Overview of the CDFI Industry Lauren Stebbins, Opportunity Finance - PowerPoint PPT Presentation

Overview of the CDFI Industry Lauren Stebbins, Opportunity Finance Network April 1, 2016

CDFIs are… Private, mission-driven financial institution benefitting low-  income, low-wealth, and other disadvantaged people & communities CDFIs serve… Customers that cannot meet conventional collateral or  underwriting requirements CDFIs provide… Innovative financing products and/or services as well as  technical assistance CDFIs create… Economic opportunity in the form of:   Jobs  Affordable housing units  Community services  Financial services for the underbanked and unbanked

About CDFIs  http://ofn.org/what-opportunity-finance  CDFIs lend to:  Community Businesses — including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing  Individuals needing consumer products  CDFIs are dedicated to delivering responsible, affordable financial products and services that benefit individuals and communities  CDFIs are profitable but not profit-maximizing

CDFI Characteristics  Strong market knowledge  Market driven  New products and models  Long-term relationships with customers  More patient than conventional financial institutions  Technical assistance a critical component of relationship

CDFI Institution Types Community CD Banks CD Credit CD Loan CD Venture Development Unions Funds Capital Funds Institution Structure For-profit Non-profit, Primarily Typically for-profit Cooperative nonprofit; some for-profit Regulation FDIC, Federal National Credit Unregulated Unregulated Reserve, OCC, Union OTS, and state Administration banking agencies Capitalization Insured deposits Insured deposits, Unsecured and Equity (and and equity secondary capital, secured debt, potentially debt) Structure and equity EQ2, and equity (grants) Sectors Loans and Promote Loans for housing, Equity and debt depository ownership of microenterprise, with equity Served services for assets and savings small business, features to mid- housing, business, for individuals; community sized businesses commercial real affordable credit facilities, and with high growth estate, and and retail financial commercial real potential and consumer services estate social impact

Scope of CDFI Industry  991 certified CDFIs active in the U.S. as of 1/31/16  Approximate breakdown  186 CD Banks & Depository Holding Companies  267 CD Credit Unions  14 CD VC Funds  524 CD Loan Funds  Over $90 billion in total assets  CDFIs operate in every state serving rural, urban, and Native communities and markets

Number of Certified CDFIs 7 Source: CDFI Fund Lists of Certified CDFIs 2006-2015

CDFI Asset Growth Source: Social Investment Forum, 2012 Report on Socially 29 Responsible Investing Trends in the United States, 2015 data from FDIC, NCUA and trade associations

CDFIs by Total Assets Source: FDIC Q4 2014, National Federation of 9 Community Development Credit Unions Q4 2014, Opportunity Finance Network 2013, Community Development Venture Capital Alliance 2014

Measuring Success  Financial and Social Returns  Financial  Preserving investor capital  Returns  CDFI financing has produced more than:  119,000 businesses  1,400,000 housing units  9,500 community facility projects  720,000 new or continuing jobs *Source: OFN’s annual member data 2013

Types of Financing Small business and microenterprise  Commercial Real Estate  Affordable Housing  Nonprofit Organizations  Education: Charter School Financing  Healthcare: Community Health Centers  Health Food Financing: Food deserts  Residential Mortgages & Home Repairs  Small-dollar consumer loans  Venture Capital 

Outputs and Outcomes of CDFI Financing Business and Community Commercial Real Consumer Housing Microenterprise Facilities Estate • Jobs Created or • Healthcare Slots • Commercial Real • Payday Loan • Housing Units Retained Estate Developed Alternatives Created, • Education Slots or Rehabbed Renovated or • Financing to • Credit Builder Loans • Childcare Slots Preserved Businesses Owned • Credit Counseling or Controlled by • Residential • IDAs (Individual Minority, Women, Mortgage Loans Development or Low-Income Accounts) Individuals • Financial Literacy for Adults • Financial Literacy for Students/ Children

Other CDFI Products & Services  Real Estate Development & Management  Research  Advocacy  Other

Where CDFIs Work Rural Vs Urban Minor Urban Rural (not in (MSA<1MM), MSA), 29% 27% Major Urban (MSA>1MM), 44%

CDFI Customers Higher percentages than conventional financial institutions to: 48% Women 61% Borrowers 74% Minority Low- Borrowers Income

Industry Trade Associations and Membership Organizations Play a critical role in industry building:   Financing  Capacity building and consulting  Advocacy  Data & research  Strategic leadership  Industry initiatives

Industry Trade Associations and Membership Organizations Focus Website Aspen Institute Microbusiness aspeninstitute.org Association for Enterprise Microbusiness microenterpriseworks.org Opportunity (AEO) Community Development CD Banks cdbanks.org Bankers Association (CDBA) Community Development CD venture capital cdvca.org Venture Capital Alliance (CDVCA) CDFI Coalition Advocacy - CDFIs cdfi.org National Community Investment CD Banks & CUs ncif.org Fund (NCIF) National Federation of CD Credit Unions cdcu.coop Community Development Credit Unions (NFCDCU) Opportunity Finance Network CDFIs ofn.org (OFN)