2006 CFED Annual Report

2006ANNUAL REPORT

CFED 2006 ANNUAL REPORT 1

(Economic development would allow every American) an ampler share of freedom … an unfettered start, and a fair chance, in the race of life … and would elevate the condition of people, … lift artificial weights from all shoulders, to clear the paths of laudable pursuit for all. – Abraham Lincoln

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Table of ContentsLetter from the President — 2Letter from the Chair of the Board — 3 CFED’s Impact Across the Nation — 4Financial Security — 6Economic and Enterprise Development — 8Manufactured Housing — 10Innovation — 12Achieving Financial Sustainability: 2006 Financials — 14Supporters — 16Staff — 18Board of Directors — 19

Setting the Stage for Future SuccessCFED’s Strategic Plan sets the stage for sustained growth in all of its areas of expertise. Over the next decade, CFED will increase its impact in asset building while strengthening its role in fostering innovation. CFED will focus on bringing three of its major asset-building efforts – matched savings and investment accounts, entrepreneurship, and manufactured housing – to a scale where they can benefit millions of low- and middle-income families and hundreds of communities.

CFED will also develop a pipeline of innovative ideas with the potential to significantly expand economic opportunity for individuals and communities left out of the economic mainstream. CFED will refine its business and financial model to generate the types and amounts of funds required to sustain an entrepreneurial culture and achieve its ambitious goals.

These strategic and galvanizing goals are motivated by the increasingly urgent need to address growing economic inequality in the United States. They take their roots in the work and partnerships CFED has been steadfastly engaged in for years. Progress made in 2006 provides fuel for what comes next.

CFED’s Strategic Plan (2007-2011): A New Birth of Economic Freedom was developed in 2006 and is available online at www.cfed.org/go/strategicplan.

2006 Annual Report

by helping Americans start and grow businesses, go to college, own a home, and save for their children’s and own economic futures. We identify promising ideas, test and refine them in communities to find out what works, craft policies and products to help good ideas reach scale, and develop partnerships to promote lasting change. We bring together community practice, public policy and private markets in new and effective ways to achieve greater economic impact. Established in 1979 as the Corporation for Enterprise Development, CFED is a nonprofit organization that works nationally and internationally through its offices in Washington, DC; Durham, North Carolina; and San Francisco, California.

www.cfed.org

CFED expands economic opportunity

Dear Colleagues,

During 2006, the CFED staff and Board of Directors created a strategic plan to guide the organization from 2007 to 2011. Titled A New Birth of Economic Freedom, the plan aims to take CFED to a new level of operation, performance and, most importantly, economic impact. I believe that our strategic plan – with its bold vision, ambitious and substantive activities, and measurable outcomes – may be among the most significant documents that we have yet produced for the organization. That we created this document collectively provides the most revealing evidence of our commitment to make real contributions to reverse the rising economic inequality in our country.

Our experiences during 2006 affirm and challenge us to act upon our vision of expanding economic opportunity. The 2006 Assets Learning Conference was a watershed event for CFED in terms of the breadth and depth of content, number and diversity of participants, quality of the presenters and an unprecedented number of learning partners and sponsors. An effort that began a little more than 10 years ago to advocate for individual development accounts has evolved into a broad-based movement. This new field looks at the role of assets over a lifetime to ensure that the financial incentives and structures that build wealth and opportunity so effectively for well-off Americans are universally shared with all Americans. CFED aims to ensure that one million low- and moderate-income Americans benefit from some form of matched savings within the next five years.

We know that savings must be paired with income-producing activities and housing to provide real financial security. Our renewed focus on entrepreneurship in rural and Native American communities tested new strategies for delivering capital, training and business development services that matched the capacity and market needs of the entrepreneur, rather than requiring the business owner to fit inside an existing “program.” Our five year goal is to advance entrepreneurial strategies in 10 rural regions or states.

We doubled our investments in I’M HOME: Innovations in Manufactured Homes over the past year to produce market and policy changes so that one million owners of manufactured housing – the major source of affordable housing in the country – can earn the same benefits from homeownership as do owners of site-built homes within five years.

Our vision for these specific asset-building initiatives is paired with an equally powerful commitment to expand CFED’s role as a source of innovative ideas, products and services for building economic opportunity. We aim to identify, test and replicate at least two new ideas that each have the potential to build individual and community assets to benefit millions. To make these commitments feasible, the organization proposes to diversify its financial structure through new sources of earned and donated income that can offer the flexibility necessary to be both entrepreneurial and operate at scale.

The inspiration for all this work lies with the millions of Americans who seek, often against daunting odds, to improve their lives and economic prospects through hard work, education, savings and civic engagement. The ability to achieve each of our strategic goals is equally dependent on the efforts of our many local, state and national partners, whose extraordinary talents, resources and dedication make working in this field a gift every day.

Thank you all for sharing in a vision that opens the doors of economic freedom to low-income people.

Sincerely,

Andrea Levere, President

Dear Friends,

For the first time in our history, CFED has put an explicit statement of core values at the heart of our strategic plan. Through the very participative process of developing this plan, it became clear that identifying and declaring our core values offered a fundamental way of charting our course, explaining it to others and dealing effectively and accountably with our partners and the larger world.

We sought a set of values which would describe our core, apply equally externally and internally, and would be distinctive yet widely-shared. We believe that the six values, taken together, point unmistakably to CFED and characterize our actual behavior. By stating our values, we hope people may more easily understand and embrace the strategies we develop. While we commit ourselves in this plan to measurable goals, we know that in a changing world, values can serve as the most reliable guideposts in choosing how to navigate. We know that values are reflected in what you do, not just what you intend, and recognize that living these values requires conscious cultivation within the organization, not just choosing colleagues with similar values. We seek to be known by these values, to engage with you, our partners and friends, by manifesting them, and invite you to hold us accountable to these standards.

The goals of the strategic plan grow directly out of these values:n Respect, especially for the productive capacity of low-income

communities to shape their own economic destinies and ours, but also for the competence of our partners and the potential contributions of all sectors;

n Enterprise, that creative adding of value, within the public, private and nonprofit sectors, and in the strategies themselves;

n Learning from experience and the insights of our colleagues; n Impact on potentially millions of working families;

n Integrity, by making sure our progress toward these goals is duly measured and assessed; and

n Collaboration, the last of these, is at the heart of the way we work, implicit in respect, learning and impact.

The 2006 Assets Learning Conference tested our ability to collaborate and pull together an increasingly complex field buffeted by huge centrifugal forces. We are proud that we were able to work with an amazing array of partners, and to secure support from 31 sponsors, 19 of them new to the Conference and the field. We are particularly gratified that among the 1,000 exceedingly varied and talented participants were, for the first time, substantial delegations of the Native American and disability communities, as well as financial institutions. Their inclusion did not just happen, but was the result of applied intent and a lot of honest talk and collaborative work among CFED, First Nations Development Institute, the World Institute on Disability and others. We know that collaboration is ongoing work, and that here, as in so many other realms, collaboration is both the destination and the way we get there.

We look forward to living our values, and giving them fuller expression. We believe that you deserve no less, and that we cannot achieve our goals in any other way.

Sincerely,

Robert Friedman,Chair of the Board

Letter from the President Letter from the Chair of the Board

CFED 2006 ANNUAL REPORT 3CFED 2006 ANNUAL REPORT2

CFED 2006 ANNUAL REPORT4 CFED 2006 ANNUAL REPORT 5

CFED’s Impact Across the NationCollaboration is central to CFED’s success as an innovator in expanding economic opportunity. CFED significantly advances its mission by forming key and lasting partnerships with national, regional and community level organizations equally committed to giving all Americans the chance to build a financially secure future for themselves and their families. The map to the right illustrates the extent to which CFED is reaching out to local grantees, community lenders, financial institutions and national researchers to share and test ideas, goals and, ultimately, successes. Each “push pin” represents at least one partner (some represent multiple partners) with whom CFED is collaborating. Currently CFED partners with more than 347 organizations through 20 different programs.

Some of CFED’s partners are highlighted in the pages that follow. CFED thanks all its current and future partners for their wisdom, creativity and commitment.

Collaboration is at the heart of the way we work, implicit in respect, learning and impact. Collaboration is both the destination and the way we get there.

– Robert Friedman, CFED Founder and Chair of the Board

“

”= Location of CFED partner organization

Financial SecurityTrue financial security – the ability to build assets that can be used to invest for the future, send children to college and weather unexpected financial storms such as job loss, medical emergencies or other life events – still eludes far too many American families. Providing opportunities for financial security to those individuals and families traditionally left out of the economic mainstream has long been CFED’s priority.

2006 Assets Learning ConferenceThe 2006 Assets Learning Conference — A Lifetime of Assets: Building Families, Communities & Economies provided a powerful affirmation of the valuable work CFED and its partners do on behalf of those aspiring to live the American dream. Set in Phoenix, Arizona in September, and sponsored by Bank of America, Citigroup, JPMorgan Chase, NeighborWorks America and many others, the biennial Conference (the eighth of its kind) was the largest gathering of the assets field to date. It was also the most diverse, with greater participation by Native Americans, people with disabilities and representatives from the financial services industry than ever before. More than 1,000 participants from the public, private and nonprofit sectors took part in four pre-conference sessions, five plenaries, 60 concurrent sessions, nearly 50 roundtable discussions and countless opportunities for networking and sharing ideas. The 2006 Assets Learning Conference offered sessions in “tracks” that focused on three areas in asset building: research, policy and practice (sponsored by Citigroup, Bank of America and JPMorgan Chase, respectively).

At the Conference, CFED designed and conducted a policy survey to assess attendees’ views on the importance of various asset policy goals, features and approaches, as well as their willingness to participate in advocacy to support these policies. Four hundred fifty people shared their views – almost half of all Conference attendees – making this the largest asset policy survey ever conducted. The results showed substantial consensus among respondents, affirming that there is more agreement in the field than dissension.

Saving for Education, Entrepreneurship and Downpayment (SEED) Policy and Practice InitiativeSEED – a 10-year policy, practice and research endeavor to develop, test and impel matched savings accounts and financial education for children and youth – is setting the stage for universal, progressive American policy for asset building. Through SEED, CFED brings together national and community partners to design, administer and

document specific aspects of children’s savings programs. All 12 of the initiative’s community and experimental sites achieved full enrollment, bringing the total of SEED savers to 1,395. Accountholders have accumulated, on average, almost $1,200 in initial deposits, savings and matches.

In addition to encouraging savings in SEED, CFED continued its work with community partners to ensure that families with SEED accounts are protected from asset limits in state-administered public assistance programs, which create a disincentive to save. By year’s end, 10 of the 12 states where SEED programs are operating had either amended state regulations or received waivers that effectively protect families saving in SEED from such limits.

Two additional state policy partners joined the SEED initiative: the Asset Policy Initiative of California (APIC) and the Southern Good Faith Fund (SGFF), in Arkansas. SGFF, which also is a SEED community partner, has a strong record in asset building in Arkansas. Their policy proposal for the most progressive 529 match grant policy in the nation has already received considerable

attention from candidates for public office in the state. APIC has developed a comprehensive plan to pursue the development of a universal and progressive savings policy for children in California. These organizations join SEED advocates working with CFED and its national partners and advisors to develop state policies to create or expand progressive savings opportunities for children. These advocacy partners are The Sargent Shriver National Center on Poverty Law and Voices for Illinois Children, The Community Economic Development Association of Michigan, and the Oklahoma Kids’ College Savings Campaign managed by the Community Action Project of Tulsa County.

Expanding Native OpportunityThrough the Expanding Native Opportunity: Native IDA Initiative, CFED furthered its mission to help the country’s Native communities build assets and create sustainable local economies. The Native IDA Initiative is a training and technical assistance program developed to enable Native communities to create and administer Individual Development Account (IDA) programs. IDAs are matched savings accounts specially designed to enable low-income individuals to save, build assets and enter the financial mainstream. This project successfully trained and assisted more than 200 individuals from over 60 Native American communities in 2006, helping them launch local IDA programs. Expanding Native Opportunity is offered by CFED, First Nations Development Institute and First Nations Oweesta Corporation, through the U.S. Department of the Treasury’s Community Development Financial Institutions Fund.

CFED-Federal Reserve System PartnershipCFED continued its unprecedented partnership with the Federal Reserve System to host Innovations in Asset Building Policy, Products and Programs, a series of forums across the country. The forums – which began in 2005 – brought together leaders in economic

policy, community development, philanthropy and the financial services industry to magnify and accelerate asset-building activities such as homeownership, business ownership, savings and investment with expanded engagement by private markets. To cap off this series, the Federal Reserve Bank’s Board of Governors hosted a July roundtable with cosponsors CFED and the Federal Reserve Bank of Richmond, bringing together key leaders on the subject of assets to interpret the information that emerged through the convening series. The event focused on financial products, public policy and market information. A major outcome was the promise of ongoing collaboration between CFED and member banks of the Federal Reserve System on the matters of economic opportunity and financial security.

Bank on San Francisco Bank on San Francisco is a collaborative effort to bring 10,000 of the city’s estimated 50,000 un-banked households into the financial mainstream. It illustrates the exciting avenues for asset building that can be taken on the local level. CFED welcomed the opportunity to work with consultant Anne Stuhldreher, the Mayor’s Office and the Treasurer’s Office of the City and County of San Francisco, the Federal Reserve Bank of San Francisco, local nonprofit EARN (Earned Assets Resource Network) and the city’s financial institutions. Bank on San Francisco goals include increasing the supply of starter account products that work for low-income un-banked individuals, as well as raising awareness among un-banked consumers about the benefits of account ownership, spurring them to open accounts.


Asset Building in Hawaii In December, a 16-month CFED collaboration with the Hawai’i Alliance for Community-Based Economic Development (HACBED) culminated in the release of Asset-Building Policy for Hawaii. Based on data from CFED’s Assets and Opportunity Scorecard, the report describes a comprehensive, ambitious assets agenda for the state. Moved by the ideas presented in the report, 14 members of the Hawaii State Senate introduced a progressive omnibus bill to the legislature in early 2007 to provide greater financial education and asset-building opportunities to low-income families looking to build a better life.

OK Task Force Advances Children’s Savings PolicyThe Oklahoma College Savings Task Force concluded its work in late 2006 by unanimously adopting a report that recommends the development of a matched-savings program for the Oklahoma 529 College Savings Plan. CFED’s SEED state policy partner, the Community Action Project of Tulsa County, and its initiative, the Oklahoma Kids’ College Savings Campaign, played an instrumental role in the creation of the task force and the formulation of the task force’s recommendations. Those recommendations include an automatic initial deposit at birth for low- and moderate-income families; progressively matched deposits; and incorporation of the Oklahoma 529 College Savings Plan into the state’s K-12 financial education curricula. Copies of the report were distributed to the Governor and legislative leaders. In 2007, legislation is expected to put the recommendations into effect.

Economic & Enterprise DevelopmentCFED was founded on the principle that strategic investments in communities and individuals to make the most of inherent resources and talents will create the greatest opportunity for sustainable economic security and growth. Today CFED continues its important work to advance progressive economic development policies and practices that increase the rate of formation, development and success of new and growing enterprises to create wealth for low-income and rural residents.

Rural Entrepreneurship Development SystemsThe work started in 2005 by the six grantees of the CFED-managed W.K. Kellogg Foundation Rural Entrepreneurship Development Systems (EDS) Initiative continued in 2006 with solid results. Local collaboratives – representing rural regions in Kentucky, Nebraska, New Mexico, North Carolina, Ohio, Oregon, South Dakota, West Virginia and Wyoming – were tasked with creating a pipeline of entrepreneurs, implementing an entrepreneurship support system and fostering a policy and cultural environment supportive of entrepreneurship within the public, private and nonprofit sectors.

Notable progress took place on the policy front:n In January, the Empowering Business Spirit Initiative of

Northern New Mexico introduced a memorial encouraging the New Mexico legislative council to develop an entrepreneurs’ bill of rights and enact an “Entrepreneur’s Day” at the New Mexico state legislature.

n Efforts by Wyoming’s Oweesta Collaborative resulted in the public recognition by State Treasurer Cynthia M. Lummis that there should be permanent state investment in the state’s community development financial institutions, specifically the Wind River Development Fund, an Oweesta Collaborative member.

n West Virginia’s Advantage Valley collaborative partner and policy lead, A Vision Shared, identified an opportunity to change state policy regarding the use of state funds by local economic

development offices – funds which are distributed from the West Virginia Development Office under the Department of Commerce. The organizations are working with state leaders to institute new program guidelines that would give West Virginia’s 46 local agencies four program funding choices for their respective areas: Industrial, Tourism, Technology and Entrepreneurship. Currently all state funds are designated for use only in industrial recruitment.

n The North Carolina Rural Economic Development Center’s Institute for Rural Entrepreneurship successfully held its first Entrepreneurship Policy Summit in April. The summit saw the formation of several policy work groups co-chaired by the leadership of collaborative members. These work groups will develop an entrepreneurship policy action agenda for 2007, including a second policy summit.

The goal in implementing an EDS is the transformation of a region – transformation of both the culture and practice of community economic development to create a viable, sustainable rural region. The EDS becomes the mechanism for achieving this goal. CFED’s work on the W.K. Kellogg Foundation Rural EDS Initiative will continue through 2008.

Learning from Small Businesses around the Globe Small and medium-sized enterprises (SMEs or “small businesses”) play a vibrant role in economies throughout the world. Many questions remain, however, about how directly a healthy SME sector leads to economic growth and poverty reduction. The SME Small Grants Program, managed by CFED and commissioned by the Ford Foundation, explores the linkages between SME strategies and poverty reduction. CFED solicited proposals to document innovative pro-poor SME programs and/or policies, and received 42 submissions from 11 countries. From that pool, four organizations from around the world – Pacific Community Ventures, in San Francisco, California; Center for Human and Economic Development Studies, at

CFED 2006 ANNUAL REPORT8

Peking University, in Beijing, China; Aavishkaar India Micro Venture Capital Fund, in Mumbai (Bombay), India; and FUNDES Argentina, in Buenos Aires, Argentina – were awarded grants to work with a third-party documenter to produce a case study about their intervention.

Development Report Card for the StatesIn January, CFED released the 19th edition of its annual economic development benchmarking tool, the Development Report Card for the States (DRC). For the first time in the report’s history, CFED hosted a Capitol Hill briefing where it presented DRC findings and federal policy recommendations to more than 35 Hill staffers from 25 states. Released since 1987, the DRC grades each state on how well its economy is doing for its people, how well the economy is doing for the state’s businesses and how well the state is preparing for its future. The focus of the 2006 report harkened back to the DRC’s origins: business incentive reform. With roughly $60 billion spent each year by states and localities on incentive packages to lure businesses, the report’s essay questions the wisdom of many incentive investments, noting some cases where the cost per job attracted was as high as $8.8 million.

Small Business Impact on PovertyPacific Community Ventures (PCV), located in San Francisco, California, provides wealth-building opportunities for low-income workers at its portfolio companies through mechanisms such as profit-sharing, phantom stock programs, 401(k)s and workplace-based individual development accounts. The organization, a grantee in the SME Small Grants Program, commissioned by the Ford Foundation and managed by CFED, specifically targets expansion-stage businesses in labor-intensive industries – sectors such as manufacturing, food processing, distribution/logistics, consumer products and media. PCV provides targeted venture capital, business advising, networking and workforce development services to companies in low-income communities in California. A double-bottom line investor, PCV seeks both financial and social returns, measuring social returns in terms of the number and quality of jobs provided for low-income individuals.


Manufactured HousingPurchasing a home is one of the most powerful investments a family can make in its future. Yet, in many parts of the country, the cost of homeownership is increasingly out of reach. Manufactured housing has opened the door to homeownership for millions of families, but only part of the way. CFED is working to enable owners of manufactured homes to enjoy benefits from homeownership, including asset appreciation, comparable to those enjoyed by owners of site-built homes.

I’M HOME – Innovations in Manufactured HomesCFED and its partners are working to ensure that homeownership remains attainable for as many low-income families as possible. The Innovations in Manufactured Homes (I’M HOME) initiative, launched in January 2005 with major funding from the Ford Foundation, seeks to safeguard the wealth-building promise of homeownership for the approximately 10 million American families living in manufactured housing. The multi-year program will address market gaps and policy issues related to the ways the homes are sold, financed and treated under the law.

I’M HOME made over $1 million in new grant commitments to local organizations dedicated to improving housing quality and homeownership opportunities in this previously ignored sector. In its second year, I’M HOME nearly doubled its number of grantees (from 15 to 27). It expanded its geographic scope, with new local partners in regions such as the Pacific Northwest, the Southwest and the Mountain West, and a greater presence in New England.

CFED continued to manage relationships with all of its local partners, as well as with funders and national partners such as New Hampshire Community Loan Fund, NeighborWorks America and Opportunity Finance Network.

Local partner successes include:n The California-based Oakland Community Housing Inc.’s award

for Best Manufactured Home Subdivision in the United States;n Northcountry Cooperative Development Fund’s facilitation

of the first manufactured home park cooperative conversion in Wisconsin;

n Community Reinvestment Association of North Carolina’s training session for community development agencies on manufactured housing as an asset-building strategy; and

n Frontier Housing’s grand opening of its manufactured housing subdivision in Morehead, Kentucky.

A third round of I’M HOME grants will be awarded in 2007.


Advancing Homeownership in AppalachiaFrontier Housing is a Morehead, Kentucky-based nonprofit that provides affordable housing solutions that help build better communities through homebuyer education, affordable home mortgage loans, subdivision development and a range of home choices including site-built, modular and manufactured housing.

Frontier Housing is expanding its manufactured housing program with the support of the CFED-led I’M HOME initiative. Frontier Housing has entered into an innovative partnership with a national manufacturer to develop a fee-simple community of approximately 40 homes. With its first manufactured housing subdivision in development, and having placed high-quality manufactured homes on multiple scattered sites, Frontier is now ramping up its capacity to serve as a broker for other nonprofit developers across Appalachia.

Preserving Affordable Rental Housing For the past two years CFED has been working with the John D. and Catherine T. MacArthur Foundation, its partners, and a host of experienced public, private and nonprofit leaders to support a strategy for affordable rental housing preservation policy. The work encompassed research on field building and policy change, and facilitation of a consensus model policy framework for preservation.

The results from this work include lessons learned and best practices for policy change – drawn from asset building and other fields – and the development of a communications plan and model policy framework for leading practitioners and stakeholders.

These efforts – which prelude a pivotal Preservation Policy Symposium, to be held in Washington, D.C. in 2007 – set the stage for realizing a major goal: stimulating the market and policy reforms needed to preserve more than one million affordable units in 10 years.


InnovationAt the core of CFED’s mission is identifying, testing, implementing and championing innovative ideas that expand economic opportunity. Over the next 10 years CFED will advance at least two new ideas that each demonstrate the potential to build wealth and opportunity for one million low-income Americans, through a systemic process that engages a wide variety of individuals and organizations in the United States and internationally. CFED is currently engaged in two innovative projects that could make a lasting positive impact on the lives of many low-income Americans: the American Dream Match Fund and the Self-Employment Tax Initiative.

American Dream Match FundCFED has embarked on a new social venture that will expand the national market of donors to assist low-income savers with their efforts to save, acquire lifelong assets, and break the intergenerational cycle of poverty. The American Dream Match Fund will stimulate the growth of matched savings accounts, like Individual Development Accounts (IDAs), throughout the United States.

Historically, the match incentives for such accounts – similar to an employer match for 401(k) contributions – have been provided through matching funds from private and public sources. As the number of accounts have increased over the last 10 years – to over 50,000 IDAs in programs run by more than 500 community-based organizations – so too have the challenges asset-building organizations face when it comes to raising the money that matches participants’ own savings. Many program sponsors report waiting lists for matched savings accounts, a situation that arises when the sponsor’s fundraising and/or operating capacity is constrained.

In late 2006, CFED initiated the American Dream Match Fund to provide a reliable and sustainable solution to these challenges and to spur innovation in the field. The Fund will raise money from individual

donors primarily, as well as from foundations and corporations, to match the savings of low-income families and provide operating support to high-performing asset-building programs. The Fund’s other goals include raising public awareness of matched savings as an asset-building strategy and adapting software technology to facilitate the flow of information among donors, program providers and accountholders.

Self-Employment Tax InitiativeCFED’s Self-Employment Tax Initiative is exploring a new, high-impact approach that would use the tax code to deliver support to up to 6 million start-up and self-employed microbusinesses annually. While conventional microenterprise programs provide microcredit and/or self-employment training to start-up businesses, fewer than 200,000 per year access this delivery system. By contrast, the tax code presents a complementary delivery system that has the potential to reach many more unserved or poorly served microentrepreneurs. This includes millions of informal businesses which forgo voluntary tax compliance due to confusion and unexpected cash-flow realities.

CFED began working with microenterprise and Volunteer Income Tax Assistance programs in 13 different states to explore effective tax preparation assistance and develop related long-term products for self-employed businesses. Additionally, CFED is investigating how to reform the tax code’s self-employment interface to make it a more effective “gateway” that can build the chances of success for first-time business tax filers.

CFED is the only national nonprofit organization focusing on tax policies that impact the self-employed. CFED believes there are innovative ways to reform this traditionally unwieldy tax interface so that it helps low-income families working up the ladder of success through self-employment.

If you’re in the business of fighting poverty and you’re not in the business of building assets, then you’re not in the business of fighting poverty.

– Geoffrey Canada,

President/CEO, Harlem Children’s Zone

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Achieving Financial Sustainability


2006 Sources of Funds

ConferenceRevenue: 8%

Investment Income: 5%

Government Contracts and Service Fees: 13%

Contributionsand Grants: 74%

SEED: 38%

Communications: 4%

Fundraising: 3% Management and General: 3%

A complete copy of the independent auditor’s report is available upon request.

2006 Uses of Funds

Field Development: 23%

Applied Researchand Innovation: 26%

Policy: 3%

Sources of Funds 2006

Grants and Contributions $ 9,385,888Governments Contracts and Service Fees 1,612,654Conference Revenue 960,641Investment Income 626,340Other Income 30,843

Total 12,616,366

Uses of Funds

Program ServicesApplied Research and Innovation 3,153,282Field Development 2,821,501Policy 476,431SEED 4,605,105Communications 443,902

Total Program Services 11,500,221

Supporting ServicesFundraising 404,573Management and General 367,942

Total Supporting Services 772,515

Total Expenses 12,272,736

Change in net assets 343,630Net assets, beginning of year 1,588,104

Net assets, end of year $ 1,931,734

2006 Statement of Activities(unrestricted funds)

2005

$ 7,466,908521,766

—219,816113,030

8,321,520

2,890,1451,525,068

535,6152,775,345

—

7,726,173

341,415235,265

576,680

8,302,853

18,6671,569,437

$ 1,588,104

as of December 31

Assets 2006

Cash and cash equivalents $ 6,190,602Investments 6,537,058Accounts Receivable 648,305Grants Receivable 1,029,810Prepaid Expenses 46,377Fixed Assets, Net of Accumulated Depreciation 284,432Deposit 2,242

Total Assets $14,738,826

Liabilities

Line of Credit $ —Accounts Payable and Accrued Expenses 518,513Capital Lease Payable 120,951Grants Payable 1,489,550Incentives Payable 2,012,987

Total Liabilities 4,142,001

Net Assets

Unrestricted 1,931,734Temporarily Restricted 4,435,791Permanently Restricted 4,229,300

Total Net Assets 10,596,825

Total Liabilities and Net Assets $14,738,826

Combined Schedule of Financial Position

2005

$ 9,746,4554,822,861

396,392674,81021,773

230,4302,242

$15,894,963

$ — 378,335

97,531631,620542,540

1,650,026

1,588,10410,656,8332,000,000

14,244,937

$15,894,963

2005

2005

Government Contracts and

Service Fees: 4%InvestmentIncome: 2%

Other Income: 1%

Contributionsand Grants: 93%

Policy: 7%Field Development: 18%

Applied Research and Innovation: 35%

SEED: 33%

Fundraising: 3%Management

and General: 4%

2006 Net Assets Distribution

Unrestricted: 18%

Temporarily Restricted: 42%

Permanently Restricted: 40%

2005Temporarily

Restricted: 75%

Unrestricted: 11%

Permanently Restricted: 14%

20062005

1,000,000

2,000,000

3,000,000

4,000,000

$5,000,000

Net Assets(excluding temporarily restricted funds)

Permanently Restricted Funds

Unrestricted Funds

Nancy Meyer and Marc WeissMaurice Lim MillerRalph and Dana Moore on behalf of Mr. and Mrs. Trevor CoeMs. Foundation for WomenNathan Cummings FoundationNeighborWorks AmericaTorod Neptune and Sabrina Michaux-NeptuneNorthwest Area FoundationOpportunity Finance NetworkChris and Janet PageChuck and Nancy ParrishKimberly Pate Sally G. PaynterThe Philanthropic CollaborativeRichard & Rhoda Goldman FundBarbara RosenBarbara and Richard Rosenberg Investors Promoting OpportunityRuth Salzman Investor Promoting OpportunityCharles and Heather Muench Sandel Investors Promoting OpportunityShoreBankNancy Stark and David SiegelState Farm InsuranceTheodore R. and Vivian M. Johnson Scholarship Foundation, Inc.Leigh TivolMichael Torrens and Claudia RadelBarry and Marjorie TraubDevin and Jenese TuckerUnited Way of AmericaW.K. Kellogg FoundationWachovia FoundationMarilyn and Murry Waldman in honor of Bob FriedmanWalter and Elise Haas Fund

Lena WarnerWashington Area Women’s FoundationWashington MutualCarol WaymanStanley S. and Muriel Casper WeithornWells FargoNicola Wood Z. Smith Reynolds Foundation

… and those who choose to remain anonymous


IPO Fund: Investors Promoting Opportunity‘Initial public offerings,’ or IPOs, on Wall Street enable people to invest in dynamic companies providing new products and services that people need. CFED’s IPO Fund invites Investors Promoting Opportunity to invest in CFED’s proven ability to identify, test and share new ideas and approaches that help people break out of poverty. A contribution to the IPO Fund is an investment in two of the most critical and powerful elements of CFED’s work:

n Innovation: identifying promising new ideas to make the economy work for everyone; and

n Improving Public Policies: impacting millions of people in need through public policies based on programs that work.

Many IPO Investors make multi-year commitments because innovation and policy work are long-term efforts. Investors Promoting Opportunity are designated in the list to the left. CFED thanks and salutes them.

SupportersCFED expresses many grateful thanks to its supporters:

AARP FoundationDiane Aboulafia-D’JaenAdina AbramowitzIrvin André Alexander, III and Kevin McGowanAlliance BankAmeriquest Mortgage CompanyAnnie E. Casey FoundationArizona Community FoundationGerson and Barbara BakarBank of America FoundationKristen BardenSamuel and Sandra Bishop Victoria and Hank Bjorklund Investors Promoting OpportunityLew and Sheana Butler Investors Promoting OpportunityCapital One Services, Inc.Catholic Healthcare WestCenter for Financial Services InnovationCharles and Helen Schwab FoundationCharles Schwab BankCharles Stewart Mott FoundationCitigroupCitigroup FoundationWilliam K. CoblentzAnn CohenCommercebank N.A.Community Development Financial Institutions Fund, U.S. Department

of the TreasuryCorporation for National and Community ServiceDavid DodsonDenise Durham WilliamseBay FoundationEvelyn and Walter Haas, Jr. FundBetsy and Roy EisenhardtF.B. Heron FoundationFair Isaac CorporationFannie Mae FoundationFaultline FoundationFederal Home Loan Bank of San FranciscoFederal Home Loan BanksWayne and Leslee Feinstein in honor of Bob FriedmanFord FoundationDaniel and Patricia Lowy Frank

David Friedman and Paulette MeyerEleanor Friedman and Jonathan Cohen Investors Promoting OpportunityPhyllis K. FriedmanRobert Friedman and Kristina Kiehl Investors Promoting OpportunityAdrienne Gallo on behalf of Jessica Young and Trevor CoeEthan Goldberg on behalf of Jessica Young and Trevor CoeFred and Wendy GoldbergJohn and Marcia GoldmanBetty Lucas and Steve Golub Investors Promoting OpportunityAnthony C. GoochNan and Steven Grand-Jean Investors Promoting OpportunityRonald GrzywinskiH&R BlockColleen and Robert D. HaasJoanne and Peter Haas, Jr.Julie and Walter J. HaasRichard and Joan M. HaberMidge and Sylvan Heumann Investors Promoting OpportunityThomas Higgins Investor Promoting OpportunityMichael J. Hirschhorn and Jimena P. MartinezJames C. HormelHSBCLeslie and George Hume with appreciation for all the ways in which Bob and the

Friedman family help the communityJim Casey Youth Opportunities InitiativeJohn D. and Catherine T. MacArthur FoundationHarry Johnson on behalf of Jessica Young and Trevor CoeJPMorgan Chase FoundationMitchell and Joleen Julis in memory of Debra LevereJames M. and Catherine P. KoshlandEllen and Paul LazarAndrea Levere and Michael MazerovSteven Levere and Patricia Sue Plumer in memory of Debra LevereLevi Strauss FoundationAnne S. Li and Edward R. MuldoonLia Fund of Triangle Community FoundationMichael LiburdLocal Initiatives Support CorporationMary Reynolds Babcock FoundationKate McKeeElsie MeeksMerrill Lynch Community Development Company L.L.C.


A Special ThanksSpecial thanks to the Federal Reserve System for an extraordinary partnership, including the Innovations in Asset-Building Policy, Products & Programs series of regional forums.

CFED Board of Directors (as of January 2007)

ROBERT FRIEDMAN, CHAIRGeneral Counsel, CFEDSan Francisco, CA

ELLEN LAzAR, VICE CHAIRSenior Vice President of Housing and Community Initiatives, Fannie Mae Foundation Washington, DC

RON GRzYWINSKI, SECRETARY/TREASURERChairman, Shorebank Corporation Chicago, IL

ANGELA GLOVER BLACKWELL Founder and CEO, PolicyLinkOakland, CA

DAVID DODSON President, MDC, Inc.Chapel Hill, NC

DENISE DURHAM WILLIAMS National Director, Community Relations, Citibank North AmericaLong Island City, NY

FRED GOLDBERGPartner, Skadden, Arps, Slate, Meagher & Flom LLPWashington, DC

DAN LETENDREDirector, Lending and Investing, Merrill Lynch Community Development CompanyNew York, NY

ANDREA LEVEREPresident, CFEDWashington, DC

KATE MCKEESenior Advisor on Policy, Poverty, Outreach and Aid Effectiveness, Consultative Group to Assist the Poor (CGAP), World BankWashington, DC

ELSIE MEEKSExecutive Director, First Nations Oweesta CorporationRapid City, SD

MAURICE LIM MILLERPresident and CEO, Family Independence InitiativeOakland, CA

MARY MOUNTCASTLESenior Associate, Self-HelpDurham, NC

TOROD NEPTUNESenior Vice President, U.S. Public Affairs Practice Director, Waggener Edstrom Strategic CommunicationsWashington, DC

CHRIS PAGESenior Vice President, Rockefeller Philanthropy AdvisorsNew York, NY

CHUCK PARRISHFormer Co-Founder and Executive Vice President, Open Way SystemsSan Francisco, CA

CFED 2006 ANNUAL REPORT 19CFED 2006 ANNUAL REPORT18

CFED Staff (as of December 31, 2006)

IRVIN ANDRÉ ALExANDER, III, CFO/COO

EMILY APPEL, Program Manager

KRISTEN BARDEN, Leadership Gifts Officer

SAM BISHOP, Writer

JENNIFER BROOKS, Policy Director

DAVE BUCHHOLz, Director, Applied Research & Innovation

KARIDA COLLINS, Administrative Assistant

KEVEN COTTON, Policy Associate

CECILIA CUTHBERT, Program Manager

ROBERT FRIEDMAN, General Counsel

KATHRYN GWATKIN GOULDING, Senior Program Manager

LIANA HUMPHREY, Senior Program Manager

JANET JONES, Office Manager

TALITHA JORDAN, Administrative Assistant

KEVIN KEELEY, Policy Associate

GLORIA KEYS, Staff Accountant

KRISTIN LAWTON, Communications Specialist

ANDREA LEVERE, President

ANNE LI, Development Director

MICHAEL LIBURD, Budget/Financial Analyst

DEBORAH MANLEY, Human Resources Manager

HELEN MARSHALL, Senior Accountant

DONNISE MCWEAY, Receptionist

GENEVIEVE MELFORD, Program Manager

PAUL NEWBY, Systems Administrator

JAMES NGUYEN, Program Associate

KIM PATE, Director, Field Development

CARL RIST, Director, SEED

JULIE ROCHESTER, Executive Assistant to the President

BARBARA ROSEN, Program Associate

BILL SCHWEKE, Vice President, Learning and Innovation

NANCY STARK, Program Director

LEIGH TIVOL, Senior Program Manager

MICHAEL TORRENS, Program Director

DEVIN TUCKER, Senior Program Manager

JEROME UHER, Communications Director

ROCHELLE WATSON, Senior Program Manager

AARON WATTS, Senior Website Manager

CAROL WAYMAN, Senior Legislative Director

BEADSIE WOO, Senior Economist

NICOLA WOOD, Development Associate

AUDIT COMMITTEERonald Grzywinski (Chair)Andrea LevereKate McKee

POLICY & COMMUNICATIONS COMMITTEEKate McKee (Co-chair)Torod Neptune (Co-chair)Angela Glover BlackwellAndrea LevereChuck ParrishDenise Durham WilliamsFred GoldbergLisa Hall*

FINANCE COMMITTEERonald Grzywinski (Chair)Robert FriedmanDan Letendre Andrea LevereElsie MeeksChuck Parrish

BOARD DEVELOPMENT & GOVERNANCE COMMITTEEMary Mountcastle (Chair)David DodsonRobert FriedmanDan LetendreAndrea Levere

RESOURCE DEVELOPMENT COMMITTEEChris Page (Chair)David DodsonRobert FriedmanEllen LazarAndrea LevereMark Constantine*

*Not a CFED Board member

CreditsEDITOR: Sam Bishop, CFED

PHOTOGRAPHY: Kristin Lawton, CFED; Jupiter Images; HomeSight; CFED file art

DESIGN/PRODUCTION: Chris Campbell, CFED

PRINTING: Linemark Printing


National Office*777 N. Capitol Street NESuite 800Washington, DC 20002(p) 202.408.9788(f) 202.408.9793

Southern Office123 West Main StreetSuite 210Durham, NC 27701(p) 919.688.6444(f) 919.688.6580

Western Office353 Folsom StreetSan Francisco, CA 94105(p) 415.495.2333(f) 415.495.7025

www.cfed.org

*CFED is moving its national office in September 2007. The national office will be located at:

1200 G Street, NW4th FloorWashington, DC 20005(p) 202.408.9788(f) 202.408.9793

Development is a process of expanding the real freedoms that people enjoy. With adequate social opportunities, individuals can effectively shape their own destiny and help each other. – Amartya Sen, Nobel Laureate

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For more information on CFED, contact Anne Li, Development Director, at 202.207.0145 or [email protected].

2006 CFED Annual Report

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