The Rio Grande Valley of Texas is one of the poorest regions in the United States. More than one-third of the population lives in poverty, and access to capital and credit – necessary to create economic opportunity – is severely limited. Meanwhile, investors with plenty of capital struggle to find new opportunities to earn even modest returns in today’s low-interest-rate environment. A diverse group of leaders has come up with some potential solutions that could help.
The challenges faced by both the Rio Grande Valley and investors can be addressed by innovations that bring together Wall Street and Main Street, according to “Increasing Access to Capital in the Rio Grande Valley.” The report identifies barriers – including lack of infrastructure and traditional lenders’ misperception that residents present too great a risk – and goes on to suggest a number of policy and financial innovations that can move capital off the sidelines and help the Valley break out of poverty.
The report summarizes the proceedings and findings of the Financial Innovations Lab® the Institute held last October in Weslaco, Tex., with support from the Ford Foundation. Labs are pop-up “think tanks” that convene investors, business development non-profits, bankers, academics, and policy activists to focus on an issue. The solutions from the Lab, though developed with the Rio Grande Valley in mind, can also be applied to other capital-starved regions.
Among the solutions described in detail in the report:
• Establish a regional leadership council in the Rio Grande Valley
• Promote education at all levels, from job training to personal finance
• Continue and expand federal programs that provide additional capital to communities
• Deploy the next generation of program-related investments by foundations – typically in the form of below-market loans or credit guarantees and equity investments
For more solutions and recommendations, download the report here at no charge, or order a hard copy.
