Insider trading. If you have inside knowledge of an imminent and material change about to take place and you act upon this knowledge for personal gain, you have committed a felony. Just ask Martha Stewart. The law is based on a "fairness factor" - a belief that every investor (or would-be investor) should have equal access to pertinent information that might influence the financial performance of a publicly held corporation. The rules on stock trading are clear. But is it insider trading when you know that a depressed neighborhood is about to rebound and you buy up property while it is still devalued? When the issue came up at a recent FCS board meeting, some of our directors said "Absolutely!" It's taking unfair advantage. It's using our inside knowledge for personal or organizational gain. But others cautioned, "Not so fast." This is about land, not stock. And besides, unless someone with a concern for lower-income residents acts in a timely way, escalating land costs will eventually push them all out. If we are committed to the poor, we must buy up property when it is affordable. Otherwise, a great injustice will be done.
It's a wonderful dilemma, really. Not so long ago the hope that inner-city property values would ever rise again was little more than the wishful fantasies of long-ignored seniors. The only money to be made in these communities was by slumlords and drug dealers. But all that is changing. A new generation of young professionals is re-discovering the advantages of in-town living. Imaginative architects are turning abandoned warehouses into avant-garde studio apartments. Charm is returning to trash-strewn streets lined with boarded up bungalows. Urban neighborhoods are springing back to life. I will choose any day the challenge of harnessing this new economic life over that of combating the relentless forces of deterioration.
What sparked the lively debate at our board meeting was when I related that a couple of real estate developers had taken me to lunch with the thinly veiled motivation of finding out what next community FCS was planning to take on. Our ministry, having played a key role in turning around four urban neighborhoods, has become something of a barometer to vigilant speculators. To "leak" our plans to profit-driven entrepreneurs, even if they are supporters of our ministry, seemed to some of our board members unethical.
The discussion got very personal when two of the board members disclosed that they had purchased with their own money vacant houses in our target neighborhood. It was one thing for FCS to buy property with donated funds in order to rid the area of crack houses and secure affordable housing for the poor. Even for the ministry to sell property (at a modest gain) to new, middle-income, ministry-minded residents seemed somewhat acceptable, since the money would be recycled into ministry purposes. But for a board member to make personal profit - especially when he or she had helped shape the community revitalization plan - was in the opinion of several board members insider trading, pure and simple.
"But someone has to prime the pump," others argued. Someone has to see the redeeming value in a neglected neighborhood. Someone has to have a vision and believe enough in the mission to put themselves at risk. What better expression of commitment than to invest one's own resources in reclaiming a community lost for years to the darker forces! These neighborhoods have suffered precisely for this very reason - disinvestment, people pulling their money out of the community, stores closing up, banks refusing to make loans there. Any legitimate investment is like a breath of life-giving fresh air. And so what if someone ends up making a return on his investment? They deserve it. They took the risk. Besides, we're not talking huge windfall profits here. We need to celebrate investors like this!
"It just doesn't pass the smell test," the dissenters countered. How does it look for the privileged to profit from the plight of the poor? The press would have a field day - "Non-profit ministry exploits poor neighborhood!" The credibility of FCS could be badly compromised if it were discovered that the organization (or its directors) used its knowledge of future development to assemble land at bargain prices knowing full well that the value would skyrocket in a few months.
"Far better that a ministry control development than greedy speculators," the debate continued. We can ensure that the community is redeveloped with a good mix of affordable housing, with seniors protected from unscrupulous schemers who would con them out of their homes, with a healthy leavening of new, ministry-minded neighbors. If we control the land we can induce much needed businesses back into the area, establish architectural guidelines to preserve the historic integrity of the community, influence zoning to achieve the highest and best land use. Otherwise, the market will drive development and the market has no conscience, no concern for those who will be displaced, no vision for reweaving the fabric of community.
"It's a slippery slope," was the response. "It's being wise as serpents and harmless as doves," came the retort. "It's blurring the line between ministry and profit," insisted another. "It's harnessing market forces for a redemptive cause," the return volley came. The debate went on long past the scheduled meeting time with no end in sight. The only point of unanimous agreement was that the issue was so vitally important that it deserved careful study. A subcommittee was appointed, an expert ethicist will be called in, a policy recommendation will be drafted. The next board meeting promises to be a spirited one. Any input?