The Center for Financial Services Innovation, an affiliate of the ailing ShoreBank Corp., says it is not only insulated from the bank's troubles but thriving.
The Chicago nonprofit organization, which focuses on financial services for underbanked people, "is in extremely strong financial shape, and our future is really bright," Jennifer Tescher, its director, said in an interview Thursday. "Our finances are completely separate from ShoreBank — there's no impact there at all."
ShoreBank, a $2.5 billion-asset Chicago community development bank, is beset by dwindling capital, mounting losses and regulatory scrutiny. Now it is reportedly seeking a $50 million bailout from the state of Illinois.
But its affiliate, which was founded in 2004 with funding largely from the Ford Foundation, was unaffected by the banking company's capital problems, Tescher said. "Our financial model is completely sustainable. We get no funding from ShoreBank and haven't for a couple years," she said.
Tescher described the current relationship between her organization and ShoreBank's holding company as "a strategic alliance. We share a common mission, and ShoreBank has a couple of representatives on my board of directors."
The center leases office space from ShoreBank's international consulting arm and also buys some shared services from the bank, she said, but "my back office isn't tied to ShoreBank's in any way that puts CFSI at any risk."
The Ford Foundation remains the center's largest funder, according to Tescher; others include the Annie E. Casey Foundation, Citigroup Inc.'s Citi Foundation and Bank of America Corp. The center does not disclose how much each foundation contributes, but Tescher said, "Roughly half of our revenue comes from philanthropic sources and grants, and roughly half comes from a variety of different business activities."
(The center co-sponsors the annual Underbanked Financial Services Forum with SourceMedia Inc., the parent company of American Banker.)
