This post was written by Seth Brown, a third year dual Masters of Public Policy and Masters of Business Administration (MPP/MBA) candidate at Duke’s Sanford School of Public Policy and the Fuqua School of Business, in November 2016. Prior to graduate school, Seth served 5 years as an Army officer. At Duke he has led Duke’s Veteran’s organization and has been actively involved in social impact throughout his time at Duke. In his spare time, Seth can be found in his 1986 VW Vanagon visiting national parks, music venues, and breweries.
I am a dual master of public policy and business student (MPP/MBA). When I left the Army for graduate school, policy was my priority. I hoped Fuqua would supplement my policy focus with leadership development and a window into the private sector, and it certainly has, but I doubted I would ever go into the private sector. Finance was the definitely the last career choice on my mind. How much difference a year can make…
I spent my summer in finance with the Reinvestment Fund, a Community Development Financial Institution (CDFI) in Philadelphia. In an oversimplified world, CDFIs are kind of like banks but they root for the underdog, so to say. They improve outcomes in their community, get certified by the Treasury Department, and can then gain access to cheap capital. This capital allows them to take more risk and provide lower interest rates to organizations, people, and businesses that would normally be excluded from the private market. Reinvestment Fund in particular lends to affordable housing developers – grocers building stores in food deserts, energy efficiency program and charter schools as well as early education programs.
My internship was the perfect opportunity for a dual degree. As an MPP/MBA, I am interested in the interaction of the public and private sectors in solving public policy problems. While at times the private sector can exacerbate market failure, the private sector can also be a phenomenal force for good. CDFIs operate at the nexus of market failure and government incentives to correct these failures.
Before the 1970s, banks were taking deposits from “risky” populations but refused to lend to them; essentially making money off them but not providing services. In 1977, U.S. Congress passed the Community Reinvestment Act (CRA). Banks now have a requirement to communities in which they operate but because they may not know how to evaluate the risks associated with community lending, CDFIs help banks fulfill their CRA obligations.
CDFIs are a public policy solution to a market failure and yet CDFIs operate within the private sector. Therefore, throughout my internship, I used nearly every one of my Fuqua classes to help a nonprofit loan fund improve outcomes.
For example, Accounting. I’m not going to lie; I struggled with accounting. Even with Professor Mohan’s best attempts, I remember thinking, “I’m never going to use this. This is funny money! The rules are all made up. I’m going into an impact field. Accounting doesn’t matter, and if it does, I’ll find an accountant.”
And yet, this summer, I found myself poring over financial statements. Instead of reviewing Target’s annual report to shareholders, as we did in class, I was now investigating a Historically Black College’s financial history. Referencing the core class, I was able to determine whether the organization could sustain the debt payments required to build a new dormitory.
Or take Entrepreneurial Finance. In class, I learned tools to evaluate the viability of fledgling ideas and companies. This summer, instead of evaluating some new tech startup, I was assessing the probability of success for a concert hall in a divested section of a Rust Belt city now reinventing itself as an arts district.
I even used tools from corporate finance to help the Reinvestment Fund model its first ever corporate debt issuance. This is allowing the Reinvestment Fund to provide a lower rate for borrowers but still generate the same return for the Fund.
Finally, lectures from two finance classes helped me walk associates through business valuation techniques. As the Reinvestment Fund was moving into more food lending, it found that the value of projects was not based in their real estate value but in the future cash flows from the businesses themselves. The change in valuation threw their risk assessments for a loop. Using language and techniques I learned at Fuqua, I was able to bridge the gap for associates who were experts on the impacts of food policy and its ability to improve outcomes in communities but had little financial training.
I am thankful to have had the opportunity to work in the impact space through my internship with the Reinvestment Fund. The experience opened my eyes to a whole new way to make a difference. Even though policy was my focus at the start of my graduate studies, I would never have been able to make an impact this summer without Fuqua. Whether working with education, health, food, or clean energy, the tools I learned at Fuqua allowed me to have a greater impact on our communities.
The Summer Internship Fund (SIF) enables first year Duke MBA-Daytime students to learn about the rewards and challenges of social sector management without making a significant financial sacrifice. In addition, the program enables organizations that otherwise could not afford to hire MBA student interns to benefit from students’ expertise. The SIF has supported more than 170 students, distributed nearly $520,000, and helped to further the mission of many nonprofit and government organizations. Funds are raised through student fundraising and from donors who believe in the mission of the program. If you would like to contribute, you can donate online using your credit card.