In the current jobless recovery, people are running out of unemployment benefits before they find job openings. Some may look to starting a small business of their own, but who would loan them money without a track record? Certainly not banks.

For such local entrepreneurs, the answer has been non-profits like Community Capital Development. CCD has provided $26 million to more than 1,000 previously "unbankable" local businesses, including Plum Bistro, Bedrock Industries and Utilikilts.

CCD-backed businesses create and sustain hundreds of local jobs, most of which go to people with low-to-moderate incomes. For entrepreneurs with a solid business plan and 10 percent of the capital, CCD provides a fixed-rate loan over five years plus free business counseling and subsidized accounting and marketing services. It charges 9 percent interest on loans.

CHRIS MUNFORD

Bedrock Industries, which turns recycled glass into art, is one of CCD's success stories.

But CCD ultimately relies on banks for capital to lend. In the current economy, that has dried up, and Chief Executive Jim Thomas worries about the fallout on struggling enterprises.

"They can't go to a bank," he told me over lunch recently. "They'll struggle along but they won't be able to grow. They'll go to the credit cards, which are at least 18 percent. they'll end up paying interest only. At interest only, you can never reduce that debt."

Another blow was losing Washington Mutual, which was one of CCD's top lenders. The new owner, JPMorgan Chase, does not lend to CCD. Washington Mutual was closed by the government a year ago in the largest bank failure in U.S. history. Its assets were sold to JPMorgan for $1.9 billion.

Meanwhile, CCD is down to microloans, funded by the Small Business Administration. The trouble is borrowers can get only one, and it's usually not enough to get a business off the ground in the U.S.

The problem is much bigger than CCD. The entire industry of Community Development Financial Institutions, a category of firms known as CDFIs that provide credit, financial services and training to under served markets, has been hit hard by the credit crunch. The segment that serves the least advantaged is suffering from a problem brought on largely by the mistakes and greed of bigger banks and Wall Street, now the beneficiaries of billions in bailout money.

Janet Ozarchuk, vice president and treasurer of the Local Initiatives Support Corporation (LISC), said her institution received some help recently from Bank of America. But banks in the first two quarters of 2009 didn't lend a single dollar to CDFIs, she said.

"The grant dollars have hung in there, but a good part of funding comes from banks," she said. "That has just been devastated."

"We have one of the strongest balance sheets of any non-profit," Thomas said. "We are not leveraged. But we cannot borrow money because it's not available."

Some efforts have begun to address the problem.

Community development non-profits may be able to raise capital from foundations' Program Related Investing (PRIs). In the current economy, foundations are exploring ways to make more social impact with their assets. PRIs can be used to guarantee loans and bring other investors and banks into the deal, said Ozarchuk.

Last month Senators Jeff Merkley (D-OR) and Barbara Boxer (D-CA) introduced legislation to extend credit to small businesses by allocating existing TARP funds to community banks.

Banks that get such federal help would be required to generate new credit equal or greater to the amount of capitalization received from the federal government. By the end of 2010 the bank would be required to increase overall business loans outstanding by at least 5 percent over the lowest level reached in 2009.

Untested borrowers are a higher risk. Many banks, whether commercial or community or even credit unions, are interested in making low interest loans for community development non-profits "only because they have some legal obligations to fulfill," says CCD's Chief Operating Officer Hongqing Chen.

The bill has the potential to be effective "if and only if it requires a certain percent of new business loans be made to distressed communities and low to medium income borrowers," she said.

The Rural Development Institute said today it received the largest grant in its history -- $9 million over three years -- from the Omidyar Network, the philanthropic investment group started by eBay founder Pierre Omidyar and his wife, Pam.

Omidyar has taken an active role in the Seattle-based non-profit over the past couple of years, investing $4.3 million in 2008 to help RDI and local governments provide land to women in rural India.

RDI said today that Omidyar Network Managing Partner Matt Bannick will join RDI's board of directors.

That RDI's pioneering work is getting noticed and supported on such a scale is significant. While microcredit has grabbed the spotlight and billions of dollars in investments, micro-ownership in the form of land has received relatively little notice.

Small loans have helped entrepreneurs make money from their tiny shops and businesses, but building wealth is difficult without access to property rights, especially for women.

RURAL DEVELOPMENT INSTITUTE

Renee Giovarelli (center, in white), founding director of RDI's Global Center for Women's Land Rights, talks with people in Kyrgyzstan about their land rights. In 2008 Kyrgyzstan had a per capita GDP of $2,200, the same as Sudan, and less than Yemen or Kosovo.

Over the past three decades, RDI has been changing the equation by working with governments to give poor rural people secure ownership of small plots of land.

Omidyar shook up the field of microcredit when he began investing and backing its transformation to a commercial, profit-making approach. His views have clashed with those of Muhammad Yunus, the Nobel Peace Prize-winning banker from Bangladesh who developed the concept of microcredit.

Omidyar's increasing involvement in land rights may also signal dramatic shifts. In fact, Bannick made the comparison to microfinance himself. (Microfinance includes credit and other financial services.)

"RDI is at the forefront of a high-impact movement designed to create economic opportunity for the world's poorest people through land rights--just as microfinance has done through credit," Bannick said. "RDI is the cornerstone of our work in the sector because their approach has produced sustainable change for millions. Partnering with RDI, we plan to raise the awareness of property rights as a means to transform economies through individual opportunity."

Omidyar's involvement means RDI will be beefing up its local and overseas staff, which now is composed mainly of attorneys specializing in international land rights. RDI says it will be hiring "experts in advocacy, communications, and development for its headquarters and experienced local leaders for its field offices."

RDI will use the new grant to expand existing programs in India, China and sub-Saharan Africa, and launch new projects through its Global Center for Women's Land Rights.

The investment will help RDI increase its impact, said Tim Hanstad, RDI's president and CEO. "With this grant, RDI will begin implementing an ambitious three-year plan to bring secure land rights to 9 million families living in poverty," he said. "These rights can bring about transformative economic and social benefits that improve well-being and restore dignity."

RDI was founded by Roy Prosterman, Professor Emeritus of Law at the University of Washington and himself a Nobel Peace Prize nominee, who is still active in RDI's work. I wrote a profile of Prosterman here.

The interesting marriage between online communities and the social sector has produced two more offspring:

One is a project by Global Washington called Blueprint for Action, which asks the public to help set priorities for development by posting their ideas and solutions. Readers can vote on the ideas, and the author with the most votes gets to host a session on that topic at a conference next month in Seattle.

Here's an idea someone submitted to Global Washington called checks and balances:

"We need to have an improved system of communication between people in the rural developing countries and 'bright' planners and analysts working for organizations such as Gates Foundation. Otherwise, we will find again and again that interests are not aligned with increasing the sustainable livelihoods and economic independence of the poor."

Another example of online media-philanthropy hybrids is a project to solicit audience help in choosing and awarding the best innovators, visionaries and leaders, who are profiled on Huffington Post.

Kushal Chakrabarti, co-founder of Seattle education non-profit Vittana made the Top 10 "Ultimate Game Changers in Philanthropy."

I wrote about Vittana here a few months ago, and the start-up has made some huge strides since then, including bringing student loans to Peru, Paraguay, Nicaragua and Mongolia, and getting its first repayment from students who now have jobs.

In addition, Vittana has received funding from some tech heavyweights, including Mitch Kapor and Mike Murray.

If you like what he's doing, you can vote for him over the next week or so.

The Game Changers awards honor 100 people for using new media to reshape their fields and change the world in politics, entertainment, technology, media, sports, business, style, health, environment and philanthropy

Another person who made the top 10, the "godfather of social entrepreneurship," Bill Drayton, founder of Ashoka, will be in Seattle on Nov. 17.

Leadership Tomorrow and CityClub will host a conversation with Drayton, chairman and CEO of Ashoka, moderated by Paul Shoemaker, executive director of Social Venture Partners. I won't have to travel far -- the event is being held in the Seattle Times Auditorium, 1120 John St., starting at 5 p.m.

By Sandi Doughton

Lancet editor Dr. Richard Horton joked that his lecture at the University of Washington Monday night would be "metrics-free," but the outspoken Brit couldn't help making the case for better data to guide global health and development programs.

Many of the current darlings of philanthropy, such as microcredit, have little solid evidence to back them up, Horton said. One recent study in the Philippines concluded that the small loans did not improve community well-being and actually led to contraction of small businesses.

"These fashions that grip us in waves ... when you actually end up looking at the data can often seem to be very, very thin," he said.

When the book "Dead Aid: Why Aid is Not Working and How There's a Better Way for Africa," argued that $1 trillion in international aid has only increased corruption, war and poverty, the development community had little to offer in rebuttal, Horton told the audience of faculty and students.

"We have badly failed to gather data on what a trillion of aid has done."

UW global health professor Steven Gloyd said he picked Horton to present the Steven Stewart Gloyd endowed lecture partly because of the UK-based Lancet's courage in publishing controversial papers, including one that estimated 650,000 civilians have been killed in the Iraq war, and one by researchers at the UW's Institute for Health Metrics and Evaluation that found many childhood vaccination numbers were inflated.

Horton, who works closely with IHME, is known for poking at the powerful, including the pharmaceutical industry and the medical establishment. His journal recently published a critique of the Bill & Melinda Gates Foundation's accountability and emphasis on technological solutions to global health problems.

But like everyone else in global health, the Lancet has received money from the giant philanthropy: $200,000 to publish a series on maternal and child mortality.

Horton said he'd like to see universities like the UW provide a forum where data on development and global health can be freely available - and critically evaluated.

The UW can also provide a counterbalance to Seattle's global health giant, the Gates Foundation, Horton said.

"I would hate it if Seattle was only seen as the center of technology in global health. The university can provide that added perspective to what comes out of the Northwestern U.S., and that's absolutely critical."

Norm Rice has only been on the job at the Seattle Foundation since July, but he aims to broaden the foundation's base from hundreds of wealthy donors to more than a million people in King County.

"Everybody can give, whether it's $5 or $5 million," he said.

BARBARA KINNEY

Norman Rice, former Seattle mayor and current CEO of the Seattle Foundation.

The Seattle Foundation is one of the largest community foundations in the country and the fifth largest foundation in Washington state, according to the Foundation Center, with assets of about $570 million.

With a staff of 26, the foundation has 1,200 funds under its umbrella, ranging in size from $30,000 to many millions of dollars. They include bequests from people who have made gifts to charity in their wills, and active "donor-advised funds," which help philanthropists invest their assets and make grants to charitable causes without the time and expense of running their own foundations. The foundation charges fees averaging 1 percent of the fund's balance.

Rice said he wants to get more people involved, with or without a fund. It's part of a sea change in philanthropy, a shift from passive donations to a new model shaped by a younger generation eager to see results and be personally engaged.

To broaden its appeal, the Seattle Foundation is revamping its Web site to offer detailed profiles and reviews of the non-profits and programs it funds, and allow online donations for the first time. The new Web site, expected to be launched early next year, will also have an Amazon.com-style recommendations feature to help people find programs related to their interests.

His goal is to reach as many as 1.5 million people over the next several years, getting them involved in some way with the foundation's programs. He'd also like to increase the number of donor-advised funds the foundation manages from the current 750.

Even without a lot of money to give, he thinks people can help support its long-term strategy to improve the community by working in seven areas: basic needs, the environment, the economy, education, arts and culture, neighborhoods and communities, and health and wellness.

Rice said he wants to focus particular attention on workforce development and early childhood learning.

Speaking to the Seattle Philanthropic Advisors Network (SPAN), the former Seattle mayor said he thinks "foundations are in an enviable place to be change agents" and show governments new ways to solve problems.

The foundation's assets, down 27 percent last year, have bounced back somewhat this year, growing 17 percent from January through the third quarter. While it has had to make significant cuts in its operating budget, Rice said he doesn't expect the foundation to reduce its grant making.

After taking a financial blow in the past year, non-profits have been forced to work with fewer resources. More than ever, it makes sense for them to consolidate, Rice said.

He suggested a "non profit mergers and acquisitions fund," where "those who come together get the dollars. I just believe some things we're funding are doing too many things that are alike."

"Every organization needs to look at themselves to see what they do best," he said. If someone else is doing it better, they should partner or concentrate on something else.

Amina S. Ali, African Union ambassador to the United States, made her first visit to Seattle this week, seeking to build bridges with Washington state institutions, which she says are playing a more important role in African business and development.

Ali, who is from Tanzania, represents an organization of 53 countries formed in 2002 and loosely based on the European Union, with the goal of helping integrate the continent to give it a stronger voice in the global economy while also addressing social, economic and political issues. The AU launched its first diplomatic mission in the U.S. in 2007.

Ali is the second high-level diplomat to come through Seattle in a week to meet the Gates Foundation, with a message to focus more on improving maternal health. Both Ali and U.N. Secretary General Ban Ki-moon warned that the world's goal of improving the health of mothers and children is falling further behind.

The African Union is calling attention to the issue in a new campaign to reduce deaths of women in pregnancy and childbirth.

"We found for the last 10 years the donor community is focused on HIV/AIDS, and it's a stubborn problem," she said. "But there are other issues that confront women and children that nobody is talking about. There's no reason women in Africa should die in childbirth."

"We are thinking what can we do to bring women's issues to the top?" Part of the problem is a shortage of doctors and nurses, she said. Throughout parts of rural Africa, the ratio is 1 doctor to every 40,000 to 100,000 patients.

Like Ban, Ali also talked about the important role business can play in solving global issues. In Seattle, she met with Microsoft, the Trade Development Alliance and the African Chamber of Commerce.

Mobile phones are now helping medical diagnosis, she said. In Tanzania, patients living 1,000 miles from a city are using mobile phones to send information about illnesses and receive diagnosis.

For all the wrangling over trade with China, the U.S. should take a look at the way it's investing in Africa, she said.

"Americans should start to think why the Chinese have gone to Africa while the Americans have not taken advantage of that," she said. Americans have been more cautious, sitting on the sidelines. Chinese have been aggressively pursuing business, and while the relationship is not always easy, they are helping Africans solve key infrastructure problems, especially in building ports, she said.

One thing that has mitigated risk for the Chinese companies is a Chinese government development fund targeting Africa. The $10 billion China-Africa Development (CAD) fund aims to promote economic cooperation between China and Africa and advance Africa's economic development by providing money to Chinese companies starting ventures there.

Ali said she hopes the United States can create a similar, large fund to help American companies bridge the gap and start to invest more in the continent to transform its future.

Such a fund could go a lot further than simply giving money to government aid programs, she said. "Give the fund to your own people to invest in Africa," she said.

"It can be done," she said. "China 20 years ago -- it was nothing, and then the private sector decided to work with them. Let's try to work with Africa."

The Bill & Melinda Gates Foundation is giving out $4 million in grants to help community foundations, libraries and legal aid services in Washington cope with the effects of recession.

The foundation is announcing a package of grants this morning aimed at local non-profits, including $672,000 to 10 community foundations. The money will help the foundations get government benefits to families, and fund programs to curb domestic violence and hunger.

Another $400,000 will go to the Washington State Library's "Renew Washington" grant program, funding 17 public libraries offering services to people looking for work. The libraries have seen a surge of people looking for information and resources during the downturn. The State Library will receive an additional $115,000 for advocacy, marketing and online training.

Another $3 million in Gates Foundation money will go to the Legal Aid for Washington Fund over the next three years. The fund provides legal support for state residents through a network of 26 nonprofit law centers. More than 80 percent of low-income households in the state need but can't afford legal services to deal with foreclosures, evictions, domestic violence and other problems, according to the foundation.

The 10 community foundations sharing $672,000 are the Blue Mountain Community Foundation, the Community Foundation of North Central Washington, the Community Foundation for Southwest Washington, the Grays Harbor Community Foundation, the Inland Northwest Community Foundation, the Orcas Island Community Foundation, the Skagit Community Foundation, the Three Rivers Community Foundation, the Whatcom Community Foundation and the Yakima Valley Community Foundation.

The Gates Foundation's local spending is still a small part of its overall giving. The foundation says it has given out about $20.4 billion in grants since 1994. Of that about $1.5 billion has gone to grants serving Washington state. Its budget for Pacific Northwest Initiatives is about $33 million this year, focusing on community organizations that address homelessness. Its work in Washington state also includes education and libraries. The foundation's total budget is about $3.5 billion.

Calling themselves "impatient optimists," Bill and Melinda Gates plan to talk directly to lawmakers and others in Washington D.C. tonight to push for continuing U.S. funding for global health.

CHUCK BURTON/ASSOCIATED PRESS

The Gates will tout the success of foreign aid, including contributiosn to the GAVI Alliance, a global initiative to immunize children in poor countries, which has prevented an estimated 3.4 million deaths over the last decade.

"In our visits to developing countries, Bill and I have met countless people who are alive, healthy, and productive as a result of U.S. global health programs," Melinda Gates said today. "We want Americans to know how much their generosity is accomplishing, and how much it's appreciated."

U.S. spending on global health has increased steadily, but it still makes up less than one percent of the federal budget. It was close to $8 billion this year, up from $1.5 billion in 2001.

The U.S. has started some ambitious development projects, even though the country's top post on foreign aid remains unfilled, and many pressing issues are vying for resources and attention.

The Bill & Melinda Gates Foundation has become an increasingly important and active player in global health and development. Its annual budget is more than $3.5 billion, and about half of that goes toward global health. The United Nation's annual budget is just under $4.2 billion.

The couple started a project called Living Proof to promote the success such funding has achieved in developing countries. Positive stories about foreign aid aren't getting told, they say.

The Gates Foundation has spent about $12 billion on global health since 1994.

Their aim is to cut the number of child deaths in half worldwide by 2025. Preventable deaths of children under five have declined worldwide to about 9 million in 2007 from 12.6 million in 1990, despite population growth, according to this report.

The presentation will be webcast live at www.livingproofproject.org at 4 p.m. Pacific.