Our History and Approach
Our Founding Story
CEF was founded on the idea that small amounts of capital coupled with social support, savings opportunities, financial education, and positive community could facilitate transitions out of homelessness.
In the summer of 2009, a group of students, shelter residents, faculty, and community members in Chapel Hill launched the Community Empowerment Fund to address the systemic financial barriers faced by the homeless and working poor in the United States.
CEF came out of the context of relationships between students, community members, and shelter residents in Chapel Hill, North Carolina. Prior to our launch, students working with the UNC Campus Y committee HOPE offered community development and storytelling-based programs that brought students and shelter residents together in meaningful dialogue on a regular basis. Students began to build relationships with members of the homeless community through projects such as Talking Sidewalks, HOPE Gardens, and Community Dinners.
Through these relationships, HOPE volunteers learned that many individuals in transitional housing simply lacked small amounts of capital to get on the path toward self-sufficiency – as little as $60 for a pair of work boots or $200 for tools. While social service agencies existed that could meet a portion of these needs through small cash grants, such grants did not address the deeper causes of cyclical and systemic poverty and inequality. Sustained support, human capital, community networks, and true empowerment were still lacking. The combination of the need for financial assistance and an assertively supportive community led to the creation of the Community Empowerment Fund – a model of microfinance that develops relationships alongside assets.
From there, HOPE began a partnership with the Carolina Microfinance Initiative (CMI), a fellow Campus Y committee with extensive experience in international microfinance. CMI members traveled abroad to intern with notable MFIs and brought the lessons from these experiences back to the UNC campus. In November of 2008, the UNC Law School Center on Poverty, Work & Opportunity joined the partnership to bring an institutional backing and academic foundation to the group’s work.
With the help of these three partners, CEF launched our pilot in the summer of 2009. Eight student volunteer loan officers and five pilot borrowers, all from diverse backgrounds, worked together to apply, adapt, and refine the CEF approach to domestic microfinance.
We got our start as just a micro-loan program, but based on the lessons that we all learned during the pilot, CEF grew to offer much more. We now provide savings accounts, educational trainings, and person-centered support.
In the CEF’s first year, when CEF was still primarily a micro-loan program, Rumsen Films followed a group of CEF’s original borrow’s to document their progress alongside the organization and produced a 20-minute film called “To Borrow, Budget and Save”.
2009 Pilot Report
CEF launched in the summer of 2009 with two pilot groups of borrowers and funding from the Office of Undergraduate Research, Carolina Center for Public Service, and APPLES. The results of this pilot have been published and are available for public learning and feedback.
Ongoing Research and Evaluation
Research and constant evaluation are integral to the success of the CEF model—both as a student-run organization and as a financial institution that works with especially vulnerable, financially marginalized populations.
CEF promotes sustained transitions out of homelessness and poverty. To do so, CEF bridges two sectors that rarely, if ever, intersect: financial institutions and shelters. CEF connects low-income individuals to saving opportunities and banking literacy.
Because without access to financial services, low-income households are relegated to continue living on the margin, and often from paycheck to paycheck. CEF has proven that education, relationships, and accountability make saving possible for low-income individuals in transition.
We do what we do because we believe that access to high-quality affordable financial services is a human right for all people, regardless of socio-economic status.
- An estimated 7.7 % of U.S. households, approximately 9 million, are unbanked.
- 8.2 % of NC households are unbanked.
- 42 % of Hispanic NC households are unbanked.
- 15.6 % of American Indians are unbanked
- 19.7 % of African American NC households are unbanked
Unbanked households have a checking or savings account but rely on often exploitative financial services like non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops at least once or twice a year or refund.
The services that are accessible to low-income populations are frequently low-quality and/or unaffordable. For example, the average amount of a credit card transaction in the United States is $70 and the highest interest rate charged on any credit card is 41%, according to CompuCredit, which did not name the issuer. Complicated policies and fees discourage people from using banks. 29% of unbanked individuals report that lower fees would encourage them to open a bank account.
Access to high-quality affordable financial services can enhance the quality of life and economic productivity of low-income households and microenterprises. Low-income households and microenterprises often have small unpredictable incomes that can vary significantly in periods of unemployment, financial hardship, illness, etc. Services like savings, credit and education can help smooth this income and provide these individuals with access to their past or future income. For example, through savings families can ensure financial stability for themselves and their families during these difficult periods. Through credit, families can access funds in the short-term they may not be currently able to self-generate through income, but will be able to pay off over the long-term with future income. Finally, financial education gives individuals the skills they need to successfully utilize financial services to reach their goals. Most simply and above all, individuals need high-quality affordable financial services to realize their personal goals.