The Center for Responsible Lending: Who Really Benefits?
By Neil Maghami, Organization Trends, June 2015 (PDF here)
Summary: The Center for Responsible Lending is an outspoken “advocacy” nonprofit that claims to defend poor borrowers. Yet its biggest Sugar Daddy is one of the worst offenders in the mortgage meltdown, and much of the group’s work involves attacking the business competitors of its nominally “nonprofit” sister organizations that operate as credit unions. The full story about this network of nonprofits reveals how public “advocacy” can lead to private profit.
In just over a decade, the Center for Responsible Lending (CRL) has evolved from a small nonprofit to a mighty engine of influence over federal and state financial policy. CRL, which coordinates actions among like-minded groups in 50 states, has long positioned itself as a simple grassroots advocacy group—and all of its public statements are intended to give that impression. But if one takes a top-down view of the organization and its history, a much different picture emerges. CRL’s powerful media relations program and its lobbying and coalition-building efforts put it in a league of its own. As one observer put it, behind the “Norman Rockwell” self-portrait that CRL presents in public is a tax-exempt group firmly fixed on increasing the power and influence of the larger tax-exempt family to which it belongs.
The Self-Help Family
CRL is part of what is called the family of “community development organizations” organized under the brand name of “Self Help.” The Self-Help structure’s mission is “creating and protecting ownership and economic opportunity for all,” which it carries out by providing “financing, technical support, consumer financial services and advocacy for those left out of the economic mainstream” through various nonprofit groups.
The oldest member of the brand is the tax-exempt Center for Community Self-Help, founded in 1980 in Durham, North Carolina, by husband and wife team Martin Eakes and Barbara Wright.
The Center for Community Self-Help disclosed $6.5 million in contributions in 2013 and ended the year with net assets of $19 million. It describes its main activities as: “community development lending,” which is carried out primarily through its Self-Help Ventures Fund affiliate (also organized as a 501(c)(3) group); next is “educational and technical assistance,” on which it works with its approximately $700 million Ventures Fund and the Self-Help Community Development Corporation to provide programs serving low-income people; and finally is its “community development real estate projects,” which include providing “rental opportunities to [tax] exempt organizations” and developing “commercial property in blighted areas.”
There is also the Self-Help Credit Union, based in North Carolina and founded in 1984; and the Self-Help Federal Credit Union, operating since 2008 and focused on building up a presence in California. Together, the two credit unions claim 90,000 members and 35 branches in North Carolina, California, and Chicago. Credit unions are exempt from federal income taxes, but they pay property taxes and sales taxes.
The manner in which this network of co-branded, tax-exempt groups is organized is so complex that there is even a separate tax-exempt organization that provides centralized salary administration for parts of the collective enterprise. That entity is known as the “Self Help Services Corporation.” According to its 2013 disclosures, it provided “personnel services and technical assistance” to the Center for Community Self-Help, Self-Help Ventures Fund, the Self-Help Community Development Corporation, Self-Help Credit Union, the Self-Help Federal Credit Union—and the Center for Responsible Lending.
The overall structure’s payroll is not small. In 2013, Self Help Services Corp. reported “program service revenue” of about $20.9 million and paid about the same in “salaries, other compensation, employee benefits” to other Self-Help affiliates.
For some readers this arrangement of having a single salary-administrative nerve center for a larger family of nonprofits may bring back memories of a similar structure that connected the many appendages of the ACORN community-organizing octopus. As described by CRC editor Matthew Vadum in his 2011 book Subversion Inc., ACORN’s Citizens Consulting Incorporated helped ACORN’s vast legions of affiliates centralize their complicated financial affairs and also helped veil money flows.
Continue reading →