from pastor to executive

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From Pastor to Executive: Equipping Faith Leaders for Economic DevelopmentPublished : November 14, 2007 in Knowledge@Wharton

Pastor T.L. Rogers, head of a mid-sized church in suburban Maryland, callshimself a "closet developer."

"One thing that makes my heart beat is the smell of drywall. I love to look atsomething and see what it can become," says Rogers, who led his Hyattsville,Md., Baptist church in renovating a strip mall in the late 1990s. The churchsanctuary is now a former Soap-N-Suds dry cleaners, the church administrationoffice inhabits a former Domino's Pizza and a former Duron Paint store is nowthe church fellowship hall.

Having completed that project, Rogers and his congregation are thinking evenbigger: "We want to reach out into the community," he says. They recently

purchased a restaurant, which they plan to tear down, next to their church. In itsplace will be an adult charter school offering vocational training andEnglish-as-a-second-language classes to local residents, many of whom arerecent immigrants.

But for Rogers, whose advanced degree is in Bible studies, meeting with bank executives is sometimes achallenge. "Finance is a whole different language. They use acronyms I've never heard of," he says. "Aspastors, the toughest thing for us to admit is when we don't know something." When Rogers met SidneyWilliams, a pastor and venture capitalist fluent in the languages of both faith and finance, he saw "howthings should be done. I realized I needed more than a Finance-101-level understanding."

Moving development-minded pastors from good intentions to executive ability is the purpose behind anew Wharton executive education program for pastors and other faith leaders. The program is

spearheaded by Wharton management professorBernard Anderson and Williams, who is the foundingCEO of EKOS Ministries, a Fort Washington, Md.,-based consulting group that assists churches withdevelopment projects. "There have been many efforts encouraging clergy to engage in real estate andeconomic development, but I cannot identify a program focused on equipping pastors to function in anexecutive role, and that's what this one aims to do," says Williams, formerly a partner in a venture capitalfund that invested in urban businesses.

'The Right Tools and Concepts'

While "faith based" has become something of a buzz word under the Bush administration and itsFaith-Based Initiative, religious groups have long been involved in civic works. In Williams' view,churches need to recapture a lost vision of community service.

"What's unique about American Protestantism is that when it began, faith-based economic development

was at its core. Many of the best hospitals, schools and universities we have today were established bychurches," says Williams, who is pursuing a divinity degree in urban ministry at the Wesley TheologicalSeminary in Washington, D.C.

This tradition of community involvement is rooted in the First Great Awakening, an 18th centuryreligious revival that made philanthropy an everyday activity for the average believer rather than "a socialobligation incumbent only on the most privileged," according to scholars John Bartkowski and HelenRegis in their 2003 book, Charitable Choices: Religion, Race, and Poverty in the Post-Welfare Era. Thetide turned as the country industrialized, says Williams. "The anticipation was that secular capitalmarkets, as well as government, would respond to the needs of society. Churches were relegated to

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focusing on individual piety."

African-American churches, however, have been the torch bearers of this initial vision of churchinvolvement in community development. Scholars suggest this involvement has been born largely ofdemographic reality. "Churches have taken the lead in stimulating and initiating economic developmentactivities in their communities almost out of necessity," says Anderson. "Many of them are located ineconomically distressed areas for historical reasons and because that's where their parishioners are.Pastors have found it necessary to attend not only to [parishioners'] souls, but also to their materialwell-being."

Indeed, in urban areas, African-American churches offer more social services programs than their whitecounterparts, even when they have "less educated clergy, fewer staff, and smaller memberships," notes a2004 report on faith-based development from the Roundtable on Religion and Social Welfare Policy, anon-partisan institute at the State University of New York. According to data from 1999 included in thesame report, between 60% and 90% of churches engage in at least one community development or socialservice project.

"To be engaged with economic development, faith-based groups must be involved with banks," saysAnderson. "They don't have to become financial experts, but they need the right tools and concepts."

The goal of The Wharton/EKOS Community Revitalization Leadership Development Program is to bringtogether up to 50 faith leaders who already have plans for a development project they can implement

within the next two years. With its focus on real estate, the program's goal is for 90% of graduates toaccess the capital they need for their projects, resulting in the creation of 2,000 units of affordablehousing and a 10% reduction of unemployment in the targeted distressed communities.

"We want pastors to be able to have deal-level discussions with developers and investors and tounderstand the risk-reward trade-offs of real estate development, so they know what they are committingthemselves and their congregations to," says Williams. "The goal is affordable housing, not strongerchurches."

In recent years, some of the highest profile faith leaders in community development have emerged fromthe African-American community. Floyd Flake, who helped author legislation about communityinvestment while serving as a U.S. Representative from New York, is now senior pastor of the GreaterAllen A.M.E. Cathedral in Queens, which, together with its subsidiary corporations, is among theborough's largest private-sector employers. Similarly, Kirbyjon Caldwell, who left his career ininvestment banking to pastor a small church in a poor Houston neighborhood, recently led the way increating the largest low- and middle-income housing project ever developed in the U.S. by a non-profitcorporation.

But Williams is interested in involving more than just pastors of historically black churches. "We areintentional in being diverse," he says, noting that EKOS is working with the Los Angeles-basedorganization Korean Churches for Community Development and the Philadelphia-based Esperanza USAto identify Korean and Hispanic faith leaders. According to Jenelle Murph, vice president of marketing atEKOS, the program is also working with the Philadelphia mayor's office to locate urban Muslim leadersactive in development.

For Rogers, pastor of the suburban Maryland church, working closely with Hispanics and otherimmigrant groups is a key part of his church's development plans. "We are looking forward to something

we don't see happening too often: Hispanics and African Americans partnering together to do greatthings," says Rogers, whose congregation is largely African-American, but whose development projectswould primarily serve neighboring Hispanic and Caribbean populations.

Faith and Capital

For any real estate project to come to fruition, of course, churches will have to be able to access the rightcapital, says Kenneth Thomas, a lecturer in finance at Wharton who will teach several sessions in theprogram, including one that focuses on the Community Reinvestment Act (CRA), a 1977 federal lawrequiring banks to service low-income communities.


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"The financing of faith-based organizations has been around probably as long as banking has, but somebanks more than others have developed expertise in lending to such organizations; they have carved out aniche," says Thomas, noting that J.P. Morgan Chase has demonstrated leadership nationally in this arena,as have more regional banks like the Washington D.C.-based Industrial Bank.

"The law is about community reinvestment, so the question is: Who represents the community? Is it themayor or some other elected official? When you need to ascertain community needs, sometimes the bestand most objective answer will come from churches because they are right on the front lines, seeing theproblems of affordable housing or lack of credit for small business," says Thomas, author ofThe CRA

Handbook: Strategies for Banks, Communities and Regulators.

Just as many banks do not perceive faith-based organizations as strong potential borrowers, so manychurches are unaware of opportunities to access credit. According to data from 1999, only 11% ofchurches with community development or social services projects access outside funding. "Pastors don'tunderstand what's out there in terms of CRA benefits and banks that are willing to work with them," saysThomas, noting that he believes faith-based, rather than more secular community-based organizations, doa better job with development projects, in part because they tend to keep overhead expenses down andhave an existence independent of funding for individual projects. "There is a lot more good thatfaith-based organizations can do," Thomas adds, "but first they need the right education to get togetherwith the banks that can serve them."

Developing the Executive Pastor

When Caldwell, a Wharton alumnus and pastor of the 15,000-member Windsor Village United MethodistChurch in Houston, was pioneering urban development projects, his education and work experience infinance "clearly contributed" to his desire to "pursue success on a large scale," he told the WhartonLeadership Digestlast year. In the 1990s, the church's community development corporation rehabilitateda big-box store to create the Power Center, which today offers banking, shopping, education and othercommunity services to residents of the underserved Fifth Ward. "When it came time for us to secure debtand raise capital, it helped to be comfortable with the nomenclature," Caldwell says.

But Caldwell, Williams and Flake are unusual in bringing extensive financial knowledge to theirfaith-based development work. Most pastors, even highly educated ones, have had to rely on informalnetworks and luck to bring their projects to life.

Anderson points to the example of Leon Sullivan, the Baptist civil rights leader who secured capital in theearly 1970s to build Progress Plaza in North Philadelphia, the nation's first black-owned and developedshopping center. "He had never had a course in accounting or banking, but he had a lot of help frompeople who knew those things." The banks who invested in the project, says Anderson, "were verynervous, but they had faith in Leon Sullivan."

Those sorts of personal relationships are not the basis for systemic economic development, Andersonadds. "To take faith-based economic development to the next level, we've got to institutionalize theknowledge that pastors need. Many community leaders won't have the standing of a Leon Sullivan, but ifa bank knows they have gone through an intensive academic program in community development, then itcan have more confidence that if it lends a couple million dollars, something worthwhile will come out ofit."

As Williams notes, the program is intentionally created for small to midsize churches, defined as having a

minimum of 75 members, annual revenues of $500,000 and a full-time minister. Williams estimates 25%to 30% of Protestant churches nation-wide fall in this category. Many of them, he says, happen to alreadyown valuable urban real estate that they have not yet developed. Along those lines, program participantswill take courses in real estate finance, development and negotiations, and complete a workshop on howto write a business plan. Among the speakers will be Henry Cisneros, former U.S. Secretary of Housingand Urban Development.

Alicia Byrd, pastor of a 250-member church in Howard County, Md., will be one of the participants.When she went ahead with a recent project to build an affordable community day care center, she needed"to get a hold of talent from other churches, because there were some gaps in my knowledge," she says.


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Byrd also relied on basic training in economic development she had received years earlier from theWashington, D.C.-based Congress of National Black Churches.

Now her church is looking toward developing an affordable housing project. "In Howard County, themedian cost of housing is $400,000; how many teachers or police officers make the kind of money toafford that?" asks Byrd. "What you don't know will hurt you," particularly when working withcontractors, she notes. "You are putting the faith and integrity of your congregation at risk. I want to be ina position to make intelligent decisions."

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