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Finny Kuruvilla, CIO at Eventide Funds, challenges faith-driven investors to consider the impact of their investment decisions.

Hear him remind us that there is an ethical responsibility on the part of the investor to know the impact of their funds. He explores examples of how investors have used their influence to inspire significant world change and encourages modern-day faith-driven investors to do the same.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

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Rusty Rueff: Welcome back everyone, to the Faith Driven Investor podcast. If you were able to attend the FDI conference this year, we’re so glad to have you join us because today’s podcast is going to feel familiar, but we think you’ll probably want to hear it again and again. Finny Kuruvilla shared how capital creates influence and what it looks like for faith driven investors to steward that responsibility. Well. It’s a poignant reminder for all of us, and we’re grateful to him and the whole team at Eventide for thinking through this topic. Listen in. Enjoy. And let us know what you think.

Finny Kuruvilla: How do you change the world? I’m not looking for platitudes or nice sentiments. I’m looking for tangible, practical strategy rooted in sound principles. Our world is changing rapidly and not always for the best. Thus, for good reason. There’s a lot of talk today about how to change the world for the good. There’s a lot of young people who hope to use their lives to change the world. And there’s a lot of older people who want to use their influence to change the world. So how do you actually do it? Let’s first dispel two common myths of world change strategies. First, the power to change the world is not found in politics. Politicians make lots of promises they rarely keep. They’ve got to make lots of deals and concessions to get them elected, which in turn makes them beholden to other constituencies. And then on top of that, politicians have their fingers up to figure out which way the wind is blowing so that they get reelected. But what makes that wind blow? Politicians in general are much more reactive than transformational. The second myth is that world change happens because of autonomous individuals, especially in America, where we tend to lift up rugged individualism. It’s easy to fall for this myth. In his book To Change the World. Sociologist James Davis at Hunter makes a compelling argument that the real power to change the world lies with institutions. Certain institutions have concentrated power to shape hearts, attitudes and beliefs. Think of school systems, churches, Hollywood, social media or the news. Certain institutions have concentrated power to affect how you spend your time. Think of professional sports leagues, for example. By the way, these leagues are for profit businesses and how many millions of hours that people spend watching those activities, or how many young people dream of being like Michael Jordan or LeBron James? Renaldo. Serena Williams. There’s other institutions that have concentrated power to shape spending. Think of the people who make commercials. Think of all the online businesses like Amazon or brick and mortar places like shopping malls. It’s difficult to overstate all of these forces. In fact, we’re a little bit like fish that swim in water, but we can’t tell you what water is because it’s our only experience. In the book of Colossians. Paul talks about Dominion’s principalities and powers that are both visible and invisible. These forces define and shape our existence. And if you can change these forces, you can change the world. I’m going to be focusing mostly on business here, but I want to illustrate world change with two historic examples. Let’s start with the very famous voyage of Christopher Columbus. Most of us know he wanted to get to India, but this enterprise of trans oceanic sailing was risky and expensive. You needed investors to supply the capital for such an endeavor. So Columbus traveled all around Europe looking for investors. He unsuccessfully went to France and England to procure these investors after failing there. He eventually got support from Spanish investors. Make no mistake about it, this was very much a business proposition. Columbus took their capital and in exchange for his labor, he arranged a contract where he personally would get 10 percent of future revenues from such expeditions. And he also got the option to invest in one eigth, a future commercial businesses that came from his explorations. Now, the rest of his voyage is history. But I want us to think for a moment about an alternative narrative. What if Columbus secured French investors? Central and South America today would be French speaking and have a very different culture. What if Columbus secured British investors? Central and South America would be English speaking and Protestant, not Catholic? Think of the hundreds of millions of people affected by this small group of investors and explorers. These investors that backed Columbus changed the world. As a second example, consider the British East India Company that was formed in sixteen hundred. Many people consider this to be the first modern corporation financed with a complex mixture of stocks and bonds, and they even had an exchange through the influence of this company. India would go on to become a colony of England that has affected the culture, the language and the politics of India. And you may not know that India has the second largest English speaking population on the Earth. Billions of people have been changed by the geopolitical power of these corporations. Now let’s jump to the future. Consider the modern multinational corporation. How much has Google, Facebook and Nike changed our habits, our desires and even our vocabulary? Companies were funded by venture investors as well as public investors. These investors changed the world through these companies. Want to change gears a little bit and talk a bit more about some of the ethics. The thesis that I’m going to lay out is very simple. By willfully becoming an owner of a company or an owner of a business, which is what investing is, you are sanctioning and benefiting from the company’s activities and practices. This ownership confers an ethical responsibility to the investor for the activities and practices of the company. Investing has long been, however, divorced from this original and basic purpose, which is supplying capital to support businesses. Instead, most investors today are trying to profit from the market itself rather than any productive and intrinsic value of the underlying companies. Basically, investing today has become about making money. The mantra is low cost, low fee products like ETF and investing has become commodities and depersonalized. Frankly, most people don’t even know what companies they own. Investors have forfeited the power to change the world using their hard earned capital to convince you of a more modern example of the positive power investing. I want to share one last example of what can happen if we work together. Let’s go to the year 1971. In 1971, Christians were having a growing concern for apartheid. If you don’t know what apartheid is, it’s an Afrikaans word. That means separation. It literally means a part hood. It’s basically institutionalized racial segregation. Apartheid was practice, of course, in South Africa. And the government had already ignored U.N. sanctions and embargoes. But a group of Episcopal shareholders filed a shareholder resolution with General Motors, a well-known car company. Many people believe this to be the first example of modern shareholder Abigail. They enrolled the help of a Baptist minister whose name was Leon Sullivan. He was an anti-apartheid activist. And Sullivan proposed specific resolutions for the General Motors board that they ended up adopting because of this Episcopal shareholder resolution after GM adopted these resolutions. Then Ford and Goodyear followed suit. Thus, one of the key instruments in the fall apartheid was coordinated investor pressure from Christians think of the many, many problems that we face today, lack of access to clean water, polluted air, difficult jobs, diseases like cancer, Alzheimer’s infections like coronavirus, educational systems that can warp students minds, misinformation and confusion in the media. Every one of these problems could be fixed through institutions, specifically virtuous businesses and a strong church. These are the sleeping giants that we can enable through our investing and participation. Right now, we need all of us to deploy our capital in positive ways to shape the world for the good. Using biblical principles that promote human flourishing. So let’s use investing as a tool to positively change the world.

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Welcome to Opportunity Zones 101. Today, we’re talking with Jeff Shafer, Co-Founder and CEO of CommonGood Capital and Jerome Garciano on Opportunity Zones—what they are, why they matter, and how Faith Driven Investors can approach these unique ventures as a way to integrate their faith and investing. 

If you’re familiar with Opportunity Zones, or if this is literally the first time you’ve ever heard that phrase, today’s episode is a chance to get acquainted with something that can provide value to you, the investor, and to local cities across the U.S.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

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Henry Kaestner: Welcome back to the faith driven investor podcast. This is a special edition. I guess I said that for other guests, and yet that’s true every time and that we’re taking some new ground and looking at an area of investing and putting a faith driven investment lens on it. And so today we’re going to learn and together we’re gonna learn because I don’t know a lot about opportunity zones and investing, but we’re going to learn from some experts and some guys with some really interesting backgrounds have gotten to know a bit over time that have brought them into the opportunity zone space. And so we’ve got two guests. Jerome Garciano and then we also have Jeff Shafer on the line with us. Guys, thank you very much for being on the program.

Jeff Shafer: It’s great to be here.

Jerome Garciano: Yeah. Thanks for having us.

Want to start with each your backgrounds. And Jeff, we’ll start with you. Tell us a bit about how you’ve come to this space maybe weave in just a bit of your faith journey, but then most specifically, common good capital and in opportunity zones. And of course, Jerome, we’re going to do the same with you.

Jeff Shafer: Yeah, great. Well, let me take you back just a little bit and I’ll try to get through this quickly, because this is a story that could go on for a long time. But as you mentioned, I was an executive at a company called CNL, which we were leading alternative investment manager. Today, that company’s been around give or take, you know, 45, 46 years. I’m not sure. I left roughly five, six years ago. But the quick story was I was an executive there. I was a workaholic. And when I was 40s, this is almost seven years ago now. God literally and figuratively brought me to my knees through a number of circumstances. But really, it was a combination of back surgery. And so it’s a great analogy of probably where I was at. I was trying to carry too much of the weight on my own and was brought to my knees. Out of that time period, though, my wife and I started to ask the question of what does it mean to be a steward of our time, town and treasuries? And I’m sure we’ve all asked questions at different times. This one just felt like a much deeper questioning across every aspect of our life. And in that time period, a friend of mine actually came to me and from an investment opportunities here in the Orlando area, they were doing some investing in affordable housing. And I remember I was recovering from back surgery on my couch and was watching the little DVD of the video. And yes, there the investment thesis, which was very compelling. In fact, the returns were extremely compelling. But really what hit me was what that did to the residents and the communities, what that capital did without intentionality did to those communities. It lifted them up. And the residents talked about and I can still hear it in my head today. They brought me dignity. I’m excited to have people come over to my house. And so that’s what a light bulb went on for me. I’d been in traditional finance at the time for about 20 years. And we really then started to look at this whole idea of how do you align your values? How do you on your faith with your capital? Now, typically in the faith based world, at least my growing up. That’s a question I’d ask. But it always been on the giving side. And I never had really thought about it. I’m an investor capital side. So that’s really what spawned me. And then also my brother to start Amen good capital is. How do you essentially take the traditional financial world? How do you marry together with our values and our faith? And how do you make an impact? And not only in the lives of the individuals who this capital is going towards or investing in. And that’s typically what most people talk about. The part that intrigues me, even maybe not more, but equally so, is when you invest this way. What it does to the heart and psyche of the investor. So we start a common good capital with that very vision that there is these massive trends and movements that are happening. And so we essentially source due diligence. Different asset managers who do impact investing. And then we create a platform and we bring that to financial advisors so that their investors are able to access different deals. In that vein is how we came into opportunity zones well before they were out. And well before they were popular. It wasn’t that we were ahead of the curve because we had some great insight. It was the opportunity zone legislation, which I’m sure will touch on, was created for this very thing to go into now and make competitive returns, but equally important, to lift up, increase human flourishing among the community of individuals in these opportunity zones.

Henry Kaestner: OK. Thank you. Great overview. Jerome, I want to do the same with you, especially because you not only are interested in opportunity zones, but you’re just more generally interested in Christ centered community development as well. So bring us through your background, how you got here as well. And then what we’ll do is I’ll ask you each to define what are opportunity zones and help us to understand what in the world we’re talking about.

Jerome Garciano: Sure. Thank you, Henry and Justin. So, you know, I was born in Southern California. My parents are immigrants from the Philippines. It wasn’t really, you know, until college when thinking about. Career and kind of purpose, and you know how the gospel really impacts my life is where I think I you know, my faith really kind of grew. And I think a critical component of it is by calling and vocation. And I think, you know, a lot of people interested in FDI talk about all the time reflect upon that all the time.

But I feel like where God calls us to is a place where we are flourishing in the skills and the gifts that he’s given to each of us individually and as organizations and a calling to serve others and a reflection of thankfulness for the gospel and for what God has done for us and to pour that thankfulness into concrete action. So I think for me it’s a lot about creativity and bringing together skills and experiences that might not necessarily be considered critical ministries. So, for example, I am an attorney in Boston. My firm is called Robinson and Cole. I started off my legal career in doing a lot of tax work. And currently I’m doing a lot of more finance and real estate and have done almost 20 years worth of transactional work in affordable housing. And so I’ve done a lot of work in tax credits and you markets, tax credits, community development efforts generally for for profit profit making companies and developers and investors. So my whole journey has been, you know, how can those opportunities and skills and experiences be leverage for the kingdom, be leveraged for the care of the most needy? And I’ve been very blessed in terms of I mean, I do affordable housing every day. You know, that’s that’s what I do every day and have worked for a really developer that focus on that. We’re for investors that are very sophisticated and creative in terms of, you know, trying to use capital for that type of purpose. As you mentioned, I’m also involved in a group called Christian Community Development Association. So it’s a faith based network of churches and nonprofit ministries that are really trying to, you know, seek God and his kingdom in the city among the least of these among those who Jesus calls us to and very inspiring group. And I’m very privileged to be on the board of that. And so it’s talking with groups like them about programs like tax credits and opportunity zones and different types of impact investing and social enterprise to really be creative and to engage people of faith churches, you know, in all these aspects that might not necessarily come to mind as ministry, but really, in fact, I think could be more creative tools in that space.

Henry Kaestner: OK, good. Thank you. So we’ll stay with you. What is the definition of an opportunity zone, as you understand it, and help us help a lay person to get that?

Jerome Garciano: All right. So first of all, it’s a program it’s a federal program that was enacted in 2017. It’s part of the tax reform legislation. So a zone is obviously a geographic region and it’s broken by census tracts. So if you’re talking about opportunity zone, so that’s a place and it’s designated as a U.S. Census tract and that there are certain definitions around poverty and other types of demographic information about that census tract. There was also a period when the program began where certain governors and other leaders can designate which low income census tracts could be opportunity zones. And then after a few months, the Treasury actually officially selected those zones. So the zone is a place. And in order to benefit from this program, an investor has to make an investment through a qualified opportunity zone fund into that opportunity zone. So those are the basics.

Henry Kaestner: Jeff, build on that a bit for us. And also maybe give us some illustrations of some of the opportunity zones that you’ve worked in.

Jeff Shafer: Yeah. Let me just take one quick step back. I think it’s important, in addition to information, you’ve just heard the rationale for why opportunity zones were created. I think it’s helpful here that a white paper that was written in 2015 by a group called EIG, the Economic Innovation Group, and they point out three things. One is they analyzed the recovery of communities after the global financial crisis. And what they found is there’s huge dispersion in the recovery, economic coercion. Secondly, they recognize was with the markets going up. At the time and there’s been a huge stockpile of capital gains. And then the third thing they looked at is they said, hey, there, that other programs and fact, some of the programs are just what we just heard. They’re tried to help these communities out. And some had been successful, some had not been successful, but they essentially kind of put that into a blender, so to speak, and out popped this legislation. So I think it’s important to note that the whole idea was to create human flourishing and then to attract capital to those areas. They created some tax incentives for investors really accessing private capital. To me, the starting point for as you look at opportunity sounds. I think it’s important that if you want to be congruent with the rationale for why these were created, you could simply attack it just as a tax benefit, which I wouldn’t personally. I don’t give a wrong with that. But that’s not how I view it. I look at it go. How do you create human flourishing inside of these zones? And how do you also get a tax benefit from it? And by doing that, you’re creating a win win. And actually, I think there are reasons besides, you know, moral reasons or even ethical reasons why you’d want to do this. I think as soon as you start investing in upcoming zones that maybe don’t have a meaningful impact to the communities, you set yourself up for scrutiny. And you saw that early on in the program. But practically, just give some examples. And I didn’t realize we both were going to have expertize in affordable housing. That is a natural asset class that fits with inside these opportunity zones. So we personally are involved with a group that does affordable housing all across the United States. I think one thing important to note is affordable housing is just a huge need anyways. And then a lot of these developers have been developing in these opportunity zones already. They just haven’t had this extra benefit. And so I think one of the things that we looked at early on is we want to find a model that could capitalize on this capital gain structure or relief. And I can explain that here in a second. But it wasn’t just a new business model that a company goes into. And so the natural spot for us is affordable housing. It’s just there’s a fundamental need that we get in some of the stats and reasons why. I will tell you, the group that we work with has done one here in Orlando in my backyard, and I’ve actually done that with the major bank. One other thing I should note is as an investor, you need to view this as an investment and then you need to look at the tax benefit kind of as gravy. And then obviously you need to think about the impact that you want to have. There’s really two things to look at from a tax consideration standpoint. This program allows for an investor who has a capital gains for simplicity. I’m going to say it’s pretty liberal in what type of capital gain it can be. There are some nuances, but whether it’s a stock, whether it’s the sale of a house, whether it’s a business. So there are taxes. If you’d sold that asset that you don’t pay taxes, that the government is basically said if you take that capital, that whole capital gains, then have all that. But you take that capital gains and you roll it into a fund that is investing into these geographic areas, then you don’t have to pay capital gains tax on that that you normally would have until the end of 2026 and you get a step up in basis in this case. Today, it’s about a 10 percent step up in basis. So you get to defer it. And presumably of tax rates stay the same. You actually will pay less as well in 2026. That’s one component. And the second component is the money that you invest inside of the qualified opportunity zone to fund those assets. If they’re held for 10 years, which you’d want all the Putin years when those assets are sold. Then you do not pay capital gains on those assets as well. And so to extent, we want to we can go into examples of that and you’ll hear, you know, how much kind of return that should add to the investments. It is real dollars in your pocket when you do the math, assuming you buy a good investment, assuming you buy good investment.

Henry Kaestner: So talk to us about what’s the most good investments are. Jerome, illustrate an example and maybe will stay in affordable housing. Something you know of. Talk to us about specific zone specific investment and maybe one that was done in a fund, maybe one that was just done outside of one. But what were the mechanics of it?

Jerome Garciano: Yeah, so our fund that I’m a part of has been involved in a couple of transactions. They were last year. One was affordable housing in New York. So in that instance, there was an investor who had a capital gain. It was a financial institution, and they worked with what they call net farm housing interest, syndicator of essentially of a broker or intermediary that matches up investors with projects, you know. And so in that case, you know, there was the typical tax benefits for an investor that would be driven by the credits. Obviously, they would still need to underwrite the project in terms of the rental income would qualify both for the housing program as well as an operating expense needs and debt service for the project. So, you know, it’s typical underwriting the tax benefit, again, was calculated really at the fund level. So it was a part of the benefit, but it was separate over and above kind of what the real estate economics were about. So certainly that was one example. The other example that we had wasn’t actually an operating business to keep in mind. Opportunities on is not just about real estate, it’s actually about operating businesses as well. And so so that was an M&A transaction. I wasn’t. Directly involved with, but my colleagues were. And so they were working with, you know, a private equity firm that acquired some assets and. And those happened to be an asylum so that they were able to get work with kind of underwriting and evaluation of the business. And then, you know, kind of a key component of that was there is a requirement that assets need to be either new assets being purchased by a qualified opportunities on business or that those assets need to be substantially improved. So, you know, there are definitely some structuring and some programmatic things that need to be laid out and everybody needs to be on the same page on that. So that was an exercise of making sure that there was in this acquisition of a business, that new assets would be placed in service, there would be substantial improvement on the property that that business had. So those are a couple examples.

Henry Kaestner: Jerome I want to stay with you. Both of you are very motivated by your faith. I’ve come to know and appreciate and love that, both of you. But, Jerome, you come out of this from the CCDA perspective, the Christian community development. What is the particular faith lens on this? Presumably at some level, of course, we’re investing in human flourishing and we’re investing in some really challenged neighborhoods. But is there a way to bring the church in? Is there a way to bring word ministry in? Is that too contrived? Talk us through that.

Jerome Garciano: I mean, I think you come at it from a couple different angles. I mean, certainly because, you know, the ease of kind of connection between real estate in place, making an opportunity zone. I mean, I think churches are already good at that. They’re good at kind of creating places and experiences that, you know, point to God and they can point to, you know, our faith. But I think it does take some creativity. I think it takes some new almost like, you know, because this concept of new wineskin for a new time and in kind of a new place of ministry and serving others, you know, for such a time as this as, you know, what we’re experiencing now.

So I feel like investing in people and relationships are at the core of everything. And one of the core tenets of the Christian community development ethos is really being with the poor and being in solidarity with kind of the struggles and the challenges and often the injustices that face those on the margins. And so I think that expresses, you know, theologically this idea of, you know, guy coming down to man and really experiencing kind of what the challenges are. And I think that reflects on even those of us who aren’t, you know, in that economic situation, like what that means and how that reminds us of kind of our need for God and hopefully thankfulness for kind of what he did for us on the cross. And so I think very deep past theological. I mean, I think there’s also, you know, very strong kind of biblical references to what it means to be just and to be equitable and to give everybody an equal opportunity. And so I think that discussion is raised in the context of kind of our Christian community development groups that, you know, kind of focus on that. I think there’s also a sense tragedy of we’re not just meeting physical needs, we’re not just meeting kind of financial needs, but we’re bringing in the gospel and what that means and how God has made us whole through Christ life, death and resurrection. And so, you know, a lot of it is also, you know, people aren’t going to hear the message until maybe you show them that you’re more interested or you’re equally as interested in kind of their practical situations and challenges that they’re facing. So I think there are a few different ways to think about it.

Henry Kaestner: Jeff, would you pile on to that?

Jeff Shafer: Yeah. So let me give you some tangible examples of where I have seen integration. It’s not necessarily an opportunity zone structure, although these assets are in opportunity zones. So we’ve come across managers in specifically affordable housing who they have a nonprofit organization that sets out the properties. And there is so management company that manage the day to day operations of it. But they almost are a dorm parent, so to speak, for the communities. And, you know, part of their ministry is fixing flat tires and being a counselor there, you know, 2:00 in the morning. And when somebody gets sick in English as a second language and then obviously embedded in that is their faith component. And so I’ve seen that model in several different ways. They other think that I’ve started to think about is from a biblical perspective. If you think about this emotional ministry, you know, are we called to be more. I don’t think it’s right or wrong. Are you called to be more evangelistic in the way that you invest? And I think that would be obviously more directly kind of faith based, at least in my mind, than you have. Is it more of a discipleship model or are you cycling coming alongside of people of faith and continuing to build their faith or even the other type of ministry that, you know, through a faith perspective we talk about? Is it more of a mercy ministry where you’re doing it in the name of the Lord, but you’re feeding the poor or whatever it is? And so I think you can use those models as framework. When you look across different types of assets and their faith integration and, you know, we not only work on the real estate side, but we also do. Private credit and private equity, and there isn’t a cookie cutter, a way to integrate it, which is part of the excitement of it, because it’s yet to use your creativity and ingenuity in each scenario and figure out how to meet whatever need that you’re trying to meet. And obviously, spiritual is a huge part of it.

Henry Kaestner: I’m intrigued by that. I love the framework that you just gave. And I think that we all, as Christ followers, need to be thinking through the different models. And we should never be prescriptive. We should never be over the top. We should definitely not force a ministry impact in this. Something that doesn’t feel genuine isn’t done with gentleness and respect. And yet it sounds like these are different investment projects that are going on in different zones where there might be a partnership with either a parish church ministry. I think that’s Jeff, what you’re talking about, but then also potentially with the local church as well. We’ve done episodes in the past where we’ve talked about what it might look like for a local church to adopt multi-family real estate and get involved there. Drome, are you seeing people within the church that are leaders of denominations or individual churches that are seen? This is something that they can get alongside and partner with?

Jerome Garciano: Yeah, definitely. I mean, you know, even before kind of the shutdown and the things that we’ve gone through now, I mean, you know, underutilized church property. Right. I think it depends on the different type of church or denomination. But there are opportunities to use building assets, you know, in ways that are beyond have the traditional Sunday service. And I think there were a lot of creative thinking around, you know, how do we engage the community? How do we serve and meet the needs of a community through these facilities, whether it be something that’s related to something like a community center or something that’s related to, you know, working with the children and after school programs. And so, you know, multi-family and affordable housing is definitely on the forefront. You know, I know a lot of churches that are looking to incorporate on their actual church campus or property housing. And, you know, I think even more so in the future. And let’s see, you know, how this plays out. But I feel like there’ll be a lot of opportunities to kind of rethink and reimagine kind of how these assets are used. So, you know, one group in California, in major cities that have homeless crisis, they’re looking into do some tiny home development, like on church property, you know, and the idea would be to lease some of the land to the developer so that a local church can get a little bit of income and then they would provide these homes that would be able to be, you know, occupied by people who need the affordable housing. You know, there’s certainly other partnerships in terms of, you know, parking lots that have been sold and, you know, developed into housing tax rental projects. So, you know, depends on obviously the sophistication of a local church and kind of what the development team looks like and what their overall goals are. But there are plenty of examples and opportunities to partner in that way.

Henry Kaestner: Okay. I think I’m following I think a lot of our audience is following now about the origination 2017 of this opportunity zone legislation, some of the financial benefits to investors. I want to talk next about how to get involved. If you’re listening to this either as an investor or as a service provider, maybe we’ll start as an investor. We’ll start with you, Jeff. Some listeners podcasts. I might get us this great. I can love on the poor and these challenging neighborhoods and put my investment capital to work there with flourishing. Maybe there’s an opportunity partnering with the church, but definitely motivated by my faith to see a disadvantaged neighborhood get back on par. What do I do now? Are there funds that do this? Are there individual deals? Is there a marketplace? Is there a funder? What do I do?

Jeff Shafer: Yeah. Funny as you’re asking the question, I’m like, what do you do? So a couple of things. And let me start with this and Be very practical for you. I myself have invested in an opportunity zone fund as well. And I think these are three questions that every potential investor needs to ask themselves. And depending if you can answer. Yes. And I think it makes sense to continue the dialog. You know, where do you find opportunity zones? And then really, you’ve got to also think through, do I want to go into a fund? Do I want to do a single asset deal? Do you want somebody else to manage or do you want to manage it yourself? But here are the three questions that I think are foundational. And there’s more than that. But if I just was to give you three questions you need to ask is in this order. So you have a game. You go. Do I pay tax on this gain or do I take some mosquito and roll it into an opportunity zone on? The first question is, you know, what kind of return can you generate? I think you have to view this fundamentally as an investment, because if it doesn’t perform as an investment, then ultimately you’d be better off just paying your capital gains and going elsewhere. Now, obviously, you can try to find different assets to perform at different levels and a different level of risk. But I think you need to start from. This is fundamentally an investment. That’s number one. Number two is can you hold this for 10 years? The way the rules are written to maximize all the tax benefits, you need to hold it for 10 years. It doesn’t mean that they’re. Ways and there may be some reasons why you wouldn’t hold the 10, but the blanket statement, that’s pretty solid. If you can’t hold the investment for 10 years, then you shouldn’t consider it. And the last thing is, can you get comfortable with some incremental risk that needs to be followed so that you actually get the tax benefit that you can? And if you can answer yes to those three questions, then it probably makes sense to go. All right. I want to look at this. One of the things, too, that’s unique. If you’re familiar with the 10 30 one investment, some people compare these and their similarities and differences.

But one of things I want to point out is if I had a half a million dollar gain as an example, I do not have to roll my whole half a million dollars into an opportunity zone. And at ten, thirty one, you really do. And so then you need to figure out how much you’d want to put in there. The other things you want to consider is do you go into a fund that has multiple assets in it? Or do you try to find a one off deal? You can find both out there. Some Web sites that I would at least looked at would be a Web site called AIG dot org. Another one is Noboa Graddick. There really is no great centralized place. I mean, there are some typically you are going to talk to your advisor, attorney, local real estate developers. This whole marketplaces developing in. One of the big questions is, does it continue to develop long term? And I think part of that is dependent on the regulations. And if they continue this program, which is, you know, we’ll find out. I do think they’ll given the Koban 19 and what’s happened there clearly is a renewed interest in that why opportunity zones were created. So not to predict what the government’s going to do. But man two the statement said earlier, for such a time as this, this structure could be extremely powerful tool to help rebuild America at a time when we’re going to need it. The short answer is we can help you find opportunity zones and we can get some places where you can go to Henry Antin and you can check out some Web sites as well.

Henry Kaestner: Jerome, maybe supplement that. But I also want to focus on the service provider aspect of it. Say I’m a church Amen ministry, not for profit in an opportunity zone. I can think of creative uses. Maybe it’s unused property on a church, maybe it’s unused facilities within a church building. Where do I go to take next steps and learn more so that I can get actively involved? Or maybe it’s just I’m a church and I just want to partner and just love on people through some of these new investments are coming in. What do I do?

Jerome Garciano: Sure. I saw, you know, through the CCD network, there was a group of us that started the Jubilee Impact Fund. And so Jubilee Impact Fund is trying to use the Opportunity Zone program to gather faith driven investors, other types of denominational connected investors to opportunity zones, and also trying to bring in on the debt side groups what they’re calling the community development financial institutions. Essentially, you know, lenders and banks that are focused on lower income is providing capital. So we are trying to launch this and we’re trying to partner with local churches. And so we have, you know, dozens of organizations around the country doing ministry already. And, you know, typically inner city areas and we’re having a discussion with them is how can you, you know, look at the existing initiatives and projects, incorporate things like affordable housing and things like a business incubators that could, you know, provide venture capital and other technical assistance and support to Minority and Low-Income Entrepreneurs. How can you engage the neighborhood with, you know, other types of services that could be funded through opportunities on equity? So the niche that we’re trying to make is a connection between the kind of faith driven investors, the people of faith who would be interested in opportunity zones and these initiatives on the grounds where these churches are already serving. I mean, I think that’s thing. I think the churches are already serving in these neighborhoods that are designated opportunity zones. It’s really just trying to make the connection and create, you know, the fund structure and kind of a consistent approach to capitalizing these projects. And I agree with what’s been said before. I mean, it has to make financial sense. I have to pencil out. But the idea would be, how do we creatively do that while maintaining the ministry impact as well as having the positive benefit for the community? Because I think was alluded to earlier, this program is fairly open. I mean, there are not a lot of rules and regulations, which is, you know, in some sense a nice thing, a beautiful thing, a flexible thing. But in other cases, there are no restrictions in terms of challenges like gentrification or displacement of, you know, the existing populations of the zones which actually harm these neighborhoods. So. You know, given the very flexible nature of it, there is creativity. But I think we need to be intentional in terms of what types of products we invest in and how we do that and how we engage the community for true stakeholder engagement to be able to do a successful opportunities on investment.

Henry Kaestner: Fascinating. I’m intrigued by this. I’m grateful for both of you being on the program. If you’ve turned in before, you know, one of the things that we want to make sure that we close out every one of our episodes with is asking our guest what they’re hearing from God about in his word. And it doesn’t need to be necessarily this morning through your quiet time, but maybe sometime last week or sometime recently about some way that you feel that God is speaking to you through time in the Bible. Jeff, we’ll start with you and then Jerome, close out with you.

Jeff Shafer: Yeah, well, if we want to get really personal, what God is challenging me on this question of, and it’s funny, I wasn’t planning on talking about this, but I started to write just for myself. I wrote a question and the question was, can you trust God in the midst of human suffering? And I just wanted to know obviously have Russell before, but I really want to get this on paper for my own self. And really, what is the question ultimately key and personal senses? Do I trust God? Is God a good God in the midst of all this, in the midst of just human suffering?

And I tell you, I’ve got a senior and a junior in high school, and obviously my wife and I and we have been chatting about this very question the last two or three days. And really where I want to go is is intellectually I want to have an answer. But more importantly, I want to know that my heart’s in alignment. And then the key is, am I actually living in that truth? And I got to be honest, I think intellectually I’m probably there. I think my heart is there at times. But really, what’s been challenged in me is, is am I living that out intentionally? Day to day. So now to be where I’m at this very moment.

Henry Kaestner: I think a lot of us are at that very moment. And I love the fact that you lean into that with your kids. Jerome.

Jerome Garciano: Yeah. I guess for me, you know, this almost hopefulness about kind of what is to come, because I feel like God is doing something. And obviously in the midst of very difficult times, there is always hope and we need, as Christians need to carry that and amplify that and share that with those who might not have any right now. So this idea of kind of the new wineskin and you kind of creative models and theories and programs. I feel like people are ready to be creative. And that is very refreshing. And I feel like there is such an opportunity there. So, yeah, I mean, this idea of new wine scans and how can we prepare and be humble and be creative in a time when in a lot of ways were challenging kind of the existing way we do things right. And so how does that balance in terms of, you know, a lot of ways, morning, maybe what we’ve lost and maybe things that we’ve lost permanently in terms of kind of how we gather and kind of how we worship and how we express our faith, but then also embracing kind of a new. And so for me, that definitely still attention and praying about that every day. But I also am very hopeful because I think there’s things that our God will show us and we can just live into and just be thankful for drove.

Henry Kaestner: Thank you, Jeff. Thank you. This has been great. Really appreciate you taking the time. I hope that people will look into the Jubilee Impact Fund, common good capital websites, Jeff, that you shared and put up some show notes to this as well and just appreciate the opportunity to talk to y’all about what does it look like for Chrysler to be intentional about their investment deployment and how to be wise as a serpent, innocent as a dove, be able to take advantage of tax code opportunities, to be able to take advantage of of the passion that we all have to love our neighbor and to take care of the least of these. And lots of those are in our midst and some is opportunity zones that are not very far away from us. So thank you for taking the time and for your leadership in the movement.

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If you’re not already familiar with the name Casey Crawford, then you need to be. We had him on the FDE podcast a while ago and even then, we knew he’d be back. 

Today is that day. Casey is here to talk to us about Movement Charter Schools and the work they’re doing in Opportunity Zones. As always, Casey’s enthusiasm is contagious, so we’ll let you tune in and hear for yourself.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

Henry Kaestner: Welcome to the feature of an investor podcast, if you’re a fund manager, investor or financial adviser driven by your faith or want to be driven by your faith, then you’re in the right place. The best way to stay connected in the faith driven investor community is to sign up for our newsletter, Faith Driven Investor ERG. This podcast doesn’t exist without you, our community. One of the things we’ve heard the community asks for is help in finding great deals to invest in. And so we’ve launched Marketplace. It’s a new platform of funds and direct deals, everything from private equity and real estate funds to ETFs, from philanthropic to market rate deals made in the US in emerging markets. Check it out. At the age of an investor ERG for Marketplace. While you’re there, please send us any thoughts you have about how this podcast might better serve you or any questions you have about being a faith driven investor.

Host: All opinions expressed on this podcast, including your team and guests, are solely their opinions. Host and guest may maintain positions in the companies and securities discussed. This podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization or school.

Casey Crawford: It was five miles to the nearest pediatrician, so most parents don’t have transportation on public transportation. It was five miles from New York’s pediatrician and the health care system came and told us that and said, hey, if you provide a space that will staff and we could really use that. The yeah, we’ll that for ten years. And I guess we saw the opportunity for partnership in these big infrastructures, education, health care, affordable housing. When you can work collaboratively with your state and federal governments, with power institutions that be, you can actually create some really synergistic impact.

And what we’ve seen, again, with a really nice, stable investment returns where it’s sustainable and scalable.

Henry Kaestner: Welcome back, everyone, to the Faith Driven Entrepreneur podcast. If you’re not already familiar with the name Casey Crawford, then you need to be. We had him on the Faith Driven Entrepreneur podcast a while ago and even then we knew he’d be back. Today’s that day. Casey is here to talk to us about the movement, charter schools and the work they’re doing in opportunity zones. As always, Casey’s enthusiasm is contagious. So we’re just going to catch it and let him take it from here.

Henry Kaestner: Welcome to the future of an Investor podcast. We’re not supposed to have favorites and guests on any of our programs. It’s just not fair. I mean, we’ve got maybe one hundred and seventy five different episodes now across the two properties, and that’s not even counting feature of an athlete. And actually, William, I think Casey is probably the only one would be crossover between all three. Right.

William Norvell: I’ve thought about it. Yeah.

Henry Kaestner: Right now. Yeah. We’ve never spent any time talking to Casey about his athletic career at all. I mean, Super Bowl and all that stuff. And we’re not going to know either, but maybe maybe for some other episode. But what I do want to mention is that the reason why if I were to have a favorite and clearly I can’t because we have so many children as you, well, it’s not fair to pick one up, but if I were to have one, one would clearly be Casey, because last time when we got on the phone with him, we just started riffing on one of my favorite podcasts that we’ve ever done, fill fishers with sharks about identity and talks about anxiety and effectively talks about the fact that, gosh, if you’ve got high levels of anxiety, maybe that’s a chance to really look at where your identity is. And Phil did such a good job of unpacking that. There’s a five minute segment there on Identi, maybe my favorite five minutes of any podcasts. And when we start off last time, Casey, I think appropriately said, dude, I liked it. I think I really liked it. But still, there’s some part of it just doesn’t resonate with me. And Casey, would you say?

Casey Crawford: I think it was haunting me because I so couldn’t identify it when I feel anxious often like I feel like the Lord continues to lead me into places where I’m very anxious and very hopeful that he’s going to come down and save me from whatever you just called me to us again, want to look to scripture. I see that same story playing out time after time with these guys that, you know, lift it up as heroes in the Bible, namely Jesus, who like I mean, the night before his greatest act of work is is in the guard against. And he just stressed out and seems like pretty anxious and seems pretty troubled and seems pretty stressed and stressed as he contemplates, you know, going and laying out his life.

Obviously, you know, half and and so I just I was processing that man that the Lord, I think, oftentimes has led me to these places where in my flesh I do have a lot of stress and maybe some anxiety. And it caused me it focuses me to, you know, look back up to him.

Guy Lord, in the physical, this makes very little sense. And I’m very nervous about it. I’m very anxious about it. It’s caused me a lot of stress. Like, you know, I’m thankful that you are above all of the physical world that you put me in.

And it’s you you have you’ve called me to it. You walk and see me through whatever that may look like. And so you’re that tension man of always being stressed and stressed and called into the battle. I think that God so often does not always want to be. It’s not in the cabana, you know, relaxing under the sun. It’s in the fight. It’s in the. Is it stretching, straining kind of place and that’s, I think, where the Lords will use those places to grow and grow. My hope and faith in him, I agree completely, and I think that that was great.

Henry Kaestner: So a lot of times will suggest that people listen to both of those podcasts now. And if you’re listening to this, you’re probably a part of the faith driven investor community. This is a faith driven investor podcast. And what we’re referring to is a Faith driven entrepreneurs series, maybe one hundred and thirty 140 of them. If you take those two together, the Phil Vishwa one and the Casey Crawford one, you’ll have a great foundation. And I’m not suggesting you stop listening right now and go listeners, but you might want to later. So today, Casey is on the fate of an investor podcast. And there are two things that I want to unpack with Casey. We talked a little bit, not nearly as much as I would have liked to last time about your emphasis on mentoring, because I think that mentoring has such a play as we make investments when we come alongside an angel investment opportunity point in the life of an entrepreneur. What is mentoring look like there? I want to talk about that and then I want to talk about something I think is super cool. We’ve unpacked this a bunch of times, just you and I personally, about how you have taken investment capital and relational capital and a love and commitment for inner city Charlotte to come up with something as super innovative. And one of the hopes that I have is that listeners to this podcast will come away and say, yes, I’ve heard about some really neat funds. I can make some investments there. And maybe, yes, I’ve heard about a marketplace where I can find different angel investments.

But this kind of concept of just how do I take all that I am and what might be unique and individual that God might place on my heart. Well, that’s been your answer. You haven’t just invested in index funds. You haven’t just invested in Eventide and Praxis and Timothee funds. As cool as they are, you’ve done something really unique and innovative. And so I want to get there on this podcast interview, too. But to do things in succession, let’s bridge off of that concept I’ve introduced, which is mentoring. You have this opportunity to mentor the entrepreneurs that you’ve invested in and comes from what you do, what movement, what is it you do?

Casey Crawford: So we try to think about think words are also very important. We try to think about phrases in language that’s relevant to culture and not just to Christendom, but really to the greater culture and mortgage. We have about four thousand employees we’re able to do about one out of every fifty home finance is now in America. So we’re kind of a broad reach and really engaged, lots of different khamees, a lot of different cultures around the US and a really intentional to think about the yes that while some of us are very much living out our faith day to day, that we want to do so in a way that’s when that’s engaging the culture in the culture. I understand. So we try not to use a lot of Christian and Christian words that frankly don’t resonate with even like many millennials who are themselves Christians. So one word that I grew up with hearing was discipleship. And then you should be a disciple maker and you need to be disciple and you need to be a discipleship. And over the last decade of being a business, you have lots of young folks in our company is a loving and engaging.

And about once a day I get an email or a LinkedIn or Facebook from somebody that says, Hey, Casey, will you? None of them said discipling everyone. I’m says, will you? And typically it’s mentor me. Will you mentor me? Will you mention mean?

I think millennials very much have it right and they understand the value of mentorship and maybe even worse than we used to call it, the value of discipleship, having someone that was older, more spiritually mature, kind of helped grow us in faith and understanding of God and who he is and how he loves us. Now we interact with that. And so we came up with Citizen Movement Mentor. We absolutely want to love and value our people. And if they want to grow spiritually, we want to provide them that opportunity to do so.

And so we created a mentoring group and it really came so many things that are borne out of God convicting me of sin, of sin in my life. And we put a lot of emphasis on physical wellness and kind of like loving the whole person in our community and company. I had a really great friend who I put into it who would be in the gym together like four or five days a week for a couple of years. You transformed by. But I was watching makes some kind of crazy decisions, like crazy decisions in his life.

I did not think lined up with the faith. The man that he had told me he wanted to be, the person he was in Christ and man, the Lord convicted me. I mean, I was considered judging him Amen he’s not doing this. He’s not in this these others. And Lord said if you put into him spiritually the way you put into him physically, we wouldn’t be having any of these problems. And I was walking by our gym when that happened, and he and I worked out four or five days a week together and I said, man, if we had that kind of time investment spiritually, where we were really spiritually being minted ourselves by the word and by those, you know, gross material, our faith, I think we’d be in such a different place and he’d be in such a place.

And so right then I called my say, hey, man, we’re still great friends. And, hey, look, I love you and I want you to know that you’re like the legacy you’re leaving. Here is one of mentorship. We’re gonna have a mentorship program that is dedicated, inspired by you and my lack of faithfulness to grow our folks spirits.

And so I hired a buddy of mine who had been in ministry for like 20 years. I played football with. And so I I need some help on some adult supervision in this because I’ve never put together a mentorship program. And Steve Macfarlan came in and he became our CTO or chief pastoral officer and he wrote a 40 week curriculum that our organization is completely voluntary, all volunteer based. And we have about five hundred folks now in our organization that are actively engaged in mentor groups. And as mentor groups go on for 40 weeks, you know, it’s a really in-depth commitment of four or five members of our community to just be open and vulnerable with each other and go on a spiritual journey to grow in their faith. And some folks come into it really far from God, maybe never setting foot in a church, not really knowing what this is, who he looks like, how I can relate to him. And some folks come into these groups having walked with Jesus for a number of years and a lot and being really close in that. And it has been true. I’ve been in small groups kind of my whole life. I can tell you doing them in the workplace has been one of the most transformative, powerful things I’ve ever done in my life, because the bottom line is we can’t hide from each other at work. And we have just seen, oh, my gosh, we’ve seen incredible life transformation happen in and through our mentor groups. And honestly, we wanted to keep it small because we didn’t know we were doing it. First of all, we just like 40 or 50 people and see how this goes and kind of iterate expand. We’ve had such a hunger for people that want authentic, intimate relationships with each other. And now during covid even more so and so, the groups have really exploded, expanded with about 20 other companies now that have picked up this mentoring program and done themselves. It’s not no rocket science to it, but I think there is a beautiful nuance of doing it in the workplace that makes it easier than anything I’ve ever done in the church. In church, I see maybe once a week, maybe four, five or ten minutes before the service that we all get up and sing and listen and don’t talk and go home at work. And we have 40, 50 hours a week where we are locking arms with each other. We’re providing for our families. We’re like living out, missioning, calling, or at least just our vocational occupation together. And we have some really deep beliefs. And you can see people laugh and see him crying and when they’re hurting. And so it’s so easy then to get into those really intimate mentoring groups where you can be open, vulnerable. And if you have some great material to go through, mean we just see people grow like crazy spiritually. So one of those powerful things we’ve ever done, that’s awesome.

Henry Kaestner: OK, so I want to get back to that here in a second. And I want to unpack a little bit more about what a chief pastor officer does when he finished writing it. Figure it out. Yeah, he’s still there. Is he still working? Oh, yeah.

Casey Crawford: Oh, yeah, yeah, yeah. He’s yes, he is going in a thousand directions. I mean, again, he was doing church planting time in the Redeemer Network on the West Coast. And what he would tell you is that he’s disengaging more people now than he ever did as a pastor, reaching kind of more folks are really far from God because, you know, folks in greater degrees will not darken the door of church.

They will not go into a church, but they will come into work. And he kind of jokes nice. You know, I used to beg him to come to church for an hour week and then I’d ask him to give me money because now I get him for forty hours and we’re buying them a paycheck at the end of the week. So this is a great deal.

So yeah, it’s been really, really neat journey with Stephen, what he’s been able to bring to our culture.

William Norvell: I just want to comment on that real quick, because we talk a lot about investing and we spend a lot of time talking about money. Right. Of course, on this podcast, I got such an incredible story, though, of, you know, you get the resources you had, the organization you had and decided to invest in that direction. Right. Not taking your money and putting it in. But I don’t think that’s such an interesting thing. You know, as you peel back the parable of the talents, I think a lot of people can narrowly end up talking about rate of returns and money, but God gives us so much more stewards, relationships, employees, suppliers, all of these relationships. And I just love that you took that and said, well, this is a place to invest my time and my energy and the resources.

Casey Crawford: Well, also leverage to write what you think about money and how we’re going to invest. And I know lots of folks who I will share Stephen’s salary, but it’s not like the biggest salary in the company. Something I mean, he’s kind of paid like our middle level managers. And yet we have one chief master lost and almost four thousand employees. That’s awesome. Leverage the material he puts out. You got seen. It’s up on the Web. Any one organization can access it. And now, again, over 20 other organizations, we have churches that are using this stuff. And so as I think about Kingdome stewardship of resources, I’m always thinking about leverage and what is a great use of leverage. And, you know, we’ve had corporate chaplains of Americans. Those were neat and were good. They definitely serve a cool role. But, man, we found incredible leverage in a role like this because all of our mentor groups, they’re. Volunteer, nobody’s paid to lead a mentor like no one goes to church because, oh man, William, I’ll pay you X dollars to lead your small group. That’s not how it works. So, yeah, it’s been a great investment to your point and a great use of leverage and scale.

William Norvell: It’s amazing to think about that. And I know you’re telling us, right. Probably jumped on about the first day of school. First day of school. Yeah. Yeah. I got to hear about this. So you’ve also leveraged this into movement charter schools. Tell us. I came about where that is.

Casey Crawford: So, you know, we were founded really as a mortgage company in a bank. And when we got to do that and really my vision, you know, seven or eight banks had been at the epicenter of the greatest really acts of financial violence perpetrated against the world in decades. And I mean, they were known for a lot of darkness, a lot of greed, a lot of destruction in our nation and even reverberating around the world. What really convicted me on was like, hey, what would it look like if a bank actually became known for how it loved and serve the marginalized? Know how a bank. Yes, maybe the wealthiest of those are able to afford homes, were able to even have bank accounts, but they took the profits and reinvested it to transform the experience of the marginalized. Maybe those who weren’t customers maybe would never be customers. And I got really expensive. Man, that would be a cool, cool story. Lord, I would actually love to be a part of that. That sounds like something like you would do it. It sounded insane. Crazy. There’s a whole law deal with that. But part of that call did we kind of stepped into this was like kind of like to go into land. I will show you something that sounds exciting. But how how how am I going to take resources and reinvest them in ways to see your kingdom come and love the marginalized? And that’s a tough question to wrestle with an answer. And I talked about that with Aton. I’m sure lots of listeners grapple with that, how to steward these resources. And I mean, I think all of us that are followers of Jesus are going to say, hey, first and foremost, look, if the Lord calls you to something that’s like kind of a do not pass go, don’t you know where to go do that? Thankfully, I think with my background in football, I didn’t have the brains and some of you all do to really deftly kind of evaluate all these different investment options and how we’re going to do these cool ways to just kind of gave me some stuff. And the first thing you gave me was this concept of a charter school. And a woman had written her doctoral thesis on why Christian schools, the only inner city serving the report. Four pages later, I’m going to save you the reading. They run out of money. We run out of money. At some point, they run out of money. Christian schools work really well. The wealthy suburbs where parents have the means to afford them. When they’re serving the poor, they run out of money. But there is a new structure. This is like fifteen years ago. It’s called a public charter and it’s a faith based, not for profit, buys a building, buys real estate, leases it back to a public charter. The faith based not for profit can own the building control. What goes on in that building? Twenty four hours a day. Seven days a week. The return on the investment can be created by the lease with that public charter school, the public charter, to faithfully secular curriculum. If kids want to come in at eight and leave it to no problem, they will do so. However, you can offer faith based wraparound services in that same building that the school occupies before school, after school and on weekends. And I read that thesis and it was like a lightning bolt that went through me. I understood it. I got leverage, I got scale. I understood real estate. I knew that, hey, we’re in the business of financing homes. The first question people ask, what are the schools like with the schools? Like when you bring world class education to a neighborhood, you actually lift the entire neighborhood, you bring all the property values up. And we were Amen, you know, churches these days are kind of starting to understand that like a 20 million dollar building to be used three hours a week, not the greatest use of investment leverage and scale. And so, I mean, why not occupy another space that had a really redemptive purpose to it for the other six days of the week? Right. And so we kind of imagined that we could bring churches in to come and to leverage space for multiple uses, create a return on the real estate investment. So lift the neighborhood, have this wraparound redemptive purpose and provide this incredibly needed service to children in America of education. And so that was the vision. And it was, man, it was big and scary because this is when we were teeny. We had five, ten employees and was one man. But it seems like those are 10 or 20 million. How are we ever for this? Do it so many questions. And so yet, I guess it’s ten years later now we’re opening up our fourth school and today is our first day of school. So we just welcome four hundred new, bright, smiling faces onto our brand new elementary school. It’s kindergarten and first grade on the east side town in the middle of covid. And we are so incredibly blessed because every kid is suffering a little bit with their lives, have changed a little bit, but by far the most impacted or the most marginalized if you’re living at or below the poverty line, covid has devastated a lot of things in your world. About two thirds of our kids in school get their meals at the school, so we serve breakfast and lunch at the school. And for many mothers, the meals they count on every day. And so we’re literally we’re balancing two. We have our kids come in in person and be able to eat or do we risk exposure to this infectious disease. And so we have an incredibly courageous group of teachers and administrators who have an amazing church partner who built a big, beautiful church in there. And yet we welcomed in our kids for the first day of school, a brand new school. We have two others that are up and running already. The new one was today. So we’re thrilled to be in this business and thrilled with God has done it and through it.

Henry Kaestner: That’s amazing. That’s just a beautiful story. By the way. I love the fact that William and I are ascribed to being deft evaluators. I think I’m trusting you, man. I’m. Oh, yeah. Amen. Yes. No, thank you. That’s right. Maybe I should just own it. No, that’s definitely William is one of those one of the things that is really just trying to put myself in the shoes of some listeners right now who are saying, that sounds awesome.

Henry Kaestner: You’re suggesting that I can go ahead and I can take some investment capital and I can do a partnership with a public charter school. I can get a return on my investment by leasing the facility out. I can control some level of the of integration. And with that, I can do some amount of partnership with the local church. Sounds like you do that with local health clinics, et cetera. I don’t know if I have the same and maybe I shouldn’t say that. Same background, same resource.

Maybe they do just want to make it back. And I can assure you of that. That provides some great resources to go do this, no doubt about that. But you couldn’t have a less qualified background. I had there’s no teacher in my history that would have put money on me opening the school.

William Norvell: Well, what I love to I mean, I think this is such a big thing. I don’t think you’ve talked about this in the podcast. Right. I mean, I also hear in your story, I mean, you’ve got this vision, if you will, a long time ago. And one of my favorite quotes, I think it’s a tribute to Bill Gates is always most people overestimate what they can do in a year and underestimate what they can do in ten. And mean when you’re talking about that is investment, that is leverage. That is like watching something grow compounded interest every single day, working on it, making it a little bit better. Of course, I have to talk a bit about football. But, you know, Nick Saban, they don’t strategy is tee shirt for like years when he got there, was outworked yesterday. You know, it was just like to do a little bit better, just do a little bit better. And by that twelfth game, we’re going to not be tired in the fourth quarter. And I hear that it’s like, yeah, I didn’t do this all tomorrow. I didn’t have ten million dollars. When I set out on this journey, I took a step and and ten years later, I couldn’t even imagine what it would be. And it’s bigger than I even thought. And the Holy Spirit.

Henry Kaestner: Yeah. William, I think you hit on that really well with a great quote about overestimating the one year underestimating the ten year walk back through some of the details about how you got started. So I’m listening to this right now. I’m an investor. I’m in Milwaukee. I’m like, oh, my goodness. Of course, that’s a no brainer. It’s education, it’s health care, it’s the church. It’s all those different things. And I think maybe I know some different people to do it. But what was it? You did so some of the particulars, for instance, you know, it’s old big box and old came out, right?

Yes, yes. The real estate first, right?

Casey Crawford: That’s right. I mean, to billions when we start small, we had this big vision, was committed to it, but then started looking sort of survey research like you would in any investment register to understand who are the good operators in the space and how do we want to emulate these folks and could they make the numbers work and what that look like?

And I was blessed to find a model right in my backyard in Charlotte, North Carolina, that was making the numbers work. They were getting no outside investment. They had ninety five percent of kids were minority. Ninety five percent of kids were at or below poverty line. And they were having three hundred percent better academic performance than their demographic peers. And they were doing it at a surplus every year. So that surplus and they were paying down five percent. Note on that facility, too, because they got no investors and they said taken out a loan. And so I kind of looked at them well, and they’re actually if I kind of strip this out without thinking about any appreciation, they’re creating like a six and a half, seven percent cash on cash return right now, serving twelve hundred kids in an incredibly redemptive way. And that’s kind of like that whole picture to me was a great return. When I think about the six and eight percent, I think about the stability, I think about the fact that it’s really underpinned by federal and state dollars ought to do is attract the kids and educate them well is doing something for sure, but that’s a pretty predictable source of income. I like the underline credit. Right. I kind of think and then think about wow.

And now I get to Steward a thousand lives for 12 years and pour into these kids because we educate our kids year round because they need that to catch up. And I get the point of all year for 12 years when we can actually start to change the trajectory of lives. And here’s what gets really exciting to me when I looked at it. This is a big pull to plan. And if we can actually raise the bar with our schools, we can raise the bar for every school because the market chases excellence.

And so there are a hundred and some odd schools in Charlotte. I don’t have to own and build one hundred some odd schools is the kind of tipping point concept. If I build 10 that are having three hundred percent better academic performance than the rest, I believe we now have a platform from which to speak. By the way we build our schools. About a third of the cost of the traditional public schools are built. So we’re already having architects come and go. We you built that house. What, your cost per square foot. What? Because we share a parking lot with a 70 million dollar elementary school. We just opened up our lives. When we’re 70, it’s going to house the same number of kids. And so already we’re starting to affect and impact the way school is done just by setting a new standard of excellence.

So when I look at the capital return, the spiritual return and then the reverberating impact, the leverage that excellence creates in a massive space like education, public education, for me it was just easy, no brainer stuff of where to allocate resources.

Henry Kaestner: So what are you going to do with that from here? What’s it look like? You’ve got a playbook. Are you sharing it with others? Are you going to run?

Oh, gosh, we have zero secrets and we’re learning as we go. So our plan is through ten schools in Charlotte.

We think if and when we do ten, we’re having two or three hundred percent better academic performance than our demographic peers.

We’re doing it, by the way, for only 70 percent of the dollar. So the traditional public schools will get almost twelve thousand bucks per kid. We only get eight. So we’re doing we’re actually saving the state money on every single child we educate and doing it two or three hundred percent higher rate of academic performance, and then we’re making it a sustainable investment. And, you know, we didn’t talk about this much, but we’ve also partnered with our health care providers to carve out pieces of our school to bring health care to serve the urban poor. It is a major problem right now is being a big shift in Medicaid. And so we go, gosh, we already have this space. It doesn’t cost us that much to carve out twelve hundred square feet, 30, 600 square feet and bring world class doctors and physicians into the neighborhood to kids that otherwise have a tough time getting to our first school, it was five miles to the nearest pediatrician. So most of our parents don’t have transportation on public transportation. It was five miles from new the pediatrician and the health care system came and told us that and said, hey, if you provide a space that will staff and we could really use that. The idea was that for 10 years and I guess we saw the opportunity for partnership in these big infrastructures education, health care, affordable housing. When you can work collaboratively with your state and federal governments, with power institutions that be, you can actually create some really synergistic impact. And what we’ve seen, again, with a really nice, stable investment return where it’s sustainable and scalable.

And that was our real hope, Henries, that we could build these redemptive projects in such a way that they could attract major investment capital because we know the is going to allow us to do it. We’ve been able to invest about one hundred million dollars and we’re thrilled with that. And we might be another 50 million this year. We’re thrilled with that.

But this is a massive problem that way outstrips our balance sheet, whatever that might ever look like. And we’re going to need to attract capital to some of these problems. So we kind of our thesis was made if we build these in a way, they can create a four, six, seven percent return in a really collaborative, synergistic way. We can attract some major institutional capital that might just like the return. I mean, you go by CBS for a lower cap rate than that. So we go, hey, if we can do this and have major, major impact, it’s a scaled amplify lever that we can pull in the marketplace.

William Norvell: So it’s super compelling. What do you think are the barriers to seeing this scale? At one point, I guess you get to 10 schools and then maybe does the governor said there are charter networks out there that have gone pretty fast.

Casey Crawford: Like one hundred know there’s some great ones out in Texas that go like one hundred two hundred maybe. And that’s great. So we’re that’s what we’re on track to do.

William Norvell: I’ve done that with the faith integration, though. Have they done that with their partnership with health care?

Casey Crawford: No. But you know what? They’ve blazed the trail, right?

Like there was no one that had done one hundred networks when they started. So that was kind of their battle. How do we scale this to one hundred? Two hundred? And they’ve given us a roadmap for how to go do that with kind of scaling of the leadership. So now we’re just adding a few elements, right? We’re adding it. I mean, I would say they’re really critical because the faith can be a critical and integral one. But we John Machel’s right in our leadership curriculum for our kids right now. So we’re going to have like kind of Maxwells sort of five leadership academies where kids are going to get all his stuff growing up for 12 years in our life. And we’re teaching the kind of values we have an after school program that we kind of developed with the faith centered after school program that’s against totally voluntary. No one has to be leveraging the faith based programs they don’t want to. And then the integration with the different health providers is stuff that we’re learning as we go. We stole that idea from Ben Novarro down in South Carolina who worked with a South Carolina hospital system to bring health care in his school. So, yeah, we’re trying to add kind of our own contributions to the movement as we move along.

William Norvell: He’s one of the things I’m struck by when I hear your story. As you mentioned, Charlotte, that’s where your company is. Obviously, your your company has employees other places as well. But that’s kind of your hub. And you explain in your story, right, of God working three, working out with a buddy and convicting you of something else that sort of sponsors and moves into something else. And I’ve heard you tell stories before and you’re so good at it. That’s why we love having you on God’s giving you that gift. I’m really interested in how you encourage people in investing specifically to think through their story. Right. What God has put in front of them, because I think it can be overwhelming sometimes you can listen to a podcast.

Yes, I need to integrate my faith of my investing. Like, what does that mean, sell all my stocks? Like, put it into something good, take it out. I realize I mean, you’ve mentioned two or three huge concepts. Right. But like, they’re unique to you. And that’s exciting to me that I don’t think that story gets told a ton is it doesn’t happen. And it’s great to piggyback on other things sometimes. Yeah. But other times for you, like.

Casey Crawford: Yeah, right. Right. I am. We do. And I do love to piggyback and love to amplify. The great work that I feel like I’ve got is others too. We’re getting to do a little bit more of that now, which is amazing. I’ll tell you, a part of our story is fascinating. And again, I didn’t grow up doing that a whole lot, afraid of what or whatever, didn’t spend a lot of time fast and growing up. But man, the Lord Rusty in season right now, a company like everyone, a mentor said, hey, man, I’d love for you all to join the other Muslims fast and pray together because they were in such a season right now of it’s kind of overwhelming. Let’s make more business than we could imagine because the federal government is using the mortgage industry to subsidize credit across the United States. So every mortgage companies just have a. They can imagine a stimulus that appropriate for like is this really bad history of God’s people when they received their blessing giving it. And so we fast and pray. And I would say you even the to start the company was a time of fasting and praying and then in working and thinking about how am I supposed to reinvest redemptive Lee and, you know, kind of understand what this look like, redemptive banquets that mean to look like and may God has been faithful every time to kind of bring the right and next project to us. And I know that’s not everybody’s story. And I hope it’s not a frustrating answer for some folks. I can hear folks going, I’ve certainly been a great man. God didn’t drop in front of me. This answer the first I say, I mean, just being honest with yourself, did you really spend some time fasting prayer over it and really seeking in that that he would like? Because I’ve certainly sometimes gotten frustrated while Lord, you direct me and then good friends that love me would convict me that process again. So I’d really move fast and pray over your investments the way you would over any other decision that you’re really wrestling with in life, because I think it’s precious. That resource that he’s entrusted us with is so precious and there’s so much potential wrapped in those resources. I don’t think his believers were called to invest like the rest of the world.

And we really, I think, better be thinking about that maximum Kingdome impact that that treasure is going to have is maybe sometimes that an alpha return or whatever, but great. But it’s so that I can take that return and do something internal with it. Right. It’s always got to have some kind of internal purpose to the investment. So, yeah, that’s always been our hard that’s been our story and it’s kind of God’s to test me in this game. It’s not the type concept, but like I would just say testing and test and testing this really cecum bass, Craig and Resler beg him to show you what to do next. And then if he let you down, email case you your movement dotcom and I’ll I’ll go talk to him.

Henry Kaestner: Yeah. Yeah. So this has been awesome. A whole bunch of different things and a whole bunch of different things I want to talk about next time. I think we’ve already established fact there’s an opportunity to talk about your story as an athlete and how this all works in as well with this new property we’ve got. But we need that next time. And just grateful for your partnership. One thing that we always like to do in cash, I’m still on something from Williams script, so I’m going to hand it actually right back to William. William, what’s the one thing we want to ask of all of our guests?

William Norvell: I’m going to say that’s all I get guaranteed to me. I can’t believe you’re going to steal my heart. Do that. You can’t do that. Like, say, hey, we’re going to send the kicker out. But sorry, but this time we’re going to let the quarterback take that one, too. He just he’s been warming up. He looked good in warmups. We’re going to let him take this. It’s just an extra point. It’s just an extra point. You know, what’s the point we love and you just fasting and pray.

Gosh, really love you pointing us back to that. And I love your urge to gently. Have you really done it? You know, but with that, what we do love to close with, we love to watch exactly what you’re talking about in weird ways, how our guest and our listeners get linked together through the word of God. It’s amazing when we hear the stories of, wow, I just really needed that word from the Lord. And while your other words were fantastic and we want to hear what God may be doing through your life, through his word right now, that could be the season. It could be today, it could be months, maybe something you’ve been meditating on or something God divinely gives you right now in the scripture to tell our listeners, well, I’ll go.

Casey Crawford: Just two hours ago, we had our mentoring phone call and there’s a number of us that are kind of taking Mondays to fast and bread. And Steven failed that test. Will also I mentioned to is leading us through. OK, so we were Daniel for like, it’s never gonna happen his dream. And he’s asking Daniel, what does this dream mean?

And Daniel’s basically down payment. You’re full of pride. You take in all God’s glory. And he is about to humble you, buddy, in a big way and never assume here will not doesn’t have ears to hear.

He’s being told like humble yourself doesn’t have to hear. He’s going to keep taking guts. Glory. That was today of Suku processing that with community. And we talk about the mentoring group and the importance of the community in the workplace, a crisis in our community and how God uses that. And so I’ll share with the guys today that my first ever play in the NFL first ever play.

Maybe we’ll touch this the next with him first ever play kick off the ball game on kickoff return on the way, if you remember the way only do to allow you to do this anymore, just like human cannon fodder. I just run back and throw yourself into the other day.

Sorry, I’m on the wedge and I’m running up to protect our ball carrier and I just smash into this like human fire hydrant.

And when I hit them like everything’s black for a minute and I kind of woke up and shook my hands and like, instinctively grabbed his shoulder pads and ran, ran, ran and whistle goes, that’s all kind of off me.

And I mean, I was, you know, when you were playing, I was on I looked down on my shirt and a white jersey and he’s just covered just a big red bloody mess all over my jersey.

And now, mind you, he had just about knocked. Me out, turns out here broken my nose, not both snaps off of my chin strap first. I was so arrogant football player I shoved him looking at you bleeding all over me.

William Norvell: He says those exact words, the arrogance piece of that sorry.

Casey Crawford: I guess that is one area where I leave and now I run to the sidelines, of course.

And the train, which he’s made your nose broken. You’re an asshole to me, man. Sometimes in life don’t we just need a community to look at us and tell us how you got a problem?

Hey, you never, never needed it. You couldn’t hear it from there. My dad was like, Anchorman, you got a problem. It’s all over. We all see it bleed all over you.

You’re full of pride, you feel, and God would stop it. And then the beauty of a crisis to me in the workplace, I think, is that we have those other brothers and sisters that can come around us like let and know we got a mess. I right. We’ll take care of and clean up. And that’s been the greatest gift I’m sitting in. I was almost in tears looking like 40. My teammates were just coming alongside the fast and the crying to see the Lord encourage each other and challenge each other and make sure that we are being humble and given God all the way.

That is his and his alone only he deserves that. None of us rob from that. And I need that in my life. And I think what God really revealed to me is just the power of that in the workplace.

Man, when we can have brothers and sisters in Christ, the workplace is weird and 40, 50, 60 hours a week with and they’re point things like that. That is an incredible, incredible gift.

Henry Kaestner: Indeed. Indeed, it’s a great word always says Casey Yurok, thank you for being our friend and our partner in the overall mission and really going to be fascinating to follow what you do over the next year. I think that you are an exception maybe to what Bill Gates has said. I think that you’ll be able to get those things done. And if there’s anything we do to help you to get that and then have you back on the show, if you have, God might use you to not only transform the mortgage industry as he’s done through you, as you’re intentional about giving him the glory, if he might use you.

And some of those that I know that are friends and partners with you on the real estate side to do the same thing with real estate investing in education investing, that’d be an amazing, amazing thing. So continue to want to watch your story. Grateful for you. Thank you, brother.

Casey Crawford: I love you guys. Honored to be on here. Man, it is so much fun. Just walk this out with you guys. So glad we got connected.

Henry Kaestner: Thank you so much for joining us on today’s show. We’re very, very grateful for the opportunity to serve the larger faith driven investor community. Hey, the best way for you to stay connected is to sign up for our monthly newsletter at faith driven investor Doug. And while you’re there, we, of course, want to hear from you. We derive great joy from interacting with many of you. And it’s been very rewarding to see people join the discussion now from all around the world. But it’s also very important to us that you feel like this is your show and that you’ll help make it something that best equips you on your journey, one that you’re proud of and one that you’ll share with others.

This podcast, it wouldn’t be possible without the help from many of our friends. Executive producer Justin Forman, program director Johnny Will’s music by Carl. Well, you can see and hear more of his work at Summer Drugstore.com and Audio and editing by Richard Bahle of Cornerstone Church in San Francisco.

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One of the things we love about the Faith Driven Investor movement is that it isn’t limited to just one corner of the globe, rather there are faithful men and women all around the world letting their faith guide their investing. 

One of those people is Sid Mofya. Sid helps steward the Draper Venture Network, a global alliance of over 20 independent venture capital firms investing in outstanding entrepreneurs across the globe. 

Their team is the coordination hub for the collaboration between the funds and provides post-investment support to a portfolio of over 800 companies. His insight on investing is Africa is one you won’t want to miss.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

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Henry Kaestner: Welcome back to the Faith Driven investor podcast. We’ve got a special guest with us today, Sid Mofya. Sid, am I anywhere close to the pronunciation of your last name?

Sid Mofya: You’re as good as it gets.

Henry Kaestner: Which means not exactly. Didn’t completely get it. But I met Sid through a friend, maybe nine or 10 months ago and connected with him. And if I’m honest, I didn’t know much about the country that he hails from Zambia. I surely had never heard of the Zambian kwacha, which is their unit of currency. But it seems that since I met Sid everybody I meet and that’s an exaggeration, of course, has something to do with Zambia. And so we’re actually getting ready to make our first of investment out of our family to Zambia. I’ve been meeting people in ministry in Zambia and now I can point it out on a map, and I’m very proud of myself for that. But Sid one of the things we’re trying to do in getting the background of every one of our guests is to understand where they hail from, what formed them. And we’ve got a unique opportunity with you before we get into what you’re doing at Draper to understand this country of Zambia. What’s unique about it?

Sid Mofya: Great question. It’s great to be here. Thank you so much. So I was born in Zambia in the late 70s. And I say the time because it’s about 20 years after Zambia had been independent from the British and after the British had been basically ruling Zambia for, I guess, close to hundred years, depending where you come from. So I was growing up in effectively post-colonial Zambia. So I grew up in a small town, which was a mining town. We mined copper and that’s the main product that comes out of Zambia and that’s the mainstay of the Zambian economy. My parents both worked for the mining company there. I went to the mine school and my whole schooling in Zambia was through the schools that were put on by the mines to train more Zambians to come and work for the mines. So that, for me, meant I got a better education than the regular person who went to a government school because that those schools were well resourced. So I grew up speaking both English and my local language, and I think in both languages. I’m one of four children. I’m the oldest of four. And all my brothers and sisters also went through that whole school system in terms of how we grew up. I guess our parents were, I would say, middle class. So they had decent jobs. They lived in a decent neighborhood. But Zambia is a poor country. It’s at least in living memory has always been a poor country. Lots of infrastructure gaps that need to be filled.

And when I was a kid, I felt that because there was I think when I was about 10 and I didn’t know this is what was happening, but the government had defaulted on some big debt. No, you don’t do that. And there was a time when everybody around us. My friend’s parents were losing their jobs. And my biggest fear was that my parents would lose their jobs and then we would have to move from our house and go live somewhere else. It didn’t happen, thankfully, but I remember that time being a very difficult time for just getting the basics like sugar and salt and so on and having to line up the big, long lines to try to get those basics. And then we kind of got out of that. And since then, it’s been a period of growth for the country. There’s still a lot of gaps to fill, but there has been a tremendous amount of growth in the last thirty years. And if you go to Zambia now, it looks a different place to what you’d have seen in, say, the 80s.

So that’s kind of where I grew up up until college age and then I left Zambia and went to the UK again. I was privileged to have a scholarship from the mining company to go and study in the UK, went and studied chemical engineering. And the goal was for me to come back and work for the mining company. But while I was in the UK, the mining company was actually sold to a different owner. And the new owners did not want anything to do with the people that they are paid for to study. So I got a free pass to then go to a lot of different things, which I’ve been doing since.

Henry Kaestner: So you could’ve been working in the mines now?

Sid Mofya: Absolutely. Yeah, that was my destiny.

Henry Kaestner: More proof that God loves you. I know. Presumably there are lots of great careers in the mines, but the mines losses clearly are…I want to get back to Africa here in a bit because that’s been much of what you and I have talked about in the past. But fast forward, if you will. What do you do right now? Tell us about the Draper venture network, because actually that doesn’t have a lot to do with Africa necessarily. But once you explain what you do right now for your day job and then let’s let’s talk more about that and let’s talk more about Africa.

Sid Mofya: So I work for an organization called the Draper Venture Network. It’s a pretty unique organization in the venture capital ecosystem, because what we are is an alliance of different firms around the world that are all investing in early stage technology companies. So we have currently I think it’s 20 for now. We brought on some new funds, funds that are investing all the way from seed stage through late stage venture capital. They all have their own investment thesis.

They invest independently, but they are part of an alliance that looks, I guess, similar to the airline alliances where, you know, sensitive times we talk about airlines, but, you know, the airline alliances, those shared codes, they’ll share assets, but they are still independent companies. They have their own key now and we’re similar. So I work for the team that’s based in Silicon Valley that basically coordinates collaboration between all these different funds.

Henry Kaestner: And so there are advantages of some of these small firms getting together and some of medium size. But in terms of technical expertize or relationships or deal flow, it tell us more about what it advantage is when you’re part of that larger network.

Sid Mofya: Yeah. So the big reason that smaller funds, for example, would join is because the bigger funds and the whole network as a whole provides them a stronger connectivity to the centers that they want to be connected to. So, for example, as part of my job, I spend quite a bit of time in Silicon Valley talking to large corporations that either are native to Silicon Valley or have set up operations in Silicon Valley with the goal of working closer with the technology ecosystem. So they have people whose job it is to go find companies to invest in or do pilots with so they can learn more about where are the next threats coming from. So I build relationships with these folks and then these relationships become our network relationships. So a small fund in, say, Chile doesn’t need to do that because the network has those relationships and because the network has a big critical mass of relationships we had where attractive to the corporations for wanting to work with us, because when they’re looking for solutions, they can come to an organization like us that has thousands of companies that we’re invested in globally.

Henry Kaestner: So you’re working with, say, a venture fund that’s in Chile. And they’ve found brilliant young entrepreneur who’s invest in storage devices. But because they’re in Chile and while there’s a lot of great commerce going on in Santiago, it’s not Silicon Valley. They call you and say, we’ve got this new investment and they could benefit from getting some counsel. They could benefit from having maybe some supplier relationships. And then you go to work for them.

Sid Mofya: Yes, absolutely. So we would plug the entrepreneur into our portal, which has all the information that we have access to. So it shows them all the people that we know that we can connect them to. It shows them resources that we negotiated on behalf of our entrepreneurs for them to be able to get no preferential prices on some of the things that they need for their business. And it gives them a way to connect with other entrepreneurs in our network. And the fund or the company can call us at any time and say, hey, I’m looking for a connection at company X. Do you know anybody? Can you help to connect us? And we do that.

Henry Kaestner: Got it. Do you ever share deal flow? You know, when I think about running a venture fund, the most important thing for somebody running to fund isn’t fund raising, is not negotiating the deal. It’s not LP. All those things are important. The most important thing is really getting deal flow. If you can get great deal flow, all the other things seem to happen. Do you ever have some of your member funds who say, gosh, I got this interesting article or came across this and it’s not really in our space, but maybe somebody else in the network has some expertize here?

Sid Mofya: Yeah, absolutely. We do that quite a lot actually, and we do syndications among the network members. So there are two types of sharing deal flow. This is not a fit for me, but it could be a good fit for somebody else to share that deal. Or this is a fit for me. But I really want to bring on other network funds to invest with. And we do both of those with the kind of co investing. Sometimes it’s limited by geography because our funds, each of our funds, has a geographic footprint. And so it depends on the company. And, you know, whether, you know, if it’s a Singapore company, which you may or may not be interested unless that companies may be doing business in Chile. So there’s all these combinations and sometimes, you know, lightning strikes and we get more funds investing together.

Henry Kaestner: OK. So I want to go back to Africa. But before I do that, I know you well enough to know that you’re really motivated by your Christian faith. And clearly that has applications in some of the things that we’ve talked about in Africa. But how do you see your faith manifests itself in the work that you do right now at Draper?

Sid Mofya: Good question. I think for me, it’s. More how I do my work. My approach to my work.

Henry Kaestner: Tell me more about that. What does that mean?

Sid Mofya: I think for me it means I wanted to do well by people. So the people that I work with, I’ll make promises that I keep. Yeah, I will try to do my best. Yeah. Basically trying to be a good person. And I’m not sure I don’t do it all the time, but that’s my goal. I really kind of go into relationships with trust. Trusting the other person to hold their end of the bargain. And sometimes that doesn’t pay off. But I think I’m naive like that.

Henry Kaestner: So you’re in a space you’re in Silicon Valley where I characterize this particular geography as having a God complex. There’s this famous scene, by the way, for our listeners from the movie Malice, where Alec Baldwin talks about this God complex, your back on vid clips or YouTube, and you’ll find out. But when firms out here are working on things like Khalikov, the initiative to end longevity or we’re talking about sending people to Mars or we’re talking about hyper loops or all these different things, or quantum computing, you know, just amazing the strides that are being made in technology, those that are in it can almost get a God complex, especially entering longevity. This last final frontier between us in immortality. Do you get that feeling that Silicon Valley is a godless economy or do you get a sense that God is at work and are you hopeful? Tell me about your experiences, as a Christ-follower and investor in this kind of larger ecosystem?

Sid Mofya: I think God’s at work, even in people that do not profess God. You know, anybody who sets out to try and find an all time cure for cancer, in my mind is doing God’s work. Whether they say I am doing this because God told me to do it or I am doing it because I want people to be healed of cancer or even if they say I’m doing it because I want to make a lot of money. I believe God is at work in all of that because I think God is so brilliant and works in all those situations.

Henry Kaestner: I spent a lot of time thinking about it and I found another guy that’s living out here and trying to process it. You know, I think that’s actually a really interesting take. I go on runs in the morning and increasingly I’ve been listening to books on audible, on articles and things like that. But right now I’m reading or listening to the book. The Future Is Faster Than You Think. By Peter Diamandis. And he’s got a coauthor whose name I can’t think of right now. But he also wrote Bold in Abundance. And Reading and Listen to these things gives me the sense of just the amazing work that is being done. And a lot of times people aren’t giving credit to the author of all these things and seeing how God is at work in this technology. And I get a lot of sense of that in Peter, his work in particularly as we talked about how he spends a lot of time talking about Chalco. One of the things that I was really interested in that got me on a run yesterday was talking about in 1844 when Samuel Morse invented the Telegraph. And the first words that were broadcast over the telegraph wire were, what hath God wrought?

Which does speak to this concept that you’re talking about, of course, which is God using us to accomplish his work for his aims. And as you have this broader sense of where he’s working and what is the meaning of all these things, I think that the scientists out here are increasingly saying, you know, everything can’t be explained by science. Actually, the more complex things get, they actually speak to something greater than just a finished. Kind of like walking out of the ocean. There’s something more at play here. And what is it about the human brain that is uniquely human? And how did it happen? So I’m getting my sense when I’m talking to folks that they’re starting, even though they’re actually answering all these questions and kind of confronting these final frontiers. They’re also, at the same time, more open to faith. And there have been and that’s why you see these emergence of faith driven employee resource groups, which, by and large, if from Apple, didn’t really exist out here until two or three years ago. But now you’re going to Google. You got them a Facebook, you got them a salesforce and Intuit. I understand that they’re doing praise and worship music in the Dropbox lunchrooms on Fridays. So I’m hopeful, as you are at seeing God work through all of these things. And I think that more and more people are trying to understand how is he working and investigating the faith in it, maybe for the first time in a long time. People in Silicon Valley, as they’re inventing or understand, they’re really co creating and are open to what does it all mean? So, okay, let’s get back to Africa. You and I connected over Africa with this heart towards faith driven investing. What does it look like when we as investors might understand we can participate in the work that God is doing in the world, bringing about his kingdom on earth as it is in heaven? Some of those things that we’re seeing maybe in so many technologies. But how does that work in a continent that is going to count for more job creation and growth than any other place in the world, more than India and China combined over the next 20 years? My hope is that as the listeners podcast will say, gosh, you know, Africa seems like it’s very far away. It is. And yet there’s so much hope and so much potential and our sense that I got from some of conversations before that. You also have a hopeful expectancy of what is it look like to invest in a ecosystem and entrepreneurial ecosystem providing capital, but also hope through a hope in jesus. Talk to me a little bit about that. And how much of you is still in Africa and how much of your hope and your spirit is still there and what are your hopes for the continent?

Sid Mofya: Well, what a big question. A lot of me is still in Africa and I still do quite a bit of work with folks that are working in Africa, mostly from a distance that I work with an organization called Lions Africa, whose main task is to bring exposure to ways to give investors exposure to African entrepreneurs for them to see what’s happening. So they host an Africa wide competition which results in 30 finalists, and then a big conference to have those finalists present and then choose five winners and then bring those five winners to Silicon Valley to basically go tour everything. Google, Dropbox, they come to our Draper offices and they get exposure to how entrepreneurs in Silicon Valley are working and those entrepreneurs get mentorship. So that’s kind of one way of connecting the ecosystems.

I also work with a venture fund called CRC Venture Capital. So I’m an investor and an advisor to the fund. And CRT in venture capital is one of the leading lights as far as early stage investing in Africa goes. So they invest very early stage seed stage and series A companies and some of the tech successes to come out of Africa. Companies like Andela, you might have heard about who are training young great Africans to be developers for large Fortune 500 conglomerates, but still based in Africa and every, you know, a lot of money. And I think they’ve given the Proofpoint that there’s potential for building companies in Africa that can compete at a global level by tapping into the African human capacity. Another company that Sciarra invested in is a company called CPS in South Africa who are similar to Thumbtack, but specifically for domestic work. So it’s connecting homes to domestic workforce and they’ve created 15000 jobs with that company. So, you know, things like that give me hope that, you know, entrepreneurs who apply themselves and work with others, they can do pretty remarkable things. I also work with a fund in Zambia called the Kaleena Education. And this one is a play on microfinance. So the question is, can we use microfinance to fund education and have like an insurance kind of a product which helps families manage their cash flow so that typically in Zambia and many other African countries, school fees are paid on a three monthly or semiannual basis. And typically, for most households, they’re living hand to mouth.

But they. So even when they have enough cash overall to pay for the school fees, the cash doesn’t flow at the right time. And this creates an insurance like product so they can manage their cash flow and pay for the school fees for their children without having to worry about it. So that’s an experiment to see if something like this could work. And I know the entrepreneur is doing that, actually went to school with him and is a brilliant entrepreneur. So I have a lot of hope. I guess the flip side of that is I have hope in the human capital that’s available in Africa. And you alluded to that this is where most of the jobs in the world are going to come from. The flip side of it is that the infrastructure lags everything from, you know, just roads and health care, infrastructure, financial infrastructure, even, you know, to support all these businesses.

That’s lagging. And that’s where I think connecting capital that can help develop that is really key. And I think for investors that are thinking about Africa, I think that’s an interesting place to be investing in. I would say if you’re looking at investing in the continent as a small to medium size investor, move towards infrastructure, you know, build factories. Because when you build a factory, factory means roads. Factory means power systems. Factory means the water systems being built around that. And that builds an ecosystem around them. But not only that, it also builds the capacity for value creation to remain in the country instead of going outside. You know, typically for the African countries that are creating raw materials that they export. We capture, I think, 10 percent as generous of the value generated by that industry. You know, for example, the chocolate industry is 100 billion.

And I think the African countries that export cocoa don’t make five billion from the exports. So there’s a ton of value that’s simply being exported. But an investor who brings that value creation and keeps it in the country. That’s huge things for the economies. I think I kind of went on a wondering.

Henry Kaestner: Well, not at all. And I have no idea what question I ask, but I really like where you’re going. Because when we think about when you get to experience with this, of course, by being associate with the mining industry in a country where mining has been a big deal. Mines have traditionally been thought of as exploitative. And with this new wave of investment, it is interesting to think about, well, what is a redemptive lens for the guys from Praxis that I’m such a big fans of? Talk about a redemptive lens to investing. What’s a redemptive lens toward putting an investment capital to work? And your suggestion here is that something as basic as factories. So a lot of us in Africa that are thinking about being serious about investments, think about this whole concept of leapfrogging, leapfrogging over the traditional telecom infrastructure into mobile and thinking about how Safaricom got started in mobile payments and things like that. And yet you’re suggesting something that I don’t think a lot of us have thought about, which is, yes, there’s probably opportunity jump for 100 years and think about software as a service and how the digitization of the economy is going to matter in places like Africa. But let’s not lose sight of the fact that we need to have roads and electricity in a way to think through redemptive investing is something as basic as a factory that spins out chocolate bars that are fully wrapped and branded and put in a case and then delivered right to the market in London or New Yorker or San Francisco. And so I hadn’t thought a lot about that. I think that that’s super interesting.

Sid Mofya: Yeah. And the other thing that that does for an economy is bring control in the economy. So right now, a lot of the African countries, you know, they go where the wind goes and there’s very little control in determining. So what do we do with our resources? So what tends to speak is the money. So the money says, oh, you should just keep digging and keep digging. But if we have agency, then we would say, no, we’re not going to dig some more. We need to preserve this for our children. But right now, there’s not a lot of agency, but something like that brings a lot of agency, which in turn, you know, circles back to governance and all that, all those good things that. We weren’t on the continent.

Henry Kaestner: So a lot of people, when they think about investing in Africa, they think about South Africa or they think about some places in maybe North Africa. My heart’s been drawn to East Africa and South East Africa or Zambia’s. And I love for you to comment just a bit about what that region looks like. I see each of those different countries having its own type of economy, own type of system. There seem to be some things that have worked well in Kenya. I wouldn’t say it’s the be all and end all. And yet some things seem to work there and other things don’t work in other places. In Rwanda, of course, they had a genocide and yet there seems to be some stability coming out of that. Was it that makes different countries work or not work in Africa? And if we’re thinking about the larger geopolitical context, what needs to happen in order for there to be joint progress?

Sid Mofya: I guess there’s several things that immediately come to mind. And I just mentioned them now so that I remember to come back to them. One is leadership. One is geographical integration. And the third is probably education from a leadership point of view. It’s pretty clear that countries that have had strong leadership towards growing economically and Rwanda is a good example. Kenya is actually a good example as well. They have grown leaps and bounds because they’ve strengthened governance. Then when the government is strengthened, I think the human capacity is amazing. Amazingly resilient entrepreneurs, they work hard after they’ve been living in the UK and they returned to Africa. We were living in Tanzania. I would go to the big open air market and I would just go speak with people because I just wanted to know, you know, what’s the entrepreneur locally about? What do they think about what are they concerned about? And I’d go to the open air market at this point. I’d learned enough Swahili that I could pass as a local person and I’d go speak, just ask questions. What do you do? How long have you been doing it? And it quickly became apparent I had gone with that initially with a little bit of a savior complex. You know, I’ve learned lots of things that I’m going to come and work with entrepreneurs and teach them.

And I quickly learned. There is very little teaching you can do with somebody who actually understands the lay of the land that are playing in very, very well. And I quickly learned, well, I don’t have a lot to teach. There may be some things that, you know, I could help with, but not a lot. You’re smart, you’re driven and you work so hard.

There’s really no big difference between you and an entrepreneur elsewhere that I’ve seen in other places that I’ve lived, except you’re working with different cards that you’ve been dealt. And part of that is governance, which allows the entrepreneur to then be able to raise capital and know that, you know, they’ll be able to pay that capital back. And the financial infrastructure allows them to basically operate a business. But that is lacking. And in countries where that has been built, Rwanda has done a lot. And, you know, you can argue about whether or not Kaigama style is good or bad. I think net net, it’s good because basically it drives the economy to a goal. He has a goal and he drives great grades towards it and he unites previously fighting parties towards that goal.

So that’s governance. The second thing was geographical integration. And so each of the African countries are generally small countries, small economies. So Zambia. Twelve million people. Zimbabwe, about the same. Tanzania is bigger, 45 million people. Kenya, I think, is about 30 million. So they are reasonably small economies. So, you know, GDP per capita across the sub-Saharan subcontinent is about fifteen hundred dollars a year. So there are small, small economies. And what tends to happen is. There’s a lot of trade happening within the country, but not a lot of cross-border trade, even between Zambian, say, Tanzania, which has no good road connection.

There is some, but not a lot, you know, compared to other economies like Europe, at least before Brexit, but probably still even now. But, you know, I think it’s something like 70 percent of GDP that comes from cross country trade. In Europe vs. 10 percent, I’m not sure of the number, but it’s really, really low in sub-Saharan Africa. So there’s a big opportunity there with just the countries working together or folks creating companies that are geography agnostic and can work across different borders. An example of a company like that is one that CRC actually invested in called Floods Away and Fuddle Wave is an integrator.

So they’re a glue. So if you’re a developer in Kenya, you can have somebody in Kazakhstan paid by connecting their payment system to your payment system in Kenya. So they basically pull up all these different payment systems and create a glue which allows all that all those transactions to happen. So the more we can see companies like that and the more we can have the geographical integration between the countries to allow freer movement of goods and services across the borders. And that’s going to be huge.

Henry Kaestner: So you mentioned something there that I want to campaign on a little is the savior complex. Many of our listeners are familiar with a book that Brian Fikkert wrote. That’s called When Helping Hurts. I think a corollary to that might be when investing hurts. You’re an investor in Africa. And Dallah, you’ve come across a lot of folks in America that would like to invest in Africa, too. What are some of the mistakes that are made there? And what counsel would you give to a faith driven investor that might be listeners podcast who wants to get involved in Africa?

Sid Mofya: I think some of the mistakes are thinking that Africa, or at least the economics in Africa are the same as the economics they understand so well in the economy that they work in.

Henry Kaestner: Give me some examples of that. Like somebody comes in from America and just assumes that it must work like this, but in Africa actually works different. Can you think of any examples?

Sid Mofya: So say you have, let’s say, a factory that’s not performing well. And you have 4000 employees at that factory. And efficiency is not that high. You know, in the 40 percent efficiency, capital efficiency or operational efficiency. And you can see as an investor that just cutting the workforce in half will. Improve efficiency to the point where the company will be solvent.

And that might work elsewhere. I mean, I think it’s tough even in Western economies to do that. But it’s tougher, even more so in Africa, especially if you factor in the fact that most people in Africa are not formally employed. Most people are running their own businesses. So if you have a factory that employs 4000 people, you’re probably accounting for eight to ten thousand entrepreneurs that are working with that factory, their suppliers to that family, their contractors and so on. And each of those employees that you have is accounting for another 10 people in their household. So the decision is a bit more complex than just saying will improve efficiency by reducing our workforce by two thousand or by half or whatever. So I think trying to get to the root of the complexity of the decision making would be helpful. And that takes time and spending time with local people to really, really understand what is going on. The other confounding factor with those kinds of decisions is as Africans and I’m speaking as an African, we have incredible resilience and incredible flexibility.

And I also have to say, quite honestly, a lot of the times we don’t feel we have agency in a decision that is being made. And so if the investor says, well, this is what we have to do, they may not get the feedback. If they don’t dig deep enough, that tells them you’ve missed some major factor for your decision and I think your decision is wrong. So decision making, I would say, you know, have a good number of Africans and a good number of Africans that are willing to tell you the truth. And part of that is with time and training and with communication, they become comfortable doing that because sometimes the risk of telling the truth is so high that it’s like, OK, now that’s the decision.

Henry Kaestner: So I’ve seen that I went to a seminar that we did on Faith Driven Entrepreneur ship and future of universities. Two days in the Fairview Hotel in Nairobi is awesome if you ever do a conference, by the way. And we had a number of Africans that were there, but we also had a number of folks from America and Europe. And for maybe the first day or so, the conversation was erroneously focused on the Westerners who had different ideas trying to figure out how to deploy capital. And it wasn’t embarrassingly until the beginning part of the second day, we said, hey, let’s actually check in here. We’ve been involving Africans in the conversations, but we had thought that some of their silence on different things meant that they thought the ideas were good. And it wasn’t till I said, listen, before we go any further, let’s make absolutely sure. And then we were also present. He said, actually, there’s three other ideas that you may have thought we thought were good are actually terrible and horrible, and here’s why. But we had to really work on extracting that. Whereas a Westerner might otherwise, you know, just take by the fact that people are nodding their heads as they must. And so I’ve experienced that. So I want to ask you about this other dynamic that you talk about and just wonder if there’s an inherent conflict in that which is so you have a factory that’s not performing well in the West. We might go ahead and say, how do we think about streamlining this? How do we get more efficiency? How do we work in more automation in that the end result of if that implementation is done well is more efficient. Deployment of capital mean more innovation, more creativity, maybe more market validation in the economic divide which goes on. If in Africa. So much of the informal economy is there’s more than just the two thousand players in the factory. There’s all these other people. How does a factory owner in then in this type of conversation with investor? How does an investor in their factory acknowledge the informal work force and engage them, enfranchise them more earlier on? Because maybe there is a special thing there to harness that maybe make an advantage, because otherwise, if you say, well, you can’t lay off some people, you can’t find efficiencies in their factory, then theoretically then African factories won’t compete on the world stage because they’re never made more efficient. So you must have to you know, can you do a jujitsu move with that whole thing that you think would be this elephant on your back of all this informal workforce? Can you turn that into an asset?

Sid Mofya: That’s a great question. And I think one that companies are trying to grapple with. I think that’s the way forward. I don’t know the answer. And I’m certainly not saying we cannot look for efficiencies and find efficiencies. I think we have to. I think what I’m saying is the answer might be different, too. Hey, I’ve seen the numbers for the workforce efficiency, so let’s go there.

Henry Kaestner: OK, so I want to stop here in light of the most recent conversation and say I’ve been asking a lot of the questions so far. Hopefully you’ve gotten to know me well enough to know that I really actually do have a desire that I think that guy is put in to be involved in the African continent. But there’s a very good question, just like at the Fairview Hotel, that I’m asking the wrong questions. Where I’m thinking about the wrong way. So let me stop. What are the right questions. How should we be thinking about it? What might I have missed? What might our listeners have missed?

Sid Mofya: Yeah, I think. Your willingness to engage with some of the difficult, intractable questions that we haven’t found answers with. That’s probably what we need more investors to be doing. Just an ability to just slow down and say, well, is there more that I’m not seeing here? You know, as you’re making your investments in Africa, I think that’s a great approach. Is there more that I’m not seeing? Because it tends to be more that we’re not seeing.

Henry Kaestner: Thank you. OK. What in your quiet time or your devotions? Time reading God’s word. What are you feeling that God is speaking to you about now? And it could be in a Bible. So you’ve done recently. Maybe it’s in your time with the Bible this morning and maybe last week. What are you getting a sense that God is talking to you about right now?

Sid Mofya: Now, I think for me, the biggest thing right now is. Time and the battling of time. So our daughter was born a month ago. And that brings a very sharp focus on time and attention. One of my focus in my time on I tend to be the kind of person that wants to do everything.

And I can’t I focus on the very few important things and for a time, you know, I just finished my paternity leave and that month just went by so quickly and could easily have been six months on paternity leave. But really just valuing those moments and that time with her and with my family, there’s nothing more important.

Henry Kaestner: Hmm. Thank you Sid it’s been great being with you. Thank you for your time. Thank you for your investment in our relationship. As we try to wade into that awesome content. Thank you for introducing me to the country of Zambia. And God bless you and looking for your next conversation.

Sid Mofya: Thank you for having me. Great to chat with you.

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Did you know that 37% of all Americans live in apartments and other multi-family units? And they’re over 96% occupied? 

What used to be a form of transitional housing has become the centers of communities where marriages start and kids are raised. Multi-Family Real Estate investing is continuing to be a dynamic place for Faith Driven Investors, and we want to make sure you’re aware of this trend. 

To do so, we’re talking today with David Snyder of Continental Realty Group and Steve Vecchitto of Advenir. Few people know more about the social and spiritual changes happening within the multi-family real estate space than them. Let’s listen in…

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

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Henry Kaestner: Welcome back to the Faith Driven Investor podcast. Special time today focusing on multifamily real estate. We’ve got two great leaders in the space, David Snyder and Steve Vecchitto. And when we think about expanding faith driven investing beyond private equity and some of you have been listening show for a while might know that my own personal background is in venture capital, private equity. But with time, we came to realize it is cause we think the private equity of venture capital might be to be able to express our faith in what we do and how we invest. There surely are other ways to do it as well across different asset classes. And maybe the best example that I go to first when I talk to somebody is multifamily real estate. So many of us are accustomed to real estate investing. We understand it. We understand how cash flows. We’ve come to understand what cap rates are. And it’s just such a great place to be able to minister to people who are in need because there’s a part of the investment we’re making. We’re investing in homes and in communities. And of course, where there’s communities, there’s great relationships. And it’s a great opportunity to love on people in a way that points to a God who loves them. And we’ve talked a little bit about multifamily real say in the past. We’ve had guests like P. Kelly on before, but today we’re going to get much deeper into multifamily real estate. I’m going to talk about that when we talk about the two leaders who really understand the space, who’ve invested in it successfully. And David and Steve, thank you very much, both of you, for joining us.

Steve Vecchitto: Thanks for having us on.

Henry Kaestner: So love to start the show by giving each of you a chance to give a brief overview of your background. We’re going to start with David. Want to start by giving us quick fly over about Continental Realty Group and the work that you are doing. And then, Steve, we’ll get right into what the work that you’re doing at Avanir Word Fundamental Realty Group.

David Snyder: We started this company in 1982. We’ve been doing it for a while. And all we’ve done for 37 years now is multifamily real estate. We don’t do any other type of real estate. One of the things I like to tell people is that we get a chance to make money by meeting people’s needs. And we specialize in their housing needs, where students and observers of people’s demographics and their needs that they have for housing. During the last 10 years, we’ve done about one point eight billion transactions, 1000 units, certified properties during a time. Over the last two years, we’ve sold off a lot of our portfolio that we bought about 10 years ago, and we’re down to around 4000 units now and expanding back up from there. So we’re involved in about 10 markets across the country and somewhat similar to Steve’s company, unexcusable, bigger than we are. We have similar amount of markets and it gives us a chance to walk alongside of people. We’re just not landlords. We’re walking more on side of people in their daily life and there’s spiritual responsibilities that come with that.

Henry Kaestner: Thank you for that, David. Steve, take us through Advenir and just a flavor of what you’re doing there. Then, I want to get back into talking about both of you and your faith journey and how you see it manifest itself through your different company.

Steve Vecchitto: David is a little more experienced than I am. We’ve only been in the business for 25 years instead of 37. Wow. We own currently about 14000 units in six states. That’s about 42 properties with a market value of around two point three billion of that, 800 million of it’s in equity and under management. We, like David, only do multi-family properties. We don’t do any other product type. We do also have our own management company. We believe that it’s essential for us to be able to operate and execute business plans to own our own management company and really be hands on. I think David’s formula works really well because you’re hands on and he’s found third party management companies that can operate in his system. So, you know, I think he’s unique to using third party management and it’s worked for both of us. You know, we think there’s a long future in multi-family properties and investments.

Henry Kaestner: Tell us about your faith journey. That’s one of the things, of course, that brought you onto the program. And you’ve been thoughtful about how your personal faith impacts the work that you guys do down in South Florida and as other five states. Tell us about how you came to know God.

Steve Vecchitto: Sure. I’ve got a storied past. I grew up in Connecticut. Roman Catholic really was a lukewarm Christian. I came down to Miami in 1996, pretty much a sinner and a heathen. And I did start at Viniar. Point in time and had a good friend who was in a church. He was drumming for Jesus and he became a special friend of mine and a brother, and we talked about faith. Then when we started our company, I decided that I really wanted to create a culture that was meaningful to our employees, our residents and our vendors and created four pillars. And the four pillars were really true fairness, love and kindness. And at that time, I was not a believer. And I have come to know the Lord over last 12 years, really, from my wife’s pushing and some other friends and I got through the Bible, you know, I started in Bible study 12 years ago and that changed my life. And since that point in time, everything has blossomed in my life from my business to my marriage, to my relationship with my kids, to my focus on what’s important and what’s not important. I’ve really left what is valuable to the world and are looking at it with a different lens. And what is it that Lord, what is it Jesus wants me to be doing in my life? And it’s turned me from being a greedy person to being a steward of what God has given me and for investors money. So it’s really changed my lenses in view of the world.

Henry Kaestner: Can I talk more about this space that you both are in? David, talk to us about the multi-family sector. I don’t think that a lot of people that are listeners appreciate how big it is in our country at least. I didn’t as an investor how big it’s in our country. The world. And just also how much it’s changing. So give us a flyover. Tell us about this industry that you guys both are experts in.

David Snyder: Well, the multifamily sector, I feel, is a very oftentimes misunderstood sector for the average investor or many investors think that the minute you talk about multifamily, you’re talking about low income housing. There are people of all demographics in the United States who choose to live in multifamily. We have very, very high end rentals. We have workforce housing. We have low income housing, affordable housing. And also just to keep pace with the housing demand, the US has to add 300000 housing units per year in the multi-family sector. And when the downturn of 2008 hit, we went through almost four years in the US where there was virtually no new housing built at that time.

So we dug a hole where we were essentially a billion two in units below what was needed. Since that time, we’ve been building and trying to equalize out that that deficit. And we’ve only in recent years gotten back up to the three hundred thousand level. There still is a high degree of intensity for demand for multifamily housing. The occupancy rate on a nationwide basis is almost 96 percent. And that’s no nationwide figure. It’s not just Boston and Denver and Dallas. That’s nationwide. So Podunk, Arkansas, you have wherever Des Moines, Iowa, everywhere is. Therefore, there are full and there’s a tremendous backlog of demand. We still have 30 percent of millennials living with their parents. We have more boomers than ever living in multi-family housing. Our current boomer generation is the healthiest that we’ve had in decades. And the healthier the boomer, the more mobile they are. And one of these people don’t want to go live in single family homes and take care of the lawn and paint the house. They’re living in multifamily and being very mobile. So we have increased occupancy there. And then, of course, the millennials, which is right now the biggest generation, is a very mobile generation and they’re creating demand for millennials. The thing that I think that many people don’t realize is the impending tidal wave of people coming after the millennials, the gen Zs right now, or within two hundred and forty thousand the size of the millennials and their demographic won’t be cut off for another two years by the time we end up with the next two years. The Jameses will actually be bigger than the millennials, and they’re only the age of about twenty two right now. So they’re just starting to enter into the multifamily stage. And we have this tidal wave of demand that is coming from a demographic basis.

Henry Kaestner: Steve, tell us more about that. Tell us about some of the personalities that are going into multi-family. So it’s it’s not just the person is just getting started. Not just transitional. I’m 50 so I’m dating myself a little bit. But when I grew up, the American dream was I own a home, and that was everybody knew this was everybody’s goal wasn’t even up for discussion. That’s all changed now. Right. Who are you seeing in your properties?

Steve Vecchitto: Yeah. Look, I think that dream got crushed in the 08 09 recession. You know, you asked what is the size of this renter base? It’s 60 million households. So we are leasing to providing housing for 60 million households and a household. There’s two point three persons on average. So apartments are essential. Right. Everybody needs a home. And we see those that are getting out of college or from blue collar workers that are mechanics to plumbers to electricians all the way through tax base. And as David mentioned, the boomers are selling their houses and saying, I don’t want the responsibility, I don’t want the upkeep cost. And I’m moving, too. We see it here in Florida. They’re moving to the coast. And large apartment communities and they’re paying anywhere from Florida, literally twenty thousand dollars a month for rents and would rather have that than have the home. So I think you have whatever our nation looks like is what the rents are based looks like.

David Snyder: It’s making our job as landlords more complex because 30 years ago, all we had to do was worry about young people. There was a there’s just transitionary housing. I’m sure Steve will agree in today’s world. He’s got boomers sitting on the same property that he has millennials and they’ve got some gen X’s. And somehow you have to figure how to meet these people’s needs, even though you’ve got all these different demographics in place and not just meet their needs, but learn how to minister to them where they’re at, whether they’re very wealthy or older or whether they’re millennials or students at the same time.

Steve Vecchitto: Yeah, I agree. We have really two categories. It’s a renter by necessity, where they have no other alternative. They can’t go live with mom, they can’t afford a house. And you have renter by choice. And I think both categories are growing just as fast. So the renter by choice says, I don’t want to own the home. I’d rather live in rental property. It’s my lifestyle that I’m renting for. The rent, by necessity, has no other choice in that demographic. Certainly are different. The renter, by necessity, probably never will buy a home. The renter by choice may never go back to a single family home.

Henry Kaestner: So which space you find yourself saying so rener by necessity, I think I get. Renter by choice. I think 75 percent of millennials now would rather rent than own a home. So the whole idea whether they’re impacted by the financial crisis or not, just they have a preference to whether it’s mobility, flexibility, just value things differently. Seventy five percent would rather rent than own before gone. Where do you find each of yourselves? Is it evenly mixed based on the properties you have, or do you focus on renters by necessity, more in Class B and C spaces or more class? How does that break after each of you?

Steve Vecchitto: Well, for Advenir, we’re probably 75 percent rents are by necessity. So we call it workforce housing and families that are making between thirty five thousand and one hundred twenty five percent of our renter base. Probably makes more than one hundred thousand dollars a year is that rents or by choice.

Henry Kaestner: David, how about you? How’s that mix work out for you?

David Snyder: Well, the challenge and the opportunity that multi-family gives us as landlords is we have the ability to walk alongside of people in their lives, to walk alongside of the wealthy. Rohner, the lifestyle runner, to walk alongside of the runner by necessity. The ones that are going through budget problems and, you know, work problems and and that we’re in a very unique position as landlords. Landlords in the 80s used to be disguised, collected rent. If you didn’t pay me, you’re gone, you know, and that’s it. There’s landlords today. We have the opportunity to be candelas to encourage successful living in the residents of our community. And not just capitalists, but we’re stewards. I mean, we’ve been given these relationships of hundreds and hundreds of people living within our community. We’ve been given those relationships. We’re going to be held accountable for what those people receive from the relationships that they have with us. And so the landlord today is a very catalytic person that is after the the economic benefit of their tenants, the spiritual benefit, the social benefit of their tenants and. At the same time, we’re driving financial value from those people that live in our communities also.

Henry Kaestner: How about you, Steve? Talked about the ministry opportunity that you see as you’ve got these people that are living in your communities. And how do you see it being different? What does it look like to live on somebody in one of your properties where it’s workforce housing? And was it looked like in another one of your properties, the love on somebody that’s maybe a millennial? And when I say millennial makes it sound like they’re like some sort of kind of like alien or something like that, although sometimes I think we experience them that way. But we’re talking about this next generation that’s really starting to lead in the workplace that would rather just not own. But that’s a different demographic. It’s a different need. How do you love them both?

Steve Vecchitto: So, you know, I love the term millennial. I have two millennial daughters and they are pure millennial. It’s all I love them to death. You know, I think it comes from a different two different standpoints. One is the culture that we’ve created in our company and the management team side. We have seven core values that we continue to train our employees in, in some of the key words that are included in those seven core values, our teamwork, customer service, innovation, integrity, humility, balance.

And if we’re training our team members how to operate in their communities. It goes it goes downstream. So they’re able to pass that on to the residents. They’re able to pass that on to the demanders that we’re working with, you know, from a spiritual side. And I know you’ll probably talk about this later, but we use apartment, life and apartment. Life has just been a wonderful bolt on addition to what we do on the management level to connect with each one of our residents.

Henry Kaestner: Tell me about their model and how you how you all employ it.

Steve Vecchitto: So their model is pretty interesting. They do recruit team members, so there’s a family or couple that will come to our community and live in our community, become a part of that community. And the cost is relatively inexpensive to us as owners. And I think the benefits are just huge. The benefit to us is higher retention, building of community social activities that they create reputation management in our business, the reputation of our community and online leasing is so important and they’re able to raise that reputation.

Henry Kaestner: So presumably also makes your online ratings go up in some of those other things, too, and I know that there are different models. I know that David has had a different approach. He’s got mission that I don’t want to talk about that here and saying. But, Steve, before I let you go, comment on what you’ve seen in your properties over the course the last two or three months, just to timestamped this a bit, we’re talking about this in May of 2020. COVID 19, has shut things down and a lot of the country is going through really a loneliness problem. And pre-covid 19, we’re headed off the charts as a country in terms of depression, loneliness, etc., and that’s only got worse. Now, of course, what are you feeling from your communities and what role do you see? Apartment life. And then I want to ask David about the same, because the way that he dresses the same situation with loneliness.

Steve Vecchitto: So I think loneliness goes to fear and a large extent and the fear is how am I going to exist with no money or how am I going to exist? I just lost my job. I’m collecting unemployment. And in some states, it’s been hard to get those benefits because the unemployment system registration has not been functioning well. So we’ve actually been reaching out to every one of our residents, helping them through the process of payment, their rent and finding out. Are there issues? Are they having problems with health? Are they having problems with transportation? Do they have an elderly in the unit that needs special care? Our teams have gone out and raised money to bring food in so that the residents can come in into the leasing center and grab whatever they need for the night. And it’s interesting because we’re now seeing residents bring in food to the leasing center as part of the community as you drive through the properties which enjoy it. What’s interesting is the parking lots are packed. Everybody is at home, right? We’re all in lockdown. And apartment life has helped with virtual social events. They’ve done video nights where they’re streaming from Netflix or some other source. And as a community, everybody’s watching the same movie the same night in our apartment, life teams have really helped. So we don’t have them on every property. And you could tell the difference of the ones we do have apartment life teams on versus the ones we do. And I’ll say the reason we don’t have apartment life teams and some of our properties is we’re still searching for that right team that’s been provided through the church system.

Henry Kaestner: David talk to us about other models, other ways for people to love on the way that you love on people in your facilities.

David Snyder: You know, we also make use of apartment life in our communities and, you know, apartment life and groups like that, they give owners the ability to pay attention to the function of what they do, which is the business side of everything. And then they have people that they provide to us that help with our purpose of why we do it and taking care of people and taking care of their social and spiritual needs and that type of thing. And an apartment life is one of the groups that helps us do that. We’ve added on more employees during this time rather than fewer. We’ve hired more part metalized staff to do nothing but just be on the phone and talking to our people on a daily basis and doing needs assessments and then that type of thing. So they’ve been an instrumental part, but we also make use of other groups and we expand also apartment life’s mission on some of our properties in that we use some of our apartment life teams as a liaison or a coordinator to bring in the local church in the area to try to adopt some of our communities and to provide different services and activities to the residents of our communities through the local church. And it’s been a very rewarding option for us because it gives a lot of people in the local churches the ability to have an outlet for ministry and multi-family housing. I mean, we’ve got some properties that there’s mechanics from the church that go out twice a month and they’re maintaining the cars of all the single moms on our properties and stuff like that. And it actually is raising the spiritual self-esteem of some of these people in the church because it gives them an outlet.

We provide Mother’s Day out programs and other things through the church and then some of our apartment life people coordinate that. They’re also coordinators for social services where we have some local social services available. They’re not necessarily faith based and they act as coordinators for that. In addition, we also have other groups that we believe in very much. And one is Crown Financial, who is involved in teaching stewardship on some of our communities and that type of thing in dealing with people and providing studies on how to budget their time, budget, their finances, et cetera. Friends First dot org is a mentoring program that is designed to help teens and young people on the properties. And then finally, Mission Ninety Eight is a group that really is somewhat similar to apartment life that they specialize in just bringing in the local church and to a point where they can serve people in the multifamily community. And, you know, a lot of people run by apartment communities without giving them a second look. And 37 percent of Americans live in apartment communities saying multifamily housing. And it’s a big part of our population that the church has a responsibility to reach out to and to include in their community also.

Henry Kaestner: Talk to me a little bit about the difference between these two different models. One is an organization like an apartment life where somebody will go and live in a community. And then on the other hand, you might have a local church that might adopt an apartment complex. When I used to go to the Church of the Good Shepherd in Durham, North Carolina, for instance, we had a apartment complex that we as a community adopted and that seemed to be able to last through any type of a turnover of key personnel as it was the church that adopted them and offered up English as a second language type of classes and things like that. David, you’ve had experience with both. Talk about the pros and cons about each of those models.

David Snyder: I think the pros about apartment life is they’re often more proactive. They’re more national. So we can have them many other states, you know, as opposed to when we deal with the church adoption concept for lack of a better term. We’re having to reinvent the wheel in each location, you know. And so a partner in life has a model that can be mobilized and news nationwide. The downside or some of the negatives of apartment life that they know, too, and I’ve discussed with them, is that local time as a ministry teams that they put on the properties are there for a two year period. And so you get all these relationships made and everything, and then all the sudden the team is gone. And it may be four or five months or six months to a new team, maybe put in their place or whatever.

But that turnover affects the model bit. That’s one reason why we’ve married our apartment life teams with the activity by the local church, because we understand that sometimes teams, you know, graduate move on to other things. But the local church provides a consistency of the effort on the properties themselves. And so even though you may have a partner or wife team that comes in and out of churches there. The church hasn’t gone away. Some of the personnel may change, but the church is there and it provides a consistent ministry provision for the people on those properties.

Henry Kaestner: OK, so this is going to be a little bit of leading question. Obviously, you believe that this is something that works or you won’t be spending money on it, but maybe I shouldn’t be so presumptuous, somebody listening to this. They’re not the family real estate property, the money that you put into these programs. How much of it do you think that you get back? How much of it do you think accrues to the benefit of the limited partners and the investors you have? And or how much of it is something that goes above and beyond that that you actually think may not add to the investment returns but is instead something that you would otherwise allocate towards ministry spend and how you do discipleship or evangelism?

Steve Vecchitto: I think I’d answer in two ways. So there is the financial benefit to the property, which ignores to the benefit the investor, and that is higher retention. So I’ve got more people staying longer. Part of the reason is the social activity that’s been created and the neighborhood that’s been generated. And so I’ve now I’ve got friends there that I don’t want to leave. Right. So I get a higher retention rate that saves money for my investors. And I think the other part is the reputation. We’re building up our online reputation for the community. So as that builds, that creates a strong community itself. That’s a financial benefit that we realize.

Henry Kaestner: So if you spend 50000 thousand dollars on an issue like that for a property, do you think you get all 50 of that back or do you say, well, that 50? I think probably 35 or 40 that back, but because I’m motivated by my Christian faith and here’s an opportunity for me to love on people. I mean, I get all 50 back, but I’m happy having 10, 15 or 20 of that be kind of like my ministry spend. Do you ever think that way?

Steve Vecchitto: No. So I don’t think it’s cost us 50. What it cost is an apartment and our monthly fee. I always have a vacant unit. So to me, that’s a zero cost. I think my return is four to five bucks and that’s pretty high on any investment you can make.

Henry Kaestner: So you may give up the free apartment, but you still have to pay them. You still pay apartment, life, apartment. Life may be a ministry, but they charge a fee. And that’s what you’re talking about, getting the four to five extra turn on.

Steve Vecchitto: That’s correct.

Henry Kaestner: Yeah. David, how would you answer that?

David Snyder: Well, you know, I think that we have a spiritual benefit, obviously, from our extra effort with our residents. And we have a good financial benefit. And the financial benefits far outweigh the costs of the programs that we put in place. The typical turnover, and I’m sure some words in Steve’s mouth, but I’m sure he’s experiencing the same thing here. The average turnover in our industry is 75 percent a year. So if you have a 400 year. Apartment community, you’re turning over 300 of those a year, year in and year out. And over the last 10 years, that’s been the American average. With our history, once we’ve been in charge of an apartment community for a year and have our apartment life programs involved in some of our other management programs and ball are turnover down. The same property turned out to be somewhere between 47 and 49 percent. So we’re literally saving 25 percent turnover san in real dollars out of 400 unit community. If you’ve shaved 25 percent off of your turnover, that’s one hundred less units per year. That’s that’s turning over. And each of those units cost you an average of about 2000 or so to turn. There’s a term cost, says 200000. The bottom line and you keep that in your expenses. I would challenge Shane. I have tried. Many of my investors are not Christians. Many are of other faiths or no faith. And they oftentimes talk about the voodoo that we do on the property. And I think we’ll keep doing it because it makes us money. So I’m very high on this type of ministry and on those type of effort by apartment life and others in this space. But at the same time, I’m very transparent, very open that it actually makes us money to be good neighbors. To be good landlords is to love people. It is financially rewarding for us.

Henry Kaestner: Okay, that’s helpful. So we’ve made the case for multi-family and because of demographic shifts, this is going to be a sector that’s going to continue for a very, very long time. And as an investor, as a space you should be looking at also made the case that investing in ministry moves the needle in terms of loneliness and depression and community and sharing the gospel and discipleship without it necessarily costing. Why do you think the concept of faith driven investing in real estate? Why do you think there’s not more of a thing? It seems to be something that people are talking about very, very recently. And yet you’ve been implemented for a long time. Why do you think that faith driven investors, people who have a Christian faith who would like to see people in the workplace minister to. Why do you think that this idea hasn’t really caught on so much so that people are saying, I want to find a real estate manager that employs these things? If I’m going to deploy capital, whether I’m an institution, whether I’m a retail investor, I want it to go to those people. Why do you think that’s not a thing?

Steve Vecchitto: I think it’s not promoted. We do it because we want to. We do it because we believe in it. We think it’s right. It’s our faith, my investors, for the most part, trusting in what we do. As David said, the voodoo that he does on his properties, they get great returns and that’s why they’re in this. And they let us operate autonomously without really knowing what’s in the engine other than they know the performance. I can open a hood of a car and not really understand the engine, but I like the car. I like the way he drives. And I think that’s been the philosophy. We’ve sort of done this silently and maybe it’s our fault. But look, at the end of the day, our faith is driving, how we operate, what our morals are. We’re trying to expand the Lord’s kingdom. Then we’re doing that through the ministry that we’re able to provide while providing housing while we’re providing returns. It just becomes a win win win.

Henry Kaestner: We’d like to close out every one of the podcast episodes we do by asking our guests what they’re hearing from God and his word and see if you tell him that have gone through the Bible again recently. And David, want to hear from you about what you’re hearing, too. And so we’ll start there. Dave, what are you hearing from God in his word? Maybe it’s something that you heard this morning, maybe yesterday, May last week for some way that you feel that God is speaking to you.

David Snyder: I mentioned this to some of the guys on the podcast, the Steve and Justin before. For some reason, God has just brought the word sanctuary to my mind. And I probably haven’t thought about that word for forever. I don’t know why, but in the last few weeks, I’ve been studying how God gave sanctuary to Moses, who gave sanctuary, you know, to Jonah, to the King David J. Gave, say, a time of sanctuary and protected him. And I just feel I’m very at peace with one of the things I have been called to do in life is provide sanctuary for our residents and where it’s a peaceful place for them to grow, for them to grow socially, hopefully. Build or grow spiritually, and you try to take steps along the line. But this is very simplistic, open droid sanctuary myself during this time of. Because I’m up here in my mountain cabin. And I’m in sanctuary. And I think that’s maybe where this came from and that I’m just so excited. And so that piece about being able to provide sanctuary or residence.

Henry Kaestner: That’s a great word. Steve?

Steve Vecchitto: And if I may actually have two that are meaningful my life today. And the first is Galatians 522, which is the fruit of the spirit is love, joy, peace, forbearance, kindness, goodness, faithfulness, gentleness and self-control. I just love that if I live my life through those words and have a wonderful life. And, you know, in the season we’re in with this Kofod, I have really been dwelling on Matthew six thirty, which says, Do not be anxious about tomorrow for tomorrow, we’ll be anxious for itself. Sufficient for the day is its own troubles. And I think the Lord gives us plenty and mercy today and provides for all we need today in with the Kofod and wondering what the economy is going to look like in our business is going to run. I could quickly run to tomorrow and be anxious about that, you know, so I go to this passage that just gives me peace that I worry about tomorrow. Tomorrow, though, and worries tomorrow. And he’ll give me mercy tomorrow.

Henry Kaestner: May that be the case for you and for me and our listeners. Great. And thank you both for your time. Thank you for your faithfulness in the market and sharing your stories with us and disinterested to see how this expands over the course next 10 years. I’ve really compelled by the ministry opportunity, and it’s just amazing to see that this ministry opportunity ministry investment on this is actually something that accrues to the benefit of investors. So much so that investors that don’t share fears like I want more of that. So super compelling. Thank you both.