Community Development Financial Institutions (CDFIs) bridge the gap between low-income individuals, families and businesses and the financial resources that they need in order to thrive. CDFIs leverage their financial resources by working with state and federal agencies, foundations, other financial institutions, and private companies.
One such company is CNote— a financial technology company based in Oakland, California. Created by Catherine Berman and Yuliya Tarasava, CNote is on a mission to build a more inclusive economy by enabling socially-conscious investors to support communities and causes that matter to them. For CNote’s growing list of CDFI partners, it unlocks a new capital source of individuals and institutions looking to invest in loans that fund women and minority-led businesses, build schools and affordable housing, and support economic development in underserved communities.
CNote’s technology enables investors to register online at www.mycnote.com and begin investing in CDFIs, certified by the Department of Treasury’s Community Development Financial Institutions Fund (CDFI Fund), within minutes. Along with providing customized investing solutions for larger clients, CNote has a suite of off-the-shelf investment products that target various investment goals. Investors benefit by earning interest competitive with other market offerings, while directly supporting small businesses and economic development in underserved communities. Through this system, CNote is able to offer impact investments that can scale with investor demand and match their thematic (racial equity, gender equity, etc.) and geographic investment preferences. CNote offers a few different core investment options for investors to choose from, including the:
- Wisdom Fund—invests in CDFIs that lend to female entrepreneurs, particularly targeting women of color. The minimum investment is $100,000, and the fund is designed to generate a 1.0% annual return. The fund is currently available only to accredited investors. Individuals are accredited investors if their net worth is at least $1 million, excluding the value of their primary residence, or they have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
- Flagship Fund—serves as a diversified CDFI investment vehicle, is open to all investors, has no minimum level of investment, and currently offers a 2.50% annual return.
During the pandemic, CNote conducted additional outreach to potential investors, which stressed the importance of investing in CDFIs that provide essential economic support to small businesses and communities hardest hit by the COVID-19 pandemic. This outreach included a COVID-19 informational page on the mycnote website that provides investors with regional data on the impact of the pandemic, as well as direct links to CDFIs that scale small business relief efforts with grants or investments. One investor, Mastercard Center for Inclusive Growth, partnered with, and provided support to, Certified CDFI Grameen America to make technological upgrades in order to continue virtual operations, including dispersing loans digitally to its customers during the pandemic.
CNote’s Wisdom Fund has proven to be a lifeline for small businesses, including restaurants and culinary businesses that have had an especially difficult time remaining open during the pandemic due to governmental mandates restricting the number of customers allowed inside buildings, spacing requirements, etc.
Culinary Artistas is a woman-owned culinary business in San Francisco that initially struggled, like many other businesses during the pandemic. Owned by Vanessa Silva, the business offers a variety of culinary activities, including cooking classes, catering, and the location also serves as a venue for events.
Ms. Silva was able to keep her business going with assistance from Pacific Community Ventures (PCV), an Oakland-based CDFI and partner in the CNote Wisdom Fund. Through its partnership with CNote, PVC provided her with small business coaching, mentorship, and technical assistance. Through this assistance and their own determination, Culinary Artistas began offering a new slate of pandemic-friendly activities, including Zoom virtual cooking classes and events, as well as shippable ingredient kits all of which proved to be a successful recipe in helping the company to thrive during the difficulties of the pandemic.
The success of businesses such as Culinary Artistas and the ability of CDFIs to easily access investor funding is reflective of CNote’s two core principles: That everyone deserves an equal opportunity to pursue financial freedom and that each of us can play a part in building a more equitable world simply by changing where we invest and hold our cash. Through their investment funds, CNote has helped deliver over $50 million in new capital to CDFIs. Investments facilitated through CNote have made it possible for CDFIs to deploy relief and forbearance measures for clients working to endure the economic effects of the pandemic.
Gail Thomas is a Communications Specialist with the CDFI Fund's Office of Legislative and External Affairs.