There was a time, not so long ago, when the team at the Northeastern Vermont Regional Hospital didn’t know what a CDFI was.
But that’s OK, because over at the nearby Community Development Financial Institution, or CDFI, “they probably didn’t know what an FQHC was,” said Laural Ruggles, VP of marketing and community health improvement at the St. Johnsbury hospital (an FQHC is a Federally Qualified Health Center).
Now the two entities and a handful of others in northeastern Vermont are working together on an acronym-rich lending venture that aims to increase economic growth, and in so doing to improve health in one of Vermont’s poorest regions.
Ruggles is one leader in the partnership with the local CDFI, called Northern Communities Investment Corp, or NCIC, a private financial institution in St. Johnsbury dedicated to providing affordable business lending to help disadvantaged people.
The work of the CDFI and the FQHC began in 2014, when the hospital leaders looked at local statistics and decided they needed to take another approach to helping local people live better lives.
A community in poor health
The Northeast Kingdom and southern Vermont trail the rest of the state in several areas of community wellness.
The northeastern counties of Caledonia, Essex and Orleans have higher-than-average teen pregnancy rates; the rate in Orleans is by far the highest in the state, according to the Vermont Department of Health.
The three counties all lost population between 2010 and 2018, according to the U.S. Census – Caledonia County by 3%.
A key measure of premature death was 3.5 times higher in Essex County than in Addison County, according to a national Robert Wood Johnson Foundation or RWJF, report, and in that report, Essex County had the highest proportion of adults, 16%, who reported they were in poor or fair health. Only 10% reported that in Chittenden and Washington counties.
Stepping out of the silo
At the time, Ruggles was working with NEK Prosper, a group formed by local FQHCs and other health and human services agencies that sought to promote economic development as a way of improving community health. Research shows poverty is strongly linked to power health outcomes.
While hospital officials and others in the health field knew they wanted to create a loan fund to foster economic development, they didn’t know how to talk to possible partners in the financial field.
“We were a bunch of health and human service agencies here,” Ruggles said.
But NEK Prosper had been gaining a higher profile by talking to community health agencies around the country, and in December 2015 Ruggles and others at the hospital were invited to a meeting on public health at the Federal Reserve in Boston. There, they learned about partnering with CDFIs, then unknown to them. The group started talking about their goals with John Freeman from NCIC, the CDFI, and with David Snedeker, president of the Northeastern Vermont Development Association or NVDA, a regional planning and economic development agency.
With shared goals and very different backgrounds, the players started learning each others’ languages and coming up with ideas to pay for anti-poverty projects.
Contacts from the Boston meeting introduced the St. Johnsbury group to the Georgia Health Policy Center, or GHPC, which was investigating innovative financing for community health improvement through a program called Bridging for Health that is sponsored by the RWJF.
Bridging for Health in spring 2017 chose St. Johnsbury as one of seven sites around the country for a $80,000 grant program aimed at community health improvement. Researchers from the health policy center repeatedly visited St. Johnsbury over 16 months in 2017 and 2018, and helped the hospital leaders, bankers, economic development officials, and other stakeholders — groups that had traditionally operated separately from one another — come up with a financing plan. Jim Kisch, the president and CEO of Passumpsic Savings Bank in St. Johnsbury, joined as an important stakeholder through meetings with GHPC.
“Jim stood out because somehow this resonated with him, that this is really what he and the bank were all about: promoting economic development. He saw the potential in having additional partners,” said Ruggles. “You have to have willing partners; you can’t drag them to the table. He was definitely one of those willing partners.”
Public officials are starting to recognize that the health care system alone can’t solve all of the population’s health problems, said Karen Minyard, the director of the Georgia Health Policy Center at Georgia State University.
She added that government support for public wellness programs tends to be anemic. GHPC has determined that a local system, with local investors, appears more likely to have an effect.
“This is a homegrown, local approach in remedying that problem which is really a problem in our system,” Minyard said.
Why St. Johnsbury?
St. Johnsbury was chosen in part because project leaders in Georgia liked the group of partners that had formed, said Minyard.
“They were very thoughtful about including business leaders in their collaboration,” said Minyard, mentioning Kisch in particular as a leader with effective ideas. “It was a unique component of the partnership, and one that we were very interested in and impressed with.”
The result is the Northeast Kingdom Prosperity Fund, a new investment vehicle aimed at promoting economic development. Led by the hospital, the partner groups have identified five objectives for residents: to be well-housed, well-nourished, financially secure, mentally happy and physically happy.
Bridging for Health helped ease communication between groups that traditionally don’t speak the same language, said Ruggles.
“We didn’t stumble upon this,” said Ruggles. “This is a facilitated process to figure out what we thought would work for us.”
The newly formed Northeast Kingdom Prosperity Fund has brought on Janice Shade, co-founder of the Vermont investment vehicle Milk Money, as an advisor to help with the financial structure. Shade said the fund will be set up as an investment portfolio that generates revenue over time to patient investors who are willing to wait for a return, and who are choosing this vehicle specifically because they want to help promote prosperity in the Northeast Kingdom.
One of the most critical problems in the St. Johnsbury area is a lack of workforce housing. Shade used a housing project as an example of a program the fund might support. An investment vehicle with money from local people, she said, delivers a different message from the grant programs often used to support local community health programs.
“I learned this from Milk Money,” said Shade. “With charitable giving, you give your money, get your tax deduction, you pat yourself on the back. With the investment relationship, you’re expecting your money back plus other things, too.”
The investors “become your brand ambassadors,” Shade said. “It becomes this self-fulfilling prophecy of ongoing support and relationship.”
Shade is also helping the group navigate SEC rules for new investment vehicles and to decide how many large and small investors to include in the mix. The target for the fund to begin lending is between $1.5 and $2 million. Shade expects the fund to be ready for investors in the fall.
Investors might be able to give as little as $250 to the fund, said Jon Freeman of NCIC.
Freeman expects investors will be “people who have a heart and passion for the well-being of the Northeast Kingdom,” he said. The money would be used for projects that aren’t eligible for traditional loans.
“If a solution appropriately fits a loan program, it should use the loan,” Freeman said. “It would be the ones that don’t fit, but something that has good probability of success, and it should have community benefit.”
Ruggles said she’s getting calls from community health leaders, in Vermont and elsewhere, who want to learn more.
“I can’t tell you how many times I am asked how we got out of our silo: ‘Could we hook our CDFI people up with your CDFI people?’” Ruggles said. “That’s what I am trying to do: I am the matchmaker.”
