Shortly after IFF published this profile, Jeremy passed away unexpectedly. We grieve his loss along with the rest of the CDFI community. Here is an in memoriam from the Opportunity Finance Network.
A widely published author and columnist, Jeremy Nowak is the co-author with Bruce Katz of a new book – The New Localism: How Cities Thrive in the Age of Populism – that provides a roadmap for change that starts in the communities where most people live and work.
Mr. Nowak consults on strategy for a variety of public, private, and civic institutions. He is currently a Distinguished Visiting Fellow at Drexel University’s Lindy Institute for Urban Innovation and a Senior Fellow at the Center for Impact Investment at the University of New Hampshire’s Carsey School of Public Policy. Notably, he previously created The Reinvestment Fund and chaired the Board of the Federal Reserve Bank of Philadelphia.
Mr. Nowak also serves on boards and advisory committees for several institutions, including: Spring Point Partners, University City Science Center in Philadelphia, Institute for Urban Research at the University of Pennsylvania, and The Philadelphia Citizen.
Mr. Nowak was the guest speaker at IFF’s recent investor meeting, and we were able to sit down with him to discuss the role of CDFIs in The New Localism.
IFF: Briefly, what is “the new localism”?
Jeremy Nowak: New Localism is the term we use to describe the shift in power that is taking place today from the Feds downward to metropolitan communities; horizontally across public, private, and civic networks; and globally along circuits of capital, talent, and innovation. For us, Localism does not refer only to local governments, but to the interplay of multiple sectors. Most importantly, we view New Localism as a problem-solving practice focused on the major challenges of our time, including growth, sustainability, and social integration.
IFF: Your book cites Indianapolis as a successful example of this transition in power. What can we learn from them?
Nowak: Indianapolis has done a great job of organizing industry, philanthropy, and academic institutions to steward large-scale regional change. They began by making the city a center for amateur sports and then eventually focused on biotechnology. What we learn from Indianapolis is the power of collaborating in order to compete. A good number of cities and metros are not as well organized and therefore cannot focus on transformative projects. Indianapolis can and does. It shows us that today, governance is increasingly a matter of horizontal co-governance across sectors.
IFF: In your book, you describe the role that CDFIs play – specifically, that we are necessary to scale investments in inclusion (e.g., investments in children). What challenges do you have for CDFI leaders, investors, and partners to bring “new localism” to life in our communities?
Nowak: During the past 40 years, capital has become place-agnostic and overwhelmingly organized around profit maximization. At the same time – particularly during the past 20 years – the public sector at every level of government has become more constrained, in part due to legacy liabilities. This leaves many localities with three choices: increase their public wealth through better management, as we describe in our chapter on Copenhagen; go to the voters for targeted investments in infrastructure, education, and other public goods; or get better at organizing civic and private wealth toward longer-term public benefit. All three are necessary.
CDFIs are a great example of the third option, the organizing of private and civic wealth. During the period of rapid changes in the organization of capital and the shift in public capacity, a variety of new capital intermediaries emerged: quasi-public agencies, CDFIs, the new impact investors, and others. It is best to think of the past four decades as R&D for forging a new type of intermediation: market discipline with a public purpose.
The challenge for CDFIs is to become more significant market and civic players by having a strong enough capital base that allows them to continuously innovate both on the capital organizing and project delivery side. They are ideally suited to become major partners in transformational moves at the local level, but only if they maintain the credibility of locality through their lending and civic authenticity.
IFF: In a portion entitled “Who’s in Charge,” you write: “To a large extent, the networks are organized and governed by elite businesses and philanthropies. The racial, ethnic, and even gender make-up of these organizations rarely resembles that of the communities they serve. And, because of their market power, they often act at a speed that outpaces the traditional timeline of community deliberation.” How have these actors evolved over time to check their market power, remedy their lack of representative diversity, and increase their patience with some level of community engagement?
Nowak: It is different from city to city. Some places are obviously doing a better job than others at inclusion and diversity. To some extent, the broader issue of legitimacy and inclusion has to be represented both by the public sector and a well-organized civil society from the grassroots. They have to be at the table. But there has been a tendency for grassroots organizing to focus on targeted neighborhood issues, which is understandable, but without having a broader voice or vision of regional growth.
In the future, we will need to figure out how we integrate more voices and communities around common growth and inclusion objectives. Today, there is a tendency for one group to focus on redistribution and another group to focus on growth, with questions of public wealth and public goods having a different meaning for each group. The future is going to belong to communities that can bring these issues together in an affirmative, future-facing manner. Think of the success of many Nordic nations. They don’t just have strong social safety nets, but they also have dynamic market economies, often with less regulation than the U.S. for, say, getting infrastructure projects done. The truth is that we need a common platform locally and nationally around market growth and human capacity supports.
IFF: Over the course of your career, you’ve accomplished a lot – you created The Reinvestment Fund, you chaired the Federal Reserve Bank of Philadelphia, and you’ve written this book, to name a few. What’s next for you?
Nowak: I am working with my colleague – Bruce Katz – to build a finance lab at Drexel University in Philadelphia around what we call metro-finance: the practices of the new types of intermediation that will finance the future. Financing the future in our book is about three things: inclusion, innovation, and infrastructure. This is the work that we want to do. As part of that, we are doing work today in three cities in your neck of the woods: Louisville, South Bend, and Oklahoma City. In each city, we are building an urban investment prospectus that will help those cities organize the demand for capital in ways that speak to issues of growth and inclusion.