Very interesting. Here’s the official web site: Create Jobs for USA. Here’s an excerpt from Joe Nocera’s NY Times article:
Here’s the idea they came up with: Americans themselves would start lending to small businesses, with Starbucks serving as the middleman. Starbucks would find financial institutions willing to loan to small businesses. Starbucks customers would be able to donate money to the effort when they bought their coffee. Those who gave $5 or more would get a red-white-and-blue wristband, which Schultz labeled “Indivisible.” “We are hoping it will bring back pride in the American dream,” he says. The tag line will read: “Americans Helping Americans.”
It didn’t take long for Starbucks to find the perfect financial partner: Community Development Financial Institutions, or CDFIs. These are lenders, mostly under the radar, that specialize in underserved communities. Most, but not all, CDFIs are nonprofit, and their loan default rates are extremely low. “We specialize in expending credit, getting paid back, and paying back our investors,” says Mark Pinsky, whose organization, Opportunity Finance Network, acts as an umbrella group to the best of them….
Starbucks and the Starbucks Foundation will pay for the marketing costs, the wristbands and every other cost associated with the new program — which will be called Create Jobs for USA — out of its own coffers.
Here is the most beautiful part about the whole arrangement. The donations to Create Jobs for USA will not be loaned to the CDFIs. They will be turned into capital — equity that can be leveraged. Pinsky and others told me that that equity can be leveraged 7 to 1, meaning that if 10 million Starbucks customers donate $5, that will support $350 million worth of lending. That’s real money.
The Starbucks Foundation is starting things off with a $5 million donation. Schultz is hoping to convince other national retail chains to participate as well — so that Starbucks isn’t the only place people can join in the effort. And, of course, he is hoping that Starbucks customers will flock to it in droves.