Center for Social Capital

Launches Compensating Balance Loan Fund:

fighting poverty through employment

Jesse just received a $5,000 Compensating Balance Loan from Calhoun Bank of Gilmer Co., West Virginia. Branch Manager Brenda Wolfe presented Jesse with the loan check he will use to purchase resources in the form of equipment, enabling him to land a job at the Self-Suds Laundromat. This is quite a feat for a 26 year old man who has never had a job, lives in a rural community with high unemployment, has no transportation or credit history, and lives below the federal poverty level.

How did he do it? By taking advantage of an innovative strategy called Customized Employment (CE) and utilizing resource ownership with a Compensating Balance Loan. Half of all working-age adults experiencing income poverty have a disability. The rates of disability among those experiencing poverty are much higher than among the overall working-age population. Just under a quarter (23 percent) of all working-age adults have a disability.

Having resources and being resourceful is the key to employment . . . and employment is the key to escaping poverty. But trying to obtain resources without money is virtually impossible for many persons the world over living in poverty. And obtaining a bank loan without credit is equally impossible.

Jessica Jackley, who co-founded Kiva in the spring of 1984, was first inspired by working in East Africa with rural entrepreneurs.

Traditional funding sources can be expensive, difficult to access . . .

Kiva.org aims to alleviate the fight against global poverty by making it easy for members to transfer money to people in third world nations who aim to start their own businesses. Capitalism is one of the best ways to fight poverty, but many people in the developing world don’t have access to the necessary funds to pursue their goals.

We want to see a world in which all people are empowered to pursue their dreams . . .

Jessica Jackley and Kiva have likewise inspired the CENTER FOR SOCIAL CAPITAL and a growing number of anonymous donors to help persons escape poverty through employment. They have created a Business Capitalization Fund for the purpose of making available compensating balance loans.

A COMPENSATING BALANCE, sometimes called an offsetting balance, is an amount of money that a bank and borrower agree to keep in the borrower's bank account as a condition for the bank giving the borrower a loan. Banks around the world have used compensating balance loans for decades. Borrowers who haven’t been able to get a loan through other methods might have better success applying for a compensating balance loan.

In Jesse’s case, his loan is fully collateralized, meaning that the compensating balance on deposit is 100% of the value of the loan. So there is zero risk to the bank and the funds are available for the bank to use in generating additional capital. This eliminates the credit history requirements that would disqualify most loan applicants living in poverty. Plus, the cost of processing such loans in house is considerably lower than for conventional loans, resulting in lower interest rates for borrowers.

It is widely known that the more resources you possess (a car, tools, special talent or skills, relationships), the better the odds are you’ll get a job. After all, that’s why many people go to college or trade schools. Obtaining a degree or professional license is quite expensive, but in the long run may pay for itself many times over in a lifetime of earnings and quality of life. Persons who live in poverty with disability face a huge disadvantage.

According to the U.S. Department of Labor’s Office of Disability Employment Policy (ODEP): “Customized Employment is a process through which the relationship between employer and employee is negotiated and personalized in a way that meets the needs of both. The negotiation process addresses areas such as job duties, terms of employment, services and supports necessary to carry out the job duties, and expectations adapted to the needs or special circumstances of one particular job seeker.”

“With Job Squad’s help,” says Jesse, “our negotiations led to how, using my own equipment and the job skills I already possessed as resources, could make it possible for the business owner to create a job that did not previously exist. It would be customized to my unique abilities and limitations. In exchange, all my resources would ‘help them meet specific production or sales goals, increase customer satisfaction, improve operations . . . ‘ I will use my equipment to fill customer orders for bar rags, sell gourmet beverages, and keep the equipment clean for laundromat customer use.”

The best part is that everyone wins . . .

Jesse gets a job at pay above minimum wage, added job security, and starts building a credit history.

The employer gets increased revenues from the added value Jesse and his resources bring to the business.

The Bank increases its revenues due to added capital from the compensating balance on deposit, and a potential future customer with a favorable credit history and relationship with the bank.

The fund donors experience the satisfaction Jessica Jackley so eloquently expressed, by helping people escape the crushing grip of poverty.

A Success Story in the Making

I feel fortunate to have met this young lady. Her name is Loren and she is 20 years old. Loren is much like any 20 year old girl. She likes clothes, shoes, Facebook, and of course, boys. She is sweet, caring, and fun to be around. When Loren expressed an interest in working, her case manager referred her to Job Squad Inc. (JSI). After getting to know Loren, and seeing her friendly and out-going personality, it was obvious that she would be a good match for a job in retail. Loren and her career counselors headed to the mall. She submitted five applications and had three interviews. Loren only worked with JSI for two months before getting her first job offer. She was hired by Kohl's and started work on the busiest day of the year - Black Friday. Her job duties included; wrapping fragile items in tissue paper, removing security tags, bagging all items, and interacting with the customers. I worked a few days with Loren at Kohl's and her skills improved each time. I observed her interacting with her coworkers and managers. She seemed to be very well liked by everyone. She always worked her scheduled shift, never leaving early and never late for work. Loren enjoyed her time at Kohl's. This was a seasonal position, but it provided her with valuable work experience and some new friends. Loren will find employment again. She may need a job coach now, but I believe she will continue improving her skills and become more competent. In the future she may need only minimal assistance that could be provided by coworkers and natural supports. Improving her skills will make her a good employee, but Loren has the makings of a great employee. She is dependable, takes pride in her work, and has a good attitude. Loren is a success story with continuing chapters.

 By: Melissa Lewis, Career Counselor

 Job Squad, Inc.

Pretty Blue (Eyes)--Stormie's Take

Hi! My name is Stormie and I am 27. I am from Clarksburg and I am working with Job Squad to get a job somewhere. I graduated from High School in 2003 and since then I've been married, widowed, and twice more engaged.

I have learned a lot with Job Squad, right now we are doing things in the community related to my skills and interests, which include things involving computers (I use a Pathfinder and do a lot of social networking on Facebook and dating chatrooms), animals (I volunteer at the Humane Society), and children (I have 2 nephews).

My skills include typing and meeting people online.

I will get a job!

Here are a few videos of things I've done:

Facebooking

College Research



Humane Society

 

Systematic Instruction

For the week of February 7th-11th, we took the opportunity to be trained on Systematic Instruction by Michael Callahan, a consultant in the supported employment field for over 23 years. Systematic Instruction is the brain child of Marc Gold, a pioneer in developing the "try another way" approach for teaching people with disabilities. At the heart of Systematic Instruction is the value that everyone has the ability to learn, although each of us acquires information in a different way. Essentially, our role as trainers is to discover the best ways to convey information to each individual. In order for Systematic Instruction to succeed, we must embrace the idea that everyone can learn, and then expect the learner to succeed.

As part of our training, we taught consultant learners how to construct a bicycle brake. This task was quite complex as a whole, but when broken down into small and simple steps, the learners were able to do a majority on their own. In addition to the bicycle brake, we also went out into the community to learn tasks in local businesses. Four learners did various tasks at Kohl's and Sears, from folding clothes to bar coding new items. This activity not only benefited us as trainers, but also benefited the store employees and the learners. Typically, most employees do not have experience training someone with a disability. The reasoning is two-fold: First, most people with a disability are not given the opportunity to work in local businesses. Second, when a person with a disability is given the opportunity to work, it is very often the job coach who does the training and not the co-worker or manager. In addition to benefiting the employees, it also benefited the learners by giving them the confidence to know that they can do real tasks in the community with little to no assistance. Rarely are people with disabilities encouraged to become independent, and often, through good intentions, can be given more assistance than they actually need. With proper instruction and teaching techniques, people with disabilities can perform many of the same complex tasks that people without disabilities can perform.

A Reminder

In the institution they told me
You have no more coordination than a common laboratory rat
That's what the disability industry sees - Disability
They have to
Its how they make money
So they say
You will never hold a job
You will never read for pleasure
You will have trouble adjusting socially
Well, they got one right
But I am a man
and a father
with a freaking Master's degree and everything
and all they see
is the disability.
Disability is a social construct
It protects people from their fear
that we are the same.
Just one car accident away
In a war of attrition
I will always win.

NO PITY
by Ken Ervin

For more information about Ken Ervin, click here, here, and here.