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Capital
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The region, state and nation need to bridge capital gaps that limit the ability of manufacturers and small businesses to access working capital. The SVA has been exploring new and innovative capital formation strategies since its inception. With our sister regional economic democracy groups around the nation, we joined labor leaders and key strategists of innovative labor-capital strategies to form the Heartland Labor Capital Network.
The Heartland Network:
Through the leadership of a broad Working Group in the U.S. and Canada, and with grants from Ford, Rockefeller and other foundations, the Network organized national conferences in 1996 and 1999, and sponsored path-breaking research on responsible investment strategies. This research that promoted the control of working people over their own savings and assets was published by Cornell University in 2001 as Working Capital: The Power of Labor's Pensions. The SVA then helped raise a major new worker-friendly private capital fund, financed with $78 m. in Taft-Hartley pension investments, and opened a new web site, www.heartlandnetwork.org/
The Pittsburgh Regional Heartland Fund:
One of the outcomes of this effort is the creation of the Pittsburgh Regional Heartland Fund (PRHF). The PRH Fund's primary goals are investments in job retention/creation in strategic regional industries, with a focus on high performance labor-management relations. The Fund has received support from the Pa. Community Bank, AmeriServ and Somerset Banks and the McKay Foundation. The Fund recently closed its first pilot loan to a manufacturing firm, in order to fulfill the requirement of the Pa. Community Bank for fund certification. The Fund Board has two SVA Board representatives on it, and the SVA's Regional Jobs Corporation is a founding shareholder for the fund.
Tri-State Capital Stewardship Initiative:
The SVA helped organize a public-private-labor consortium to educate "capital stewards" in the region and Tri-State area about the importance of economically-targeted pension investments (ETIs) and responsible investing. A second forum co-sponsored by the Benedum Foundation, Organized Labor, and the State of West Virginia explored long-term alternative investment strategies for the state. Pension-related private capital investments in regional and small businesses can help diversify pension portfolios and generate above-average returns on investment (ROI). As a collateral benefit, they can also leverage private and public investments; create jobs; fill capital gaps in undercapitalized regions and industries; promote positive labor and environmental practices; and generate equitable, sustainable economic development. And, pension funds can be activist shareholders, forcing companies to be more responsible.
The SVA and the Heartland Network have also been involved in the following activities:
- Promoting major new investment funds capitalized by workers' capital, and working with a network of labor-sponsored investment funds that invests in sustainable, worker-friendly businesses at all spectrums of the market….small businesses poised for growth, under performing businesses that can be turned around, and viable branch facilities that might succeed.
- A similar direct investment strategy has been successfully launched and operated by the Canadian Labour-Sponsored Investment Funds (LSIFs), regional investment funds that have a 15-year track record of good financial returns. The LSIFs have created or preserved over 80,000 living wage jobs in Quebec alone over the last decade, helping create new industries and stabilizing economically depressed regions.
- There have been some two dozen U.S.-based private capital funds capitalized with over $3-4 billion in new Taft-Hartley pension investments since 1999, joining a similar number of LSIFs in Canada that have amassed $8-10 billion. Of these, there are a half-dozen U.S. and Canadian funds that have good relationships with the Heartland Network.
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