Matching Grant Application
The Rotary Foundation (TRF)
PROJECT DESCRIPTION
Project site The 4 counties that comprise Rotary District 5240
City/Village Initial site: Santa Paula
State/Province California
Country USA
The initial phase of the project will address the reduction of poverty in Santa Paula, California and in the immediate surrounding area. The area of focus is Community and Economic Development. The grant will be focused on building the financial competency of women and enabling them to open and/or increase the stability of their own small businesses, thereby giving them a sustainable means of increasing their standard of living. The grant will establish a Revolving Loan Fund in the amount of $200,000 that will be available to low income persons (mostly women) who have taken a set of classes focused on self employment training; fall within 80% of the Federal Poverty Guideline for Ventura County; produce a 3-year history of paying income taxes.
The need: Read any newspaper; watch CNN; listen to Fox News. The hot topics are jobs, or more accurately the lack of them, and poverty. According to the Census Bureau report issued on September 13, 2011, nearly 1 in 6 Americans are living in poverty – the highest rate in 50 years. (Los Angeles Times Business section, September 14, 2011). According to Bill Watkins, the executive director of Center for Economic Research and Forecasting at California Lutheran University, “The economic outlook for the United States and California is grim.”(Ventura County Star, September 28, 2011 p. 1-2.) California’s unemployment rate is more than 12% with the unemployment rate in Ventura County standing at 10.5% in August 2011. Watkins went on to state that the recession has hit low-income and low-educated sections of the population hardest. In the same article Bill Buratto, president and CEO of the Ventura County Economic Development Association stated, “It boils down to finding a way to stimulate job growth. At this stage in the game, it’s not going to be fueled by the government sector....Job growth will depend on the private sector.”
In Santa Paula, the unemployment rate is 20% and 17% of the population lives below the federal poverty line with children under the age of 5 making up 30% of this number. Immigrants, mostly Hispanic, make up a majority of those living in poverty. The selection of Santa Paula as a “pilot” site for the micro credit lending program was made primarily because of the strong, demonstrable need. It was also based on Rotarian interest/involvement, involvement of the community and community leaders, as well as travel distance from Santa Barbara where the cooperating organization is headquartered.
The grant has the following goals:
1. Conduct self employment training classes for 48 low income entrepreneurs (mostly women).
2. Initiate 40 loans to people who have completed the self employment training classes in the first year after the grant is funded.
3. Establish a 93.5 % repayment rate (default rate of 6.5%)
4. Demonstrate that within 18 months of taking classes and opening a new business, 70% of the beneficiaries will be out of poverty.
It is our intention that the work we will be doing in Santa Paula will serve as a pilot program. We will be testing and fine-tuning assumptions and procedures. Once the initial need has been met in Santa Paula, the program will be replicated in communities of need throughout District 5240 beginning in Bakersfield, a city of approximately 250,000 people in Kern County with the highest poverty rate in District 5240. Some communities in Kern County have an unemployment rate of 40%. Rotarians in this area have been fully engaged in the planning of this Matching Grant and are committed to making the potential benefits of the RLF successful. Within a period of 5 years, the program will be replicated throughout the four counties that comprise District 5240(Ventura, Kern, Santa Barbara and San Luis Obispo).
The grant will be administered with Rotarian involvement and oversight by Women’s Economic Ventures (WEV- pronounced “Weave”), a non-profit organization headquartered in Santa Barbara. WEV has a 20-year track record of teaching classes in financial literacy and the management of micro credit lending programs. We anticipate that the collaboration between WEV and Rotary will last a minimum of five years, with no predicted date for the expiration of the project. However, we will be able to close the Matching Grant once the original loans have been issued, repaid and re-issued in a second round of financing. We are estimating that this will take a period of two (2) years.
Describe how the benefiting community will maintain this project after grant funding has been fully expended.
The benefiting community will be new business owners - residents of Santa Paula and immediate surrounding areas who have qualified to participate in the revolving loan program and have launched their enterprises. One of the components of the lending program will be opening a mandatory savings account for each borrower. The habit of savings and the actual savings account will contribute to the sustained benefit to program participants. We anticipate a loan repayment rate of 93.5%. The combination of loan repayment plus interest paid on the loans will ensure that funds will be available to continue the loan program once the grant funding has been fully expended and the MG closed. Additionally, once the grant funding has been fully expended, WEV will continue to support new business owners through a program of offering one-on-one mentoring as an option for those requesting more intensive assistance and through a quarterly Roundtable discussion including business owners and staff. These programs do not depend on grant funding and are part of the usual services that WEV offers its clients.
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