Fighting poverty and helping to build a sustainable environment are not what you would expect from an car dealership. But then again, Ideal Auto is not your typical automart. Peter Kilde, executive director of West CAP, a non-profit agency serving west-central Wisconsin, explains in an interview with Edge Life.
Ideal Auto is a dealership that is a non-profit enterprise. Why did you to decide that your business would become non-profit, as opposed to for-profit?
Peter Kilde: Ideal Auto, West CAP’s car dealership, was created primarily to support JumpStart, our facilitated car purchase program for low-income families. With the dealership license and facility, we have access to the wholesale car market and a place to store, detail and deliver cars. Purchasing used cars wholesale allows us to pass these cars on to our low-income customers at significantly lower-than-retail prices, which also gives the lender a better loan-to-value ratio for the financing part of the transaction.
So IdeaI Auto is what is commonly called a social enterprise – a business established to promote a social objective, in this case helping low-income single moms, for the most part, meet their transportation needs with a good car. Because there are no investors, no profits to share with Ideal Auto owner(s), we saw no reason to separate Ideal Auto from any of the other non-profit activities of our non-profit agency.
Finally, as a non-profit car dealership supporting low-income car ownership, it is possible for West CAP Ideal Auto to accept car donations that the donor can claim as a tax deduction. And, if it is a car we can use in the program, the donor can receive the maximum value of that car rather than only what the car brings when sold, as is generally the case under the new IRS rules for car donations to non-profits.
What causes or programs does your auto dealership support?
PK: The dealership has provided great support to the JumpStart program and its replications in Minnesota and Wisconsin. In fact, without the services noted above, the program would not be feasible. We also sell cars on the retail market. This benefits the program primarily by lowering the fixed, overhead costs of the dealership and making it possible to provide our JumpStart customers with the lowest possible prices on their program cars. Retail sales are reported to the IRS as unrelated business income, and if that activity becomes profitable we will be taxed on those profits. And, because the question is often asked, we do pay sales tax on all the vehicle transactions, even the ones to qualified low-income buyers.
In the future, we would very much like to see the retail sales aspect of Ideal Auto generate a respectable profit, or, in non-profit parlance, surplus revenue. If it does, those revenues will continue to support and expand the JumpStart program in an era of decreasing federal and state funds for anti-poverty programs.
Please describe JumpStart and share what this particular program means to you and why your company offers it.
PK: JumpStart is a facilitated used-car purchase program that helps low-income families, primarily working single moms on public assistance, to purchase late model, reliable, safe, gas-sipping cars, in order for them to become more self-sufficient in our society with its car-based transportation infrastructure. In addition to providing credit repair and budget counseling, we also provide the vehicles, arrange for very favorable financing, offer a $1,500 forgivable loan toward the car purchase, put customers through a car maintenance and safety training and establish a repair fund if a major repair is required on their car in the first five years of their ownership.
To help secure great financing rates, we guarantee the loan by contracting with lenders to buy back any repossessed vehicle for the remaining balance of the loan. Lenders love this. And after six years of operations and sales to more than 240 JumpStart customers, we have only had 15 repossessions to date.
JumpStart means a great deal to us because it has proven to be a dramatically effective way to help these poor working moms become more self-sufficient. Three surveys have documented significant, if not dramatic, improvements in earnings, education, housing, quality of child care, credit ratings, financial security, community engagement and quality of life. And it saves the tax payers a bundle of money too, as these families reduce their dependence on a host of public assistance programs.
What is Ideal Auto’s relationship with the non-profit corporation West CAP, and how does that relationship affect the mission of Ideal Auto?
PK: Ideal Auto is just like any other program or activity of West CAP, a non-profit agency created 40 years ago to reduce poverty in west-central Wisconsin. West CAP’s approach to poverty reduction is to help families develop both social and economic assets. In the case of JumpStart and Ideal Auto, the customer benefits from improved financial literacy, some education about cars and a host of other social assets that result from being able to get to work as well as to recreation and other positive, motivating experiences of life. The car itself is an economic asset because, while it is not an appreciating asset like a home, it is an earning asset: it makes it possible for the customers to get to work dependably and to advance in their careers.
Please share an anecdote or two about how Ideal Auto has directly helped the community, and perhaps the feedback that you have received.
PK: The main impact that JumpStart and Ideal Auto have had is on the larger community of public policy in low-income transportation and economic advancement. The great success of this program and service as an effective strategy for getting families out of poverty has been recognized by several major foundations: the Northwest Area Foundation and the Otto Bremer Foundation, which funded JumpStart replications at two sites in western Minnesota; the Annie E. Casey Foundation, which has called on me to share our story with rural county groups across America; the Brookings Institution, doing low-income transportation policy work in Washington, D.C.; and several members of Wisconsin’s federal congressional delegation.
What is your overall feeling about the responsibility businesses have to their communities? In your opinion, how well are businesses, in general, fulfilling that responsibility?
PK: I believe it is the responsibility of all people and all organizations, regardless of their specific mission or charter, to contribute to the common well-being of all people, the planet and to the generations to follow. I also believe that the "community" of a business extends to wherever its activities are felt, not just where their administrative offices or retail outlets are located. Having said that, some businesses are great for their communities. Some are lousy.