01 Mar 2005
One-on-One with Edwin Reedby Mary Ellen GardnerTopics:
Edwin C. Reed (MBA ’79) spends Saturdays with his family, but on Sundays, you’ll always find him at the office. Reed is the CFO of the Allen African Methodist Episcopal Church in Jamaica, Queens — a powerhouse religious institution and one of the nation’s leading community-development organizations. With more than 18,000 members, Allen’s congregation is the largest in the state of New York; the 2,500-seat Greater Allen Cathedral, the organization’s centerpiece and the site of Reed’s office, regularly fills to capacity for its Sunday services.
Reed joined the Allen church in 1983 and was soon working side by side with its dynamic pastor, the Reverend Dr. Floyd H. Flake, to take Allen’s ministry outside the church walls. In 1986, after eight years as a senior executive at General Motors, Reed left GM to manage Flake’s successful bid for Congress and then served as his chief of staff in Washington for the next eight years. Reed returned to Allen as CFO in 1995 to oversee the building of its $23 million cathedral, which was dedicated two years later. (That same year, Flake resigned from Congress to return to Allen.) Since 1997, Reed has managed the financial operations of Allen’s numerous ministries and eleven affiliated corporations, its 350-person staff, and its total assets of more than $92 million.
After three years of commuting to Virginia Union University for Friday and Saturday classes, Reed received a master of divinity degree and was ordained in June 2004.
As CFO, what sorts of activities do you oversee?
Allen’s corporations provide myriad social services and operate a school, a resource center for battered women, senior-citizen complexes with 630 units, a for-profit transportation company, and nonprofit entities responsible for neighborhood preservation, affordable-housing development, and commercial revitalization. Total revenues for Allen will soon top $25 million per year, with about half coming from donations to the church (the cathedral’s average weekly collection is $235,000) and the other half from city, state, and federal sources.
Why did Allen get involved with community development?
For some years, the area around the church had been in steady decline, with vacant storefronts, deteriorating houses, and neglected properties. Gang activity and drug use were on the increase. Reverend Flake arrived at Allen in 1976 with the clear philosophy that a church cannot simply be a building in the community. Ministry is serving the needs of others. Allen’s mission is to build community through uplifting people, especially children, the elderly, and those who need love and a little guidance to achieve the purpose in their lives.
Can you describe some of the church’s projects?
The central components of Allen’s outreach are economic and community development, housing, and education. Our first project was a 300-unit, senior-citizen housing complex completed in 1978. We have since doubled the number of senior units and made tremendous investments in rehabbing existing houses and apartment buildings as well as ground-up construction of homes sold directly to qualified buyers. In 1982, we built the Allen Christian School (ACS), which, after a recent expansion, can now accommodate 800 students from prekindergarten through eighth grade. With a 98 percent graduation rate and test scores that lead the district, ACS ranks in the top 5 percent of schools in Queens.
In all our endeavors, excellence is the standard, not the goal. We believe that performing at the very highest level is critical to having a long-term impact.
Has Allen increased its involvement in developing commercial enterprises?
Yes, it has. In addition to providing outstanding education, competitive communities must offer high quality goods and services — an escalating need in our neighborhood because of Allen’s success in housing development.
Allen completed its first commercial strip development in 1983. Since then we have pursued a strategy that has overcome historical biases and roadblocks to urban reinvestment.
How did you contribute to this strategy?
I led a comprehensive study that helped establish a vision for change in our community. In addition to assessing needs and identifying financially viable opportunities in this market, we defined an acquisition and property control strategy, secured public/private funding partnerships, and structured responses to competitive pressures.
The development plan we created takes into account the unique character of underserved urban communities where houses of worship are stable, deeply rooted institutions. We are adept at leveraging both human and financial resources and are committed, in particular, to nurturing entrepreneurship. Our model of community and business development reflects, and is responsive to, the needs of faith-based institutions and their members.
The centerpiece of our present strategy is a $15.5 million mixed commercial and residential development across the street from the cathedral.
Do you give Allen members preference, for example, in the church’s housing projects?
No. The application process is open, and qualified buyers are selected on the basis of lotteries and other methods. Our projects attract and retain people in the neighborhood, which contributes to stability, further investment, and a broader tax base to support services. One of Allen’s greatest achievements is that the majority of local residents have come to share our objectives.
How did you raise the money to build the cathedral?
In 1995, my HBS education and corporate financial experience were central to persuading commercial lenders that it was a good business decision to make a $15 million loan to a church. I presented our proposal in classic business terms as a capacity expansion. When we outgrew our 600-seat church, we moved to the school gymnasium, which held 1,500, and we still had people standing outside. The new cathedral would double our seating capacity, and I could demonstrate that each time we added seats, average attendance and contributions increased. I made a cash-flow analysis and revenue projections that helped lenders understand our business model.
We’re now able to negotiate and secure reasonable financial terms due to the reputation we’ve established.
What other kinds of challenges have you encountered?
Successful community development is as team-oriented as any business. You have to be a skilled coalition builder among your financial partners, government officials, and contractors as well as among the varied constituencies in the community.
The biggest challenge, ironically, is our own success. Due, in part, to our initiatives, people have recognized the value in Southeast Queens, and the rapidly rising cost of land has become an inhibiting factor to future development. Before we built the cathedral we could buy a storefront in the neighborhood for around $80,000. Today, properties can cost up to $250,000. We’ve learned that churches, like any organization in a competitive environment, must have both the will and the wherewithal to be early movers and take advantage of opportunities when they arise.
As a major stakeholder in this community, we are committed to finding solutions that enable current residents to live and prosper here.
What’s ahead for Allen and for you?
We will continue to implement our strategic plan in this area, but more of my time will be allocated to taking the Allen model of faith-based community development to cities all across the country. The message I bring is that opportunities for urban communities are limited only by the vision of their leaders. We must not only envision possibilities, but also recognize that taking ownership of our communities requires broad participation.
Devotion to a higher purpose makes my work rewarding. It takes time and commitment to get things done, but you have to keep pushing. I like to say we have to be aggressively patient.
Class of MBA 1979, Section A