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Upcoming Council Webinars and Events
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• Show Me the Money: Fundraising
Tips for Community Foundations
in the New Political Landscape
DEC 13
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• Leading Together ConferenceMiami, FL— APR 30-MAY 1
• HR SummitAtlanta, GA— SEP 11
Housekeeping Items
A Primer for Funders on CDFI’s: Co-Investing in Opportunity Zones and Inclusive Community Development
Dec 12, 2018 | Opportunity Finance Network
WELCOME
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Today’s Agenda
Overview of the CDFI Industry
Foundation and CDFI Partnership Models
▪Opportunity Zones
Resources to Support Your Work
Q&A
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Today’s Presenters
Donna Fabiani, EVP Knowledge Sharing, OFN
Jennifer Vasiloff, Chief External Affairs Officer, OFN
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Overview of the CDFI Industry
What Is a CDFI?
Community Development Financial Institution
Mission-driven financial intermediaries that benefit low-income & low-wealth people and places
Capital + Development Services
Create opportunities
▪ Jobs & business growth
▪ Affordable housing
▪ Community services
▪ Financial services
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Who Do CDFI Serve?
CDFIs serve all 50 states, District of Columbia and Puerto Rico
On average,
▪82% of clients are low-income, low-wealth or historically disinvested
▪55% of clients are people of color
▪45% of clients are female
▪27% of clients are rural
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A Bird’s Eye View of CDFIs
$
$$$
Sources of
Capital
Users of
Capital
Community Development Financial Institutions (CDFIs)
RegulatoryMotivatedInvestors
MissionMotivatedInvestors
PolicyMotivatedInvestors
Small businesses, microenterprise, community service providers, housing developers, commercial
real estate developers, and individuals
Borrowers and Customers
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CDFI Institution Types
Community DevelopmentInstitution
Community DevelopmentBanks
Community Development Credit Unions
Community Development Loan Funds
Community Development Venture Capital Funds
Structure For-profit, depository Non-profit,Cooperative, depository
Primarily nonprofit; some for-profit
Typically for-profit
Regulation FDIC, Federal Reserve, OCC, OTS,and state banking agencies
National Credit Union Administration
Unregulated Unregulated
CapitalizationStructure
Insured deposits and equity
Insured deposits, secondary capital, and equity
Unsecured and secured debt, subordinated debt, and grants
Equity and equity-like debt
SectorsServed
Loans and retail financial services for individual and commercial customers
Loans and retail financial services for individuals/ members
Loans for housing, microenterprise, small business, community facilities, nonprofits, and commercial real estate
Equity and debt with equity features to businesses with high growth potential and social impact
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Current Number of Certified CDFIs
15 Venture
Capital Funds2%
226 Banks/Thrifts and Holding Companies
21%
277 Credit Unions26%
541 Loan Funds51%
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Source: CDFI Fund, February 2018
1,059 Total CDFIs
Total Asset Size by CDFI Type
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Source: FDIC Call Report Data, Q4 2014, Opportunity Finance Network, FY2013, National Federation of Community Development Credit Unions Q4 2014
Smallest Largest Mean Median
Bank ~$15 Million $2,500 Million $304 Million $220 Million
Credit Union $43 Thousand $6,000 Million $177 Million $25 Million
Loan Fund <$300 Thousand $1,000 Million $48 Million $15 Million
Venture Capital Fund
$ 5 Million $150 Million $30 Million $24 Million
Types of CDFI Financing
Affordable Housing
Commercial Real Estate
Consumer Finance: Alternative to Pay-Day Loans
Education: Charter School Financing
Healthcare: Community Health Centers
Healthy Food Financing: Food Deserts
Nonprofit Organizations (including other CDFIs)
Residential Mortgages & Home Repairs
Small Business and Microenterprise
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Loan Fund Lending Sector Concentrations*
Consumer, 0.3%
Intermediary, 1.0%Microenterprise, 4.0%
Commercial Real Estate, 9.0%
Housing to Individuals, 9.2%
Business, 14.0%
Community Services, 19.0%
Housing to Organizations,
42.0%
Other, 2.0%
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* From OFN’s Loan Fund members based on 2016 data; total 2016 financing = $16.4 B; outstanding = $37.9 B; credit unions and banks report categories to regulators in different categories.
About the CDFI Fund (cdfifund.gov)
Established by Community Development Act of 1994
Resources & Roles
▪ CDFI and CDE certification; Equity capital at the
institution level; Capacity building for CDFIs; New
Markets Tax Credits; Bank Enterprise Award Program;
CDFI Bond Guarantee Program; Capital Magnet Fund
CDFI Applications for Financial Assistance (FA) and
Technical Assistance (TA) to the CDFI Fund
Year Requested Awarded
FY2017 $567 million $171 million
FY2016 $675 million $170 million
FY2015 $435 million $160 million
FY2014 $475 million $161 million
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CDFI Certification
The CDFI Fund certifies that a financial institution meets seven requirements:
Is a legal entity at the time of Certification application
Has a primary mission of promoting community development
Is a financing entity
Primarily serves one or more target markets
Provides development services in conjunction with its financing activities
Maintains accountability to its defined target market
Is a non-government entity and not under the control of any government entity (Tribal governments excluded)
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CDFI Certification
Enables
▪ Access to funding from U.S. Dept of Treasury
▪ Eligibility for its own and other government programs
▪ CRA-related funding from banks and foundations
Does Not Ensure
▪ Prudent lending or financial health
▪ U.S. Department of Treasury funding
▪ Consistent accounting or reporting standards
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Questions?
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Foundation and CDFI Partnership Models
Which Investors Fund CDFIs
Banks and Financial Institutions
Government
Foundations
Individuals
Faith-based Institutions
Socially Responsible Entities
Corporations, including insurance companies
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Sources of CDFI Loan Funds’ Borrowed Funds
% Borrowed Funds from:
Banks/Thrifts/Credit Unions 38%
Corporations 5%
Federal Government 21%
Foundations 11%
Individuals 3%
National CDFI Intermediary 3%
Nondepository Financial Institutions 2%
Religious Institutions 4%
State/Local Government 7%
Other 5%
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Source: Opportunity Finance Network Member Data, FY2016
How Foundations Work with CDFIs
Grants
▪ Operating
▪ Capacity Building
▪ Equity
Program Related Investments (PRIs)
▪ Loan capital
CDFI Note Purchase
Deposits in CDFI Banks and Credit Unions
Co-lending into Projects
New: Opportunity Zones
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Opportunity Zones
Tax incentive for investors with capital gains liability
Equity investments in real estate and businesses located in designated Opportunity Zones
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Opportunity Zones
Opportunity Zones Coalition of Foundations and Community Development Stakeholders convened by the Beeck Center
A few CDFIs are planning to establish and manage Opportunity Funds
Kresge Foundation grant to Calvert Impact Capital to establish Opportunity Zone Incubator
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Why Investors Choose CDFIs
Efficiency▪ Leverage
▪ Market Knowledge and Reach
Impact/Mission▪ People
▪ Communities
▪ Markets
Risk Management
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Resources to Support Your Work
Side by Side
Use benchmark data to compare to similar CDFIs and make business decisions
Understand differences in lending sectors
Educate board members
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https://ofn.org/opportunity-finance-institutions-side-side
CDFI Coverage Map
Shows CDFI coverage:▪ Where CDFIs are located
▪ Where they are providing financing and other services
▪ Which financing sectors they are serving
▪ How these change over time
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https://ofn.org/cdfi-coverage-map
CDFI Connect | cdficonnect.org
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CDFI Connect Communities:• CDFI Consumer Marketing Toolkit• CDFI Women’s Network• Job Board
• Open Forum• Small Business Finance
