Professor Fairchild Wins MacArthur Grant

Oct. 4, 2007 — Darden professor Greg Fairchild has won a three-year, $850,000 grant from the John D. and Catherine T. MacArthur Foundation to support his research into the business models of successful Community Development Financial Institutions and their evolution.

CDFIs are financial intermediary organizations dedicated to fostering the development of communities through financial and advisory assistance. These organizations provide financial products for the under-banked, debt capital for housing and business development, and risk capital to entrepreneurs.

“One of the big things CDFIs do is provide housing loans for people with low and moderate income,” Fairchild said. “They can be a counter to subprime lenders. Some of the big CDFIs have started bundling and securitizing their loans. So one of the things we’ll be looking at is how they’ve done that and to whom they’ve sold these loans. In that sense, I feel like I’ll be working on something that is both socially and economically important.”

Fairchild, the study's lead investigator, will collaborate in his research with professor Josh Lerner of the Harvard Business School. Their work will provide important insights into many related business- and public-policy issues, leading to a better understanding of how the best practice of financial institutions can help communities grow.

“The foundation contacted me last year and asked me to apply, based on some of my earlier research,” Fairchild said. “They basically asked me, ‘What would you like to study?’ and we went from there.”

The bulk of the grant will be devoted to interviewers, transcribers and quantitative analysis. Travel is also involved, and there is money available for student assistance, Fairchild said. “There is also a good bit of archival and library research,” he added. “And finally, there is money that goes into studying CDFI cash flows to determine which ones have been putting their money to work most effectively in their communities.”

Founded in 1955, the University of Virginia’s Darden School of Business is a professional school that works to improve society by developing leaders in the world of practical affairs.