:04:37] You guys used that. That was a good number. 

Mark Pinsky: [00:04:39] That was, that was a way better number. It seemed like a number that would be credible on Capitol Hill. I'm not sure it was, but it sounded like a good number. And I could document about $1.6 or $1.7. 

Douglas Bystry: [00:04:48] Right. And then you estimated from there. 

Mark Pinsky: [00:04:49] Yeah, there were these people, you know, I wasn't counting . 

Douglas Bystry: [00:04:51] Right. 

Mark Pinsky: [00:04:51] And what's remarkable is that number sort of gone down in history. So that was significant. I mean, $2 billion is not an insignificant amount of money.  

Douglas Bystry: [00:04:58] So Mark, you have a very impressive resume, obviously, and you led the preeminent trade association for CDFIs from 1995 to 2016 and if you look back during your time, talk a little bit about the growth, what you think your role was, and how we developed as an industry. 

Mark Pinsky: [00:05:17] It was a big debate early on, whether we are a movement, which is where most people were most comfortable because they were movement people. And the idea of an industry was that it had a kind of discipline that people external to it would see it as something more substantial than it was. 

Douglas Bystry: [00:05:32] Right. 

Mark Pinsky: [00:05:32] Or would see it with the kind of discipline that they might not assume that it would be if it was a movement.  

Douglas Bystry: [00:05:36] Kind of, if you're an industry, you can't be as committed as you if you are a movement.

Mark Pinsky: [00:05:40] Exactly. If you're moving, you're more committed and more deeply passionate, and people wanted to feel that. You know, there was a lingering desire to harken back to the civil rights movement. 

Douglas Bystry: [00:05:47] Do you make a connection between the civil rights movement and the CDFI movement in this country?

Mark Pinsky: [00:05:52] I do, because I think the driving force behind a lot of people who started this was finding a way to carry forward the mission of the civil rights. I think that was formative. And most people in the seventies, as this was taking shape, and into the early eighties, were trying to figure out—what comes now? What follows the civil rights movement? How do we carry that forward? That was the big defining thing at that point in our lives.

Douglas Bystry: [00:06:14] Sure, and one of the ways we got there, obviously was through housing discrimination and, and not until 19—was it 1968—with the Fair Housing Act.

Mark Pinsky: [00:06:22] Right, right. 

Douglas Bystry: [00:06:23] That started to change some of the systematic laws and things that were in place that have created the problems that we're still dealing with today. 

Mark Pinsky: [00:06:29] Right. And all the great society programs seem to present a kind of hope, but there were constraints. And I think by that point, by the early eighties, when this stuff started really coming together and people started figuring out how to run loan funds in different parts of the country as a solution, there was this desire that there was something unrealized about all the federal laws and we needed to do more than that. And so, that was a really formative thing. What was really critical to the organization that started as the National Association of Community Development— 

Douglas Bystry: [00:06:56] I do remember that name. Yeah. 

Mark Pinsky: [00:06:58] That was the worst. There were other bad names, but that was the worst.  And today, continues as Opportunity Finance Network—was this idea that I inherited from my predecessor, that it was essential that we be a performance driven and self-regulating industry, particularly as loan funds, which are not regulated for the most part. And so there was this real commitment within the founding group of folks to excellence, performance...  

Douglas Bystry: [00:07:23] I remember that. 

Mark Pinsky: [00:07:24] Yeah. As a core driving commitment to the customers that we were trying to serve. There was this fundamental notion that there's no reason that someone just because they're poor shouldn't have the same excellent level of product and service that someone who's wealthy should have. So there's a lot of formative work around that, and that lent itself to the idea of an industry.

Douglas Bystry: [00:07:42] So how important was that, the performance metrics and the commitment to excellence, during the years that you led the Opportunity Finance Network? 

Mark Pinsky: [00:07:51] So there was something wonderful and magical about that when I discovered it.  I'd come out of working on a bunch of policy issues, working in the nonprofit world, working in Washington on Capitol Hill a little bit, and I couldn't put words to it, but I couldn't understand. And I was incredibly frustrated by the fact that the folks pursuing the policy goals that I shared in some ways seemed to not care enough about business discipline. 

Douglas Bystry: [00:08:13] Interesting. So you've found sort of a gap there. 

Mark Pinsky: [00:08:15] Yeah, absolutely. And I suddenly felt like I'd stepped into this world where people really cared about what it meant to manage money well and to use it for you know, inclusion or use it for more equitable outcomes. To me that was huge.

Douglas Bystry: [00:08:29] Do you think there's an inherent discrepancy between those two concepts, between the concept of being good financial managers and being a solid deliverer of social responsibility? To me, a good CDFI has to have both aspects. 

Mark Pinsky: [00:08:45] Absolutely, without a doubt. 

Douglas Bystry: [00:08:46] And I think that was a message that you promoted during your years at OFN.

Mark Pinsky: [00:08:50] That was core and central to everything I believe. What really defined that duality of purpose in the industry was what happened when CDFIs started borrowing money. In the earliest, many were from faith based institutions, particularly from women religious. So not just nuns. Not everybody knows that orders of women, religious and communities of women religious are self sufficient. They earn all their money. They don't get money from the church. And there's really a remarkable story about how they decided, in response to the Vatican, that because they were a diminishing number, they only had so much money, that the best way they could fulfill their mission was to leverage themselves and leverage their money and create other institutions that could carry forward what they wanted to do.

Douglas Bystry: [00:09:29] That's very interesting. I'd heard, some of the early stories of the religious women involved, but didn't know that it was that pronounced and that profound. 

Mark Pinsky: [00:09:38] For them it was, and I think we, in the CDFI industry were really the beneficiaries of that. But what happens is, if your debt is coming from women religious, there are two really important rules. The first is you better do something really important. 

Douglas Bystry: [00:09:50] That's right. 

Mark Pinsky: [00:09:51] You better do something really mission driven because they're not lending you money at 0% or 1%, even though the interest prevailing interest rates were 20%, so that you can invest in a bond somewhere. They're doing it so that you'll do something that goes beyond. But the second thing is, if you're borrowing money from women religious, you don't lose the nuns' retirement money.

Douglas Bystry: [00:10:08] You've got to be a prudent manager of that resource. 

Mark Pinsky: [00:10:10] Right. And that goes to that point. You have to be as disciplined about mission as you are about financial management. That's how, to me, they're one in the same thing. It's the moral bond that goes with managing other people's money.

Douglas Bystry: [00:10:22] Yeah. Wonderful. Wonderful. 

Mark Pinsky: [00:10:24] So for me, that was defining. That was what brought me in and it was really inspiring to me. And that was at a time when there was a big debate going on because there was another group of people who thought everybody should be able to participate, and it was wrong to have standards that kept people out. And in the process, my predecessor developed—this would have been about '90 or '91—developed this model of performance-based financing that not only defined what we did at OFN, but really became the model for the CDFI Fund at least for the first 10 years or so.

And there's a really funny story, if you look back in the minutes of the board meetings from OFN from that time, they decided to develop performance criteria and then see how they worked. And the way they were going to see how they worked was that all the board members— almost all of whom were CDFIs—to get rated against them. And the board minutes are really hilarious because the report back was everybody, all the board members who were the best CDFIs out there at that time, all of them failed. 

Douglas Bystry: [00:11:16] All of them. That is really wild. 

Mark Pinsky: [00:11:18] But the conversation they had, which is equally important, was we have two choices. We can lower the standards, or we can work together to build the skills and build the capacity of these CDFIs. And they decided the latter. They said that, no, those are the right goals. That's, that's how we should be. 

Douglas Bystry: [00:11:33] Right, let's not lower the bar. 

Mark Pinsky: [00:11:34] Let's not lower the bar. That's how we should be. And let's help do that. So if you think about, in my time there, all the things that we did at OFN, the capacity building efforts, the training conference, the way we did financing early on, which was not always easy, they were all aimed at helping folks get up to those levels. 

Douglas Bystry: [00:11:49] It was always important, I know. Mark, in my opinion, you issued the most significant and challenging directive ever to our industry: grow, change, or die. I'd love to have you talk a little bit about that. Where did that come from? What did you mean, and how is it perceived in our industry? 

Mark Pinsky: [00:12:05] It sort of shook the industry, in a good way. Let me explain it by giving a little historical context. We've talked a little bit about the struggling beginnings of this movement becoming an industry and the effort to sort of impose performance on it. And something happened along the way. We got really lucky, and Bill Clinton came along and wanted to create the CDFI Fund. We invented not only the CDFI Fund, we invented a new way for the government to work. And we can look back now and say, "Hey, it works. It's a, it's a good thing." It juiced the growth and expansion of this industry in a really remarkable way. Folks were growing everywhere. Everybody wanted to be a CDFI all of a sudden. And so as that went on, it became clear that we needed to make sense of this. There was a kind of strategic planning that the organization hadn't gone through at that point, and most CDFIs hadn't gone through at that point. Suddenly we were, important, at least in a small way, to people in the federal government. We were important to a greater number of people than ever in our local communities. And so it was really a question of what do we do with this? You know, something good happened to us. We were able to take it and grow and do some really great work with it. It was exciting stuff. 

Douglas Bystry: [00:13:06] Kind of like a child reaching, you know, adulthood, and now it's, let's figure out what to do.

Mark Pinsky: [00:13:12] Yeah. But on top of that, remember Bill Clinton was the president only until 2000. I had a hard time getting people to recognize that could kill the CDFI Fund. We didn't know. Only after George W. Bush was elected did people start to say, "Hey, wait a minute. What are we going to do now?" Because in fact, the CDFI Fund had bipartisan appeal, but at the time it had been Bill Clinton's baby. 

Douglas Bystry: [00:13:33] There was always a concern that it would be perceived as simply something Bill Clinton created. 

Mark Pinsky: [00:13:38] And there was some history to that. So the law was passed in the fall of '94. That fall there the elections where the Republicans took over the house. Republicans the following year tried to defund the CDFI fund. It was their number one target. So we had reason to think that they would want to oppose it and they want to oppose it because it was a way of hurting Bill Clinton, not because they cared about us. 

Douglas Bystry: [00:13:55] Right, right. That's right. 

Mark Pinsky: [00:13:56] And they made the justification, which was not unreasonable, that it hasn't even started up yet, so before we create more big government... that was their view of it. And in fact, there's a really remarkable thing, which is that in, I think December of '95, President Clinton sent a letter to Newt Gingrich, who was then Speaker of the House. We had a budget impasse, and he said, I'm willing to negotiate on anything, except three things. First was social security. The second was maybe Medicare. And the third was the CDFI Fund.

Douglas Bystry: [00:14:21] Seriously. 

Mark Pinsky: [00:14:22] Yeah. I remember seeing that letter and thinking, "What? How is it that we're in there?" He made it a target in some ways, but he stood up for it. So we assumed that there would be a lot of pushback. So, when President George W. Bush came in and Congress came back, I spent a lot of time in Washington trying to, as we said at the time, trying to talk to Republican. And it turned out to be not as hard as we thought it was going to be, but it seemed like an existential threat at the time. So, we had faced this time of uncertainty. Even after we got the budget back, the Democrats in Congress sort of backed this, but the Republicans didn't fight us too hard. 

Douglas Bystry: [00:14:54] Right. I mean, ultimately it did receive funding. 

Mark Pinsky: [00:14:56] It did receive continued funding. We had to sort of say, okay, there's no short path here. What are we going to do and where are we as an industry? So all of that came together in a discussion at the Board. We went through a strategic planning process to define what was core to us, what should never change about what we did as CDFIs. And that's where the term aligning capital with social, economic, and political justice came out of. 

Douglas Bystry: [00:15:18] Right. 

Mark Pinsky: [00:15:18] But we needed to go forward. And it was very clear that the way forward was not a straight line and that was where that notion of grow, change, or die really came out. I knew people would take it seriously, but I wasn't prepared quite for the intensity of the response.

Douglas Bystry: [00:15:31] That's right. And, we had reached, I don't want to say critical mass, but there was enough going on within the industry to know that, this is really something. It's not going away. And now how do we take it to scale? 

Mark Pinsky: [00:15:43] Right. And scale was a big word that wasn't always popular, but we'd always thought of ourselves as a bandaid. We do this for a while till somebody else figured out how to do it better, and then we go on and do something else. And suddenly somewhere in there there was this realization that we weren't bandaids. We were around for the long haul. 

Douglas Bystry: [00:15:57] That's right. 

Mark Pinsky: [00:15:57] And we had to start gearing up to do that in some way.

Douglas Bystry: [00:16:00] So Mark, when I was in the audience and I heard your speech and I listened to grow, change, or die—

Mark Pinsky: [00:16:07] What was your reaction? 

Douglas Bystry: [00:16:08] Oh, I was like, that's easy. We're going to grow. And that's how we've always looked at it at Clearinghouse CDFI. But it was important, too, because, you know, we saw a lot of CDFIs that didn't have much of a balance sheet, really, were making some impacts, but very little. And, it's so hard to compare CDFIs. I mean, how do you compare CDFIs? 

Mark Pinsky: [00:16:33] Let me go back. I'm just curious how, what was your balance sheet then? What was your total assets? 

Douglas Bystry: [00:16:37] That's a good question. In 2003...I'm going to guess we might've been between $15 and $40 million. 

Mark Pinsky: [00:16:43] Yeah. That's likely. It's really important to keep in mind where we were and what we knew. We didn't have New Market Tax Credits. We didn't have the Bond Program. We didn't have the relationship with banks. That was just really getting started . 

Douglas Bystry: [00:16:55] Yeah, I didn't perceive grow, change, and die as threatening, and some CDFIs did. Why do you think some were threatened by that? 

Mark Pinsky: [00:17:03] Well, I think there were two broad reasons. The first was what we meant by grow was, yes, individual CDFIs have to grow, but the CDFI industry had to grow.

I clearly didn't articulate that well enough from the start because people were confused about it. There was this idea that we were out to euthanize small CDFIs, which we were not. If you were small, you needed to find a way to work with other CDFIs. The long term, wasn't going to work to just continue doing four loans a year. So, I think that was one reason, but the other reason, which I think we still deal with today, people don't like to change. 

Douglas Bystry: [00:17:34] Right. Change is hard. 

Mark Pinsky: [00:17:35] Change is really hard. And as you said earlier, running a CDFI is really hard. It's not for most people. 

Douglas Bystry: [00:17:41] No. It's not. 

Mark Pinsky: [00:17:41] And I think it really triggered for a lot of people a fundamental question of, "Can I do this?" 

Douglas Bystry: [00:17:47] Right. 

Mark Pinsky: [00:17:47] And now you want me to change? 

Douglas Bystry: [00:17:49] Mark is telling us to change.

Mark Pinsky: [00:17:50] Yeah. I think people really have a hard time changing and I think they still do. I tried to say over and over and over again, you think you can't do it, but look what you just did. Look at this last year. Two years ago, you didn't think you'd be where you are today. The CDFI industry, it's a fairly unique thing, full of remarkable people who tend to overachieve.  

Douglas Bystry: [00:18:06] So that leads me to my next question, which I think is an important one. What are there, 1,200 CDFIs around the country? Are there too many? Is that a good thing to have so many or is that a bad thing? 

Mark Pinsky: [00:18:17] I think the number of CDFIs is not what's important. What they're producing, and the volume of lending and the support they're providing is more important. When I was at OFN, I said that 20% or 30% of the CDFIs out there probably shouldn't be operating. 

Douglas Bystry: [00:18:32] Meaning that they should— 

Mark Pinsky: [00:18:33] ...merge into somebody else. We had some of that. Grow, change, or die was partly about integration, some mergers, and some different kinds of collaborations. Some of those collaborations are happening now. The bigger CDFIs, including you, go and work in more places. You find ways to work with other CDFIs, sometimes informally, sometimes formally. We thought that would happen more than it did. An economist would say there's inefficient use of resources. But I don't think that just having more CDFIs is a good thing. And I think there are plenty of CDFIs out there that aren't pulling their weight. They're very important to the community they're in—maybe—or maybe not. So I don't know the answer, but I've been doing this work to try and help small markets become more CDFI friendly. And this idea that rather than starting new CDFIs, which is what every community kind of wants to do— 

Douglas Bystry: [00:19:15] Start their own CDFI.

Mark Pinsky: [00:19:16] Yeah, and in most cases it's not going to be the right decision if you can create a way to attract financing from other CDFIs. The good thing I know and that I've seen is there are plenty of CDFIs out there with room on their balance sheet and a hunger for more assets and more places, but they're not going to go create bricks and mortar in a small community because there isn't going to be the deal flow. 

Douglas Bystry: [00:19:38] Do you still come across people that say, "CDFI? What's that?" And what's your response? Because I know how I feel when I still have to explain what I do. But you've been doing this for a long time—

Mark Pinsky: [00:19:49] I haven't done it well yet. That's why I have to keep explaining, but yeah, it's a really problematic term in that it brands us as internally focused, technical things, and not something that really represents the roles we play in communities and in bringing people together and creating good outcomes. 

Douglas Bystry: [00:20:06] But it is what and who we are. And this is CDFI Central, so we're going to embrace it. Mark, I don't know how much you were involved with the creation of the CDFI Bond Guarantee Program. It's something we've used quite a bit. I think we're at $350 million. What are your thoughts on that program and why aren't more CDFIs taking advantage of that? 

Mark Pinsky: [00:20:27] So there's an interesting history to that program. That was actually born out of the George W. Bush administration, where there was someone there who came to me and said, there's this other program over here that's a Bond Program you should think about. It didn't come out quite the way it was supposed to because of the way Congress passed it in a rush, and that's part of the reason that folks aren't using as much. But I think it's a good program. It's a little burdensome for folks who are not used to the managing that kind of complexity. 

Douglas Bystry: [00:20:53] Right. 

Mark Pinsky: [00:20:53] But it goes back to that conversation we had about change. It's a new way of doing things. I was around when you first participated and it was complicated and it was hard and we had to figure this out. But one of the things we learned really quickly was, CDFIs weren't used to thinking about what they would do with 30-year money. 

Douglas Bystry: [00:21:09] Right. 

Mark Pinsky: [00:21:10] And it's a very different kind of asset that you're dealing with. Those folks who started really imagining what they could do, started to embrace it. It opens new doors and creates new opportunities and almost redefines new roles for CDFIs and what they can do...so, that was back to that idea of grow, change, or die. This was a big change, and no one was sure how to do it. 

The other issue was that the way it was written and the way it was created through the Federal Financing Bank and the way it was interpreted by Treasury created so many, I call it belt suspenders and chastity belts. Um, it made it really alarming to some folks. They were worried about what it would do to the rest of their investors, and that was a real issue. A lot of folks had to renegotiate with investors. 

Douglas Bystry: [00:21:50] Yeah. What are your quick thoughts on New Markets Tax Credits and how that program has impacted the CDFI industry, as well as low-income areas where projects have been done?

Mark Pinsky: [00:22:01] So, let me give you a two path response to that. The first path is: the more I talk to people, the more I think CDFIs in particular have found ways to make really good use of that. Not all of them, and not every deal is good. But I think by and large, it's a program that CDFIs have managed to make work at a significant scale to benefit the communities where they're working. And the financial benefits to the CDFIs are significant. It's a good, stabilizing program. 

Douglas Bystry: [00:22:26] It's a great source of revenue.

Mark Pinsky: [00:22:27] It's a great source of revenue. It's not gonna go away overnight. So, in that sense, I think it's been good and it's hard to say negative things about it. 

The other channel of that is that the New Market Tax Credit played a really important role. When we created the CDFI Fund, we worked really hard to try and make sure that it was only CDFIs that met mission standards that could participate in it.

Douglas Bystry: [00:22:47] Right. 

Mark Pinsky: [00:22:48] And we had a split in the industry in some ways, when New Markets came along, because in fact, the Clinton administration wanted to make it more inclusive, and I understand they wanted to bring new money from new sources to New Markets. And there was a big fight. I was in the middle of it, and I was on one side of it in the CDFI industry about whether to push for greater CDFI control, preferential CDFI access— 

Douglas Bystry: [00:23:13] Yeah, or make it an inclusive CDFI program versus a much broader— 

Mark Pinsky: [00:23:17] Right. That's exactly right. And I lost on that. And partly, I think it was that CDFIs wanted to use it to build relationships with banks. At the time, people hadn't really thought about the fact that cities could participate or other entities could participate. It was mainly the idea that banks would participate. And you know, banks have significant advantages in competing for this program, both in scale and in terms of their ability to fund it themselves. So there was a big fight that went on about whether or not to create a CDFI only New Markets Tax Credit Coalition, in addition to the New Markets Tax Credit Coalition, which includes banks and others.

Douglas Bystry: [00:23:54] Yeah, I certainly wish you would have won that fight. 

Mark Pinsky: [00:23:56] I wish I would have won that fight, too, because what it meant was that the CDFIs gave up a significant amount of control over the program and at a time when they could have made it a more effective program over time that they could have then leveraged in turn and made other things happen. And so, it was sort of a, in a sense a failure of power. 

Douglas Bystry: [00:24:15] Right. And if you think about CDFIs with the focus on impact, focus on community, generally, I think CDFIs are in a better position to create better projects through the New Markets Tax Credit Program or programs that they are exclusively involved with. 

Mark Pinsky: [00:24:30] Yeah, and in fairness, not always. There are plenty of banks that do good things and plenty of other folks who do good things as well. But they gave up the ability to leverage how others did it. 

Douglas Bystry: [00:24:39] Right.

Mark Pinsky: [00:24:39] But what I think is really important to that is it also has had a mission drift effect on some CDFIs. Maybe not all CDFIs, but because in fact, in order to get your New Markets Tax Credits funded, get the investment, or get the leverage loan, you end up responding to the source of money. 

Douglas Bystry: [00:24:53] I want to share with you one of my ideas on New Markets and see what your response is. Why not have the awards to be two-year awards, and if you win, you can't apply the next year, and you have two years to deploy it. 

Mark Pinsky: [00:25:06] That was an idea that we talked about somewhere along the way. I don't remember. I think it makes a lot of sense— 

Douglas Bystry: [00:25:10] —because there is this rush to deploy, right? It creates people putting their money into projects that otherwise, it wouldn't go there. 

Mark Pinsky: [00:25:17] Yeah, there was partly the incentive to say, "We don't want the money to go out over two years because we want to create an imperative that it has to go out quickly. One of the original driving forces required people to get the money out quickly. But the other side of it is, I think that if you're a big institution, you want to gobble up an allocation every year. I think that's the other resistance to it. 

Douglas Bystry: [00:25:33] Yeah. I'd have to share with you one of our pet peeves or frustrations is that, you know, we meet a new city or borrower and we explain to them this program. Then, in the next round we find that they have applied and won and we didn't, and they knew nothing about it. We taught them everything, they know about the program. But that's life, right?

Mark Pinsky: [00:25:52] Yeah. What are you going to do. 

Douglas Bystry: [00:25:53] Yeah. Mark, it's been what, three and a half, four years since you left the OFN. Tell me in general what all have you been doing? 

Mark Pinsky: [00:26:00] When I left OFN, I had a few goals that broadly I would classify, as doing selective CDFI work. One of the challenges of running OFN is you love all your kids equally, but some you love better than others. 

Douglas Bystry: [00:26:11] Right. 

Mark Pinsky: [00:26:12] And I wasn't able to respond to every CDFI interest in some ways. So I wanted to do some work and some consulting, and I've done that with a bunch of CDFIs, some small things, some big things. I wanted to write. That was something I had been trying to do at OFN, and it just wasn't going to happen. It wasn't realistic. So I did, and I wrote a book, as you know, that came out recently, and have done other writing as well.

And then the third thing I wanted to do was something else. I didn't know what it was. It was something unrelated, certainly involved finance for mission, but it wasn't CDFIs. And so, I've done a few projects like that. Actually, one of them I did a paper on impact investing for good labor practices, and try and support the labor practices along global supply chains. 

Douglas Bystry: [00:26:51] Is it rewarding for you, that work? 

Mark Pinsky: [00:26:54] Yeah. On that front, I was working on labor issues close to 40 years. So I have some history around them and I care about them. But it wasn't the compelling, driving thing that CDFIs have been in my life, but I was interested in it. It was a chance to meet some new people and think about some new things. I'm really interested in the power of organized money to create good, positive, progressive outcomes. And so I was interested in sort of exploring that a little bit. And now I'm involved in a project that—also unrelated to CDFIs—that's about creating a financing strategy in the Middle East to benefit Palestinians and Israelis in Palestine and Israel.

Douglas Bystry: [00:27:28] Wow. That is, that's unbelievable. You're gonna solve some of the crises that have happened in that region. 

Mark Pinsky: [00:27:33] I'm sure I'm not going to solve them, but, it's a similar kind of approach, which is how do you use financing to try and create some more equitable outcomes— 

Douglas Bystry: [00:27:42] Right.

Mark Pinsky: [00:27:42] It's really interesting to take what I've learned from how you organize money in the CDFI industry and think about how to do that in a context that's frankly way more complicated than CDFIs.  When I left OFN, I knew there was some things I wanted to do, but I didn't know what they were. This was one of them. 

Douglas Bystry: [00:27:56] When you left OFN it was kind of unexpected. And I do remember receiving notification and being in shock. And I'm sure a lot of your friends and supporters have shared with you that same sentiment. Is there anything you'd like to say in terms of your time there or your leaving OFN at that time? 

Mark Pinsky: [00:28:13] There's two narratives that are relevant to me. The first is that when we talked about grow, change, or die earlier, to me my role was in significant part to raise issues and challenge the industry. It wasn't always popular, but I wanted to do that. And so going back to, I would track it to about 2012, I really had started trying to raise some challenging issues. One of them was the issues of racial equity, but it also had to do with issues of mission drift generally, had to do with how CDFIs collaborated. And, you know, if you go back and look at my annual speeches, you'd see some of these issues coming up. To some extent, I felt like I was raising these issues and people weren't responding, but I also got feedback people weren't hearing them, and part of the reason I think they weren't hearing them was I also got feedback that my speeches had become entertainment more than they had become content. People liked to hear me give speeches. 

Douglas Bystry: [00:29:00] I'm kind of surprised to hear that though, because I know how much time and energy you spent on those speeches and I know— 

Mark Pinsky: [00:29:05] Too much. I really was trying to say something and it made me feel good, obviously, that people appreciated my speeches and were really supportive of me, but I didn't feel like the message was getting through. So part of that was—whatever I'm doing, whatever I'm saying, I'm not delivering the message effectively. So there was, there was some of that.

Douglas Bystry: [00:29:20] So would you call that burnout? Was there some burnout? 

Mark Pinsky: [00:29:22] Yeah, yeah. I think there was. There was this nagging idea that maybe I should do something different. 

Douglas Bystry: [00:29:27] Right. 

Mark Pinsky: [00:29:28] Second thing that happened, in April of 2015, I was in a very serious car accident. 

Douglas Bystry: [00:29:32] Oh, I didn't know that. 

Mark Pinsky: [00:29:33] I was rear-ended. I was sitting on a highway and the traffic stopped in a place that was unusual. 

Douglas Bystry: [00:29:38] Okay. 

Mark Pinsky: [00:29:38] I had this sense of like, boy, I hope whoever's behind me is paying attention. I looked in my rearview mirror and coming at me, close to 70 miles an hour, was a guy in a van texting. 

Douglas Bystry: [00:29:49] Wow. 

Mark Pinsky: [00:29:49] I could see it. And he didn't see me. And I knew he was going to hit me. And didn't know I could do much, but after the fact, I realized I went through a flash of like, well, how did I do? That was really the thought. How did I do? Life's over.

Douglas Bystry: [00:30:01] So almost this thought of evaluating what you've done in your life and what else you need to do. 

Mark Pinsky: [00:30:06] And I didn't have any magical formula running through or film running through my head. But it stayed with me. And my car was totaled. I hit the car in front of me and I was not bruised. I was very, very fortunate. The next day I went off on a business trip and didn't stop to think about it, but what, what had entered my world was at that point I was 58 years old. I thought, what else do I want to do in life? 

Douglas Bystry: [00:30:26] Sure. 

Mark Pinsky: [00:30:27] So there was that, and I was ready to get on to other things, you know, and I felt a tremendous sense of relief when I left. And I hope that the change that resulted helped the organization and helped the industry wrestle with some of the things it wanted to wrestle with then.

Douglas Bystry: [00:30:40] Absolutely. I mean, I think you can be proud that you left both a legacy as well as a path toward the future and where the industry is now and is going. 

Mark Pinsky: [00:30:49] I hope that's right. That's, that's, that's reassuring.

Douglas Bystry: [00:30:51] I think it is, absolutely. I can tell you that as someone who's been involved as a CDFI for 22 years, I can tell you that. Mark, you've had a remarkable career and obviously have been a tremendous leader in the CDFI arena. Would you ever consider running for public office? 

Mark Pinsky: [00:31:07] Uh, no, but thank you for what you said. I really, I really wouldn't. There was a time when I was young, I worked on Capitol Hill. I thought, what would a career in public service be? Or even just, a run for public service. That time has passed and I think there are people who fit better in public service than I do. I'm too disruptive. 

Douglas Bystry: [00:31:27] Maybe too opinionated, too. Would you say that? 

Mark Pinsky: [00:31:29] Yeah. I'm trying to be nice to myself, but you know, there's a reason I've worked in the CDFI industry or worked for myself from home virtually my entire professional career over 40 years, and I wouldn't do well in that kind of a setting where there's a public convention of some kind. It's actually interesting. I've been on a book tour and I've been asked that a number of times, but it's not right for me. We are at a time in our political lives in this country where I think youth should be served. There are a lot of really talented leaders coming from a lot of directions who are better suited to political service.

Douglas Bystry: [00:32:01] Just off topic a little bit, but what do you think of the divisiveness between the parties and this lack of collegiality that there was in the past? At least, we thought there was. What are your thoughts on that, Mark? 

Mark Pinsky: [00:32:13] It's sad. That's my thoughts on it. It's sad. You know, you may have heard me say this in my job at OFN: the strength of any community is its ability to disagree and how well it disagrees and how respectfully it disagrees. And if that's true, we're weak right now as a country. 

Douglas Bystry: [00:32:26] Yeah, I agree. 

Mark Pinsky: [00:32:27] One of the things that Chuck Mathay said from the very beginning was that one of the things that's great about CDFIs is they bring people together across divides. People who come from different backgrounds who otherwise might not get in the room together. 

Douglas Bystry: [00:32:39] Right. 

Mark Pinsky: [00:32:39] And they get together and they try and find solutions because they do share a sense of progressive outcomes. They do care about treating people equally. They do care about being inclusive. They do care about sustainability from an environmental perspective. 

Douglas Bystry: [00:32:50] I remember the first time we had some meetings and included the bankers in, and you know, they walk in and you have a mental perception of who that banker is going to be. And then when they're in a committee meeting with you, and you're working together to try to fund loans that make a difference in the community, and you see that they really care, it's quite eye-opening.

Mark Pinsky: [00:33:08] Yeah. I think people are more alike than they tend to assume, but if you don't have a mechanism for getting people together to work together, whether it's around financing or something else, it's really hard to get to a better place. 

Douglas Bystry: [00:33:20] Right, right. Mark, I want to just challenge you to share with our listeners an important disappointment in your career or something that you've experienced that maybe you thought, you know, should have happened or could have happened and then also something that would be a fantastic accomplishment in your professional career related to your work.

Mark Pinsky: [00:33:40] So, I'll give you two disappointments. One was, we talked earlier about this growing sense I had of not making myself heard effectively. It wasn't that people weren't listening. And you know, ultimately led me to realize it was time for me to go do something else. But the bigger one is that in the lead up to the financial crisis in 2008, in the work that happened afterwards, CDFIs had something really important to say and we didn't get heard. And we didn't get heard partly because we were too small, partly because we as an industry were understandably concerned about our own wellbeing, but it seemed to me we should have more power than we did.

Douglas Bystry: [00:34:21] Okay. 

Mark Pinsky: [00:34:21] Honestly, underriding my push starting in 2012 or 2013 to challenge the industry to do more and do better, underlining my decision to do something else, underlying the new book that I've written...all of those were driven by this idea that a financial sector that's done as well as CDFIs have done, has achieved as much as we've achieved at managing the scale of assets that we do as an industry, should be able to be a more significant player in issues broader than just, can we get money for the CDFI Fund. 

Douglas Bystry: [00:34:51] Right? 

Mark Pinsky: [00:34:52] Can we make New Markets Tax Credits survive? Going back to the crisis, there were some people in the CDFI industry, none more than Martin Eakes at Self-Help, who saw this coming. We all did. People in the CDFI industry were experiencing this, right? They were seeing these odd things happening in their communities. We couldn't make ourselves heard. And so, I don't mean to jump topics here, but, but the preface to the new book I wrote is about the realization of what power comes from: managing, organizing other people's money, and that we hadn't done it. 

Douglas Bystry: [00:35:20] What about the accomplishment or something you're very proud of?

Mark Pinsky: [00:35:23] I'll give you one early and one other. The early one was, as I said, I stumbled my way into the CDFI industry. I suddenly woke up one day and I was running what became the CDFI Coalition. I found myself —with the pursuit of the CDFI Fund, the election of Bill Clinton, and the congressional process that went to create the CDFI Fund—to a remarkable extent I found myself spending my days on the phone with the House leaders, Senate leaders, and White House folks. In some ways, my achievement is that I survived that and I didn't screw it up too badly. I was in over my head. But, I was able to sort of learn enough about how the CDFI industry worked. I was able to understand what was important and the creation of the CDFI Fund as a source for equity for the industry. The fact that we were able to get that across the finish line without giving up important aspects of it was really remarkable. 

At that time, there were arguments within the industry, the biggest one between ShoreBank on one side and the CDFI Coalition on the other side.  Everybody assumed that ShoreBank was going to get its way and they didn't. 

Douglas Bystry: [00:36:19] Right. 

Mark Pinsky: [00:36:20] We made that program work better for a broader range of CDFIs. So, I'm very proud of that. I think I played an important role in helping the industry, and it started probably with grow, change, or die. So, when I hear, as I did just this morning, I heard someone tell about at their CDFI, they've established a brand now that people come to them. Money comes to them. That's, their achievement, not mine, but during my time in the industry, we realized that we needed to be able to be not only germane from an economic perspective to a broader universe, we needed to find ways to relate to them that didn't compromise who we were or what our values were, but that allowed people to come find their way to us. And I think it did bring people together. It did help us achieve more than we would have otherwise.  

Douglas Bystry: [00:37:00] You mentioned ShoreBank and I just want to ask a question. We sometimes hear from investors that they can't invest with us because they had previously invested with ShoreBank and that didn't turn out exactly as they wanted. What happened at ShoreBank? Why did that fail? 

Mark Pinsky: [00:37:14] I think you should just tell all those investors get over it. That was...How many years ago was that? That was a decade ago. A few things happened at Shorebank. One of the things that happened was that they, by definition—and this is a CDFI challenge—they had a great concentration of risk. They did many things well. They did one thing particularly well, which was small mom and pop rehab of small unit rental. And so when you have a recession and people lose their jobs, rental goes really quickly. They weren't set up for that. They didn't have good risk procedures in place. They had gotten distracted. They weren't paying attention. They were doing global stuff. It was important work, but it can bite you really quickly, and it did. Politics became involved around the perception of ShoreBank as a Clinton thing, and it became hard for them to raise money. It was externally activated, but somewhat internally produced. It's a lesson to all of us. Could happen to any of us. 

Douglas Bystry: [00:38:03] Well, and that's exactly what I was about to say. It's a good lesson to remember that no matter how large we are, no matter how successful we are, we all have to pay attention. And we want to make sure that we continue to not only operate in a manner that's benefiting the community, but also in a safe and sound manner, as well. 

Mark Pinsky: [00:38:18] There was this realization it wasn't good enough that we had been around for 10 years. We were managing other people's money. They expected us to be here 20 years from now. 

Douglas Bystry: [00:38:24] Right. 

Mark Pinsky: [00:38:25] And we have to be the kind of managers to do that. Now, at OFN we had our own balance sheet, and thank goodness I had talented CFOs and good lenders to manage that, because that was hard for me to do. It speaks to why in an organization you need to have a nice compliment of skills and motivations to make sure that you keep yourself on track. 

Douglas Bystry: [00:38:44] Absolutely. Well, Mark, listen, I know you and I could go on and on for hours. Well, we did, and we also didn't get a chance in this podcast to talk about your book. Will you make a promise to me to come back and spend some time with me so that we can talk about your book on an upcoming podcast?

Mark Pinsky: [00:39:03] Absolutely. I would love to do it. It's what I'm focused on now. 

Douglas Bystry: [00:39:05] Great. I really look forward to having you back. I want to thank you for being so candid, so open. And also I want to thank you for your tremendous leadership in this industry. As a CDFI, I've always admired and looked up to you and counted on your leadership and your friendship. Thanks for coming in today and sharing so much with our listeners. 

Mark Pinsky: [00:39:26] Oh, it's my pleasure. I really enjoyed the opportunity to come and talk with you and I respect you so much in what you've built. I think that you're a good reminder that the CDFI industry has great things ahead of itself. 

When I was debating whether to take the OFN job back in 1994, I drew up a pros and cons sheet, which I forgot about, but my wife found once, years later. The most compelling reason to take the job was the people.

The people in the CDFI industry are simply exceptional, dedicated beyond what people outside the industry can understand. Smart, savvy, strategic, committed—and you represent that to me, so thank you for having me on. 

Douglas Bystry: [00:40:02] Well, thank you very much. Mark Pinsky, our guest today. On behalf of CDFI Central, I bid you adieu.