Pastor T.L. Rogers, head of a mid-sized church in suburban Maryland, calls himself a “closet developer.”

“One thing that makes my heart beat is the smell of drywall. I love to look at something and see what it can become,” says Rogers, who led his Hyattsville, Md., Baptist church in renovating a strip mall in the late 1990s. The church sanctuary is now a former Soap-N-Suds dry cleaners, the church administration office inhabits a former Domino’s Pizza and a former Duron Paint store is now the church fellowship hall.

Having completed that project, Rogers and his congregation are thinking even bigger: “We want to reach out into the community,” he says. They recently purchased a restaurant, which they plan to tear down, next to their church. In its place will be an adult charter school offering vocational training and English-as-a-second-language classes to local residents, many of whom are recent immigrants.

But for Rogers, whose advanced degree is in Bible studies, meeting with bank executives is sometimes a challenge. “Finance is a whole different language. They use acronyms I’ve never heard of,” he says. “As pastors, the toughest thing for us to admit is when we don’t know something.” When Rogers met Sidney Williams, a pastor and venture capitalist fluent in the languages of both faith and finance, he saw “how things should be done. I realized I needed more than a Finance-101-level understanding.” 

Moving development-minded pastors from good intentions to executive ability is the purpose behind a new Wharton executive education program for pastors and other faith leaders. The program is spearheaded by Wharton management professor Bernard Anderson and Williams, who is the founding CEO of EKOS Ministries, a Fort Washington, Md.,-based consulting group that assists churches with development projects. “There have been many efforts encouraging clergy to engage in real estate and economic development, but I cannot identify a program focused on equipping pastors to function in an executive role, and that’s what this one aims to do,” says Williams, formerly a partner in a venture capital fund that invested in urban businesses.

‘The Right Tools and Concepts’

While “faith based” has become something of a buzz word under the Bush administration and its Faith-Based Initiative, religious groups have long been involved in civic works. In Williams’ view, churches need to recapture a lost vision of community service.

“What’s unique about American Protestantism is that when it began, faith-based economic development was at its core. Many of the best hospitals, schools and universities we have today were established by churches,” says Williams, who is pursuing a divinity degree in urban ministry at the Wesley Theological Seminary in Washington, D.C.

This tradition of community involvement is rooted in the First Great Awakening, an 18th century religious revival that made philanthropy an everyday activity for the average believer rather than “a social obligation incumbent only on the most privileged,” according to scholars John Bartkowski and Helen Regis in their 2003 book, Charitable Choices: Religion, Race, and Poverty in the Post-Welfare Era. The tide turned as the country industrialized, says Williams. “The anticipation was that secular capital markets, as well as government, would respond to the needs of society. Churches were relegated to focusing on individual piety.”

African-American churches, however, have been the torch bearers of this initial vision of church involvement in community development. Scholars suggest this involvement has been born largely of demographic reality. “Churches have taken the lead in stimulating and initiating economic development activities in their communities almost out of necessity,” says Anderson. “Many of them are located in economically distressed areas for historical reasons and because that’s where their parishioners are. Pastors have found it necessary to attend not only to [parishioners’] souls, but also to their material well-being.”

Indeed, in urban areas, African-American churches offer more social services programs than their white counterparts, even when they have “less educated clergy, fewer staff, and smaller memberships,” notes a 2004 report on faith-based development from the Roundtable on Religion and Social Welfare Policy, a non-partisan institute at the State University of New York. According to data from 1999 included in the same report, between 60% and 90% of churches engage in at least one community development or social service project.

“To be engaged with economic development, faith-based groups must be involved with banks,” says Anderson. “They don’t have to become financial experts, but they need the right tools and concepts.”

The goal of The Wharton/EKOS Community Revitalization Leadership Development Program is to bring together up to 50 faith leaders who already have plans for a development project they can implement within the next two years. With its focus on real estate, the program’s goal is for 90% of graduates to access the capital they need for their projects, resulting in the creation of 2,000 units of affordable housing and a 10% reduction of unemployment in the targeted distressed communities.

“We want pastors to be able to have deal-level discussions with developers and investors and to understand the risk-reward trade-offs of real estate development, so they know what they are committing themselves and their congregations to,” says Williams. “The goal is affordable housing, not stronger churches.”

In recent years, some of the highest profile faith leaders in community development have emerged from the African-American community. Floyd Flake, who helped author legislation about community investment while serving as a U.S. Representative from New York, is now senior pastor of the Greater Allen A.M.E. Cathedral in Queens, which, together with its subsidiary corporations, is among the borough’s largest private-sector employers. Similarly, Kirbyjon Caldwell, who left his career in investment banking to pastor a small church in a poor Houston neighborhood, recently led the way in creating the largest low- and middle-income housing project ever developed in the U.S. by a non-profit corporation.

But Williams is interested in involving more than just pastors of historically black churches. “We are intentional in being diverse,” he says, noting that EKOS is working with the Los Angeles-based organization Korean Churches for Community Development and the Philadelphia-based Esperanza USA to identify Korean and Hispanic faith leaders. According to Jenelle Murph, vice president of marketing at EKOS, the program is also working with the Philadelphia mayor’s office to locate urban Muslim leaders active in development.

For Rogers, pastor of the suburban Maryland church, working closely with Hispanics and other immigrant groups is a key part of his church’s development plans. “We are looking forward to something we don’t see happening too often: Hispanics and African Americans partnering together to do great things,” says Rogers, whose congregation is largely African-American, but whose development projects would primarily serve neighboring Hispanic and Caribbean populations.

Faith and Capital

For any real estate project to come to fruition, of course, churches will have to be able to access the right capital, says Kenneth Thomas, a lecturer in finance at Wharton who will teach several sessions in the program, including one that focuses on the Community Reinvestment Act (CRA), a 1977 federal law requiring banks to service low-income communities.

“The financing of faith-based organizations has been around probably as long as banking has, but some banks more than others have developed expertise in lending to such organizations; they have carved out a niche,” says Thomas, noting that J.P. Morgan Chase has demonstrated leadership nationally in this arena, as have more regional banks like the Washington D.C.-based Industrial Bank.

“The law is about community reinvestment, so the question is: Who represents the community? Is it the mayor or some other elected official? When you need to ascertain community needs, sometimes the best and most objective answer will come from churches because they are right on the front lines, seeing the problems of affordable housing or lack of credit for small business,” says Thomas, author of The CRA Handbook: Strategies for Banks, Communities and Regulators.

Just as many banks do not perceive faith-based organizations as strong potential borrowers, so many churches are unaware of opportunities to access credit. According to data from 1999, only 11% of churches with community development or social services projects access outside funding. “Pastors don’t understand what’s out there in terms of CRA benefits and banks that are willing to work with them,” says Thomas, noting that he believes faith-based, rather than more secular community-based organizations, do a better job with development projects, in part because they tend to keep overhead expenses down and have an existence independent of funding for individual projects. “There is a lot more good that faith-based organizations can do,” Thomas adds, “but first they need the right education to get together with the banks that can serve them.”

Developing the Executive Pastor

When Caldwell, a Wharton alumnus and pastor of the 15,000-member Windsor Village United Methodist Church in Houston, was pioneering urban development projects, his education and work experience in finance “clearly contributed” to his desire to “pursue success on a large scale,” he told the Wharton Leadership Digest last year. In the 1990s, the church’s community development corporation rehabilitated a big-box store to create the Power Center, which today offers banking, shopping, education and other community services to residents of the underserved Fifth Ward. “When it came time for us to secure debt and raise capital, it helped to be comfortable with the nomenclature,” Caldwell says.

But Caldwell, Williams and Flake are unusual in bringing extensive financial knowledge to their faith-based development work. Most pastors, even highly educated ones, have had to rely on informal networks and luck to bring their projects to life.

Anderson points to the example of Leon Sullivan, the Baptist civil rights leader who secured capital in the early 1970s to build Progress Plaza in North Philadelphia, the nation’s first black-owned and developed shopping center. “He had never had a course in accounting or banking, but he had a lot of help from people who knew those things.” The banks who invested in the project, says Anderson, “were very nervous, but they had faith in Leon Sullivan.”

Those sorts of personal relationships are not the basis for systemic economic development, Anderson adds. “To take faith-based economic development to the next level, we’ve got to institutionalize the knowledge that pastors need. Many community leaders won’t have the standing of a Leon Sullivan, but if a bank knows they have gone through an intensive academic program in community development, then it can have more confidence that if it lends a couple million dollars, something worthwhile will come out of it.” 

As Williams notes, the program is intentionally created for small to midsize churches, defined as having a minimum of 75 members, annual revenues of $500,000 and a full-time minister. Williams estimates 25% to 30% of Protestant churches nation-wide fall in this category. Many of them, he says, happen to already own valuable urban real estate that they have not yet developed. Along those lines, program participants will take courses in real estate finance, development and negotiations, and complete a workshop on how to write a business plan. Among the speakers will be Henry Cisneros, former U.S. Secretary of Housing and Urban Development.

Alicia Byrd, pastor of a 250-member church in Howard County, Md., will be one of the participants. When she went ahead with a recent project to build an affordable community day care center, she needed “to get a hold of talent from other churches, because there were some gaps in my knowledge,” she says. Byrd also relied on basic training in economic development she had received years earlier from the Washington, D.C.-based Congress of National Black Churches.

Now her church is looking toward developing an affordable housing project. “In Howard County, the median cost of housing is $400,000; how many teachers or police officers make the kind of money to afford that?” asks Byrd. “What you don’t know will hurt you,” particularly when working with contractors, she notes. “You are putting the faith and integrity of your congregation at risk. I want to be in a position to make intelligent decisions.”