CDFI Impact Blog

 

 

Music to My Ears: The Financial Services Sector Helping Build the Capacity of CDFIshttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=49Music to My Ears: The Financial Services Sector Helping Build the Capacity of CDFIs<div class="ExternalClass1D6CC504FE3E4638A47500583295A276"><p>​<em>Judy Chapa is the Vice President of Corporate Social Responsibility at Financial Services Roundtable and was appointed by President Trump to the Community Development Advisory Board, the CDFI Fund's advisory committee. She is one of the two members representing national consumer or public interest organizations. This post was originally published to the Financial Services Roundtable's Corporate Social Responsibility </em><a href="http://www.fsroundtable.org/music-ears-financial-services-sector-helping-build-capacity-cdfis/">webpage</a><em>.</em> </p><p>How many of you still remember when CDs made you think of music? I still remember using the association of music CDs to get consumers interested in opening checking or savings accounts and Certificates of Deposits (CDs). Today it is CDFIs that are a focus for me. <a href="/Documents/CDFI_infographic_v08A.pdf">Community Development Financial Institutions</a> (CDFIs) are organizations that aim to provide capital and technical assistance to families, individuals and small business owners who are unable to receive traditional bank loans. Their customers live in underserved communities and often require more flexible loans compared to those offered by traditional financial institutions.</p><p>CDFIs also aid in community development, increase access to capital, create jobs and provide an opportunity for affordable housing. Often, certified CDFIs offer financial literacy programs that are as unique and tailored to their customers as their financial services and products. As in all financial literacy programs the goal is for consumers to make informed decisions, and never is this more important that in economically distressed communities. Knowledge is power and financial literacy can help empower those in low-income areas with the knowledge and skills needed to graduate into the financial mainstream. </p><p>On a recent trip to south Texas with the U.S. Department of the Treasury's CDFI Fund Director, Annie Donovan, we saw firsthand how CDFIs working in Las Colonias, an area of persistent poverty, are making a difference.  While it was Director Donovan's first trip to McAllen, Texas, it was not for me. I grew up just down in the road in Roma, Texas.  It was no surprise to me that the area is considered persistently poor (when 20% or more of the population has lived in poverty for the last 30 years). The residents are resilient, hard-working and forming CDFIs that have the potential to disrupt the cycle of poverty. CDFIs have the potential to disrupt poverty by increasing access to capital, but this alone is not enough. Education is a prerequisite for meaningful change. </p><p>In McAllen, Texas, we met with Bobby Calvillo, the Executive Director for Affordable Homes of South Texas (AHSTI), and his team.  Since 1976, AHSTI has been dedicated to improving substandard housing conditions, and is a one-stop shop for home ownership including: land development, general contracting and providing a full-service mortgage company.</p><p>AHSTI supports consumers every step of the way with homebuyer education, financial fitness and post-purchase classes. By helping people increase their savings, reduce debt and maintain their home, consumers can buy a house, and keep it.  AHSTI has a home that was built as a teaching tool for simple home repair and maintenance. Here, the <a href="https://www.ahsti.org/homebuyerdevelopment">financial literacy classes</a> included everything from setting up a budget to cleaning out your garbage disposal and finding the stud in your wall! <br></p><p style="text-align:center;"><img src="/impact/PublishingImages/Lists/Posts/AllPosts/IMG_0205.jpg" alt="IMG_0205.jpg" style="margin:5px;width:400px;height:266px;" /> </p><p>BBVA Compass has a large presence in Texas with 336 branches. They have invested $35 million to build CDFI capacity in struggling areas of Texas, including Las Colonias. These long-term investments help revitalize low-income communities.  In addition to its direct investment in CDFIs, BBVA's approach to aiding CDFIs also includes their partnership with the Opportunity Finance Network to create the Opportunity Fellows Program. Each fellow represents CDFIs from across the country, and this year, Cynthia Garcia from the AHSTI, was chosen as a fellow.  </p><p>It is exciting to learn that other traditional financial institutions are also supporting CDFIs to build capacity. For example, in Bloomington, Indiana, PNC Bank provided seed funding for a recently launched pilot program called "<a href="https://bloomington.in.gov/news/2018/03/28/3434">CDFI Friendly City</a>".  This program incentivizes CDFIs to come to Bloomington with $2 million in public funding that can be used to leverage private capital. The Mayor of Bloomington, John Hamilton, is behind this push for a new approach to financing community development. Using public funding to attract investors is a creative approach for small communities that may not have the resources to support a "stand-alone" CDFI. Mayor Hamilton says that $2 million in public funding would "leverage at least $4 million from outside private investors." </p><p>Another creative way for mainstream financial institutions to support CDFIs was demonstrated by <a href="/impact/Pages/BlogDetail.aspx?BlogID=38">Regions Bank</a> in 2015. They donated two empty branch locations to HOPE Credit Union, a certified CDFI, along with a $500,000 grant to support its operations in rural Mississippi. These branches are both located in areas with high poverty and unemployment rates. By helping establish critical infrastructure to aid struggling communities, Regions helped keep a community alive.</p><p>It wasn't until long after I had moved away from Roma, Texas, and began working in the financial services industry, that I became aware that I had grown up in an underserved community. Not because I was unaware of the poverty, but because I was aware of the wealth of spirit and determination of those around me. It is that same spirit that makes CDFIs succeed and continue to grow, but not without the help of traditional financial institutions investing and supporting CDFIs across America.  </p><p>So now you know that there are music CDs, Certificates of Deposits and Community Development Financial Institutions, and it is music to my ears hearing that another traditional financial institution is investing in CDFIs. </p></div>Judy J. Chapa2018-04-17T14:45:00ZCommunity Development Advisory Board49GP0|#6977010d-91c8-405e-8f44-4df9b1fb4ec9;L0|#06977010d-91c8-405e-8f44-4df9b1fb4ec9|Bank Enterprise Award Program;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#0760f5d5-6360-4d45-ba32-761ff5345cd1;L0|#00760f5d5-6360-4d45-ba32-761ff5345cd1|CDFI Program;GP0|#6c6d17ef-fcb5-4e67-b444-d90ca9e01872;L0|#06c6d17ef-fcb5-4e67-b444-d90ca9e01872|Banks
A CDFI Program Financial Assistance Success Story: Spring Bankhttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=41A CDFI Program Financial Assistance Success Story: Spring Bank<div class="ExternalClass2C7FE8E700A54274A8C9EEE3397C76EB"><p>With New York City’s high cost of living, making ends meet on a modest salary can be challenging. Even when financially stable New Yorkers are faced with an emergency, the ability to access sources of credit can be very expensive.</p><p><a href="/Documents/Spring%20Bank%20Impact%20Story%20112017%20Final.pdf">Read full story here.</a></p><p> </p></div>2017-12-04T22:24:00ZLocal Impact41GP0|#0760f5d5-6360-4d45-ba32-761ff5345cd1;L0|#00760f5d5-6360-4d45-ba32-761ff5345cd1|CDFI Program;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#6c6d17ef-fcb5-4e67-b444-d90ca9e01872;L0|#06c6d17ef-fcb5-4e67-b444-d90ca9e01872|Banks;GP0|#e5f0b692-95a5-41ec-aba7-eab8e43309f9;L0|#0e5f0b692-95a5-41ec-aba7-eab8e43309f9|New York
Tackling Banking Deserts By Giving New Life to Unused Real Estatehttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=38Tackling Banking Deserts By Giving New Life to Unused Real Estate<div class="ExternalClass61683918A3F0450FA5E0A75A806E3FB4"><h3>A BEA Program Success Story - HOPE Credit Union Receives Two Regions Bank Branches </h3> <br> <p>Last month, the CDFI Fund announced the selection of 102 FDIC-insured depository institutions to receive $18.6 million in fiscal year (FY) 2016 Bank Enterprise Award Program (BEA Program) grants. </p><p>The BEA Program recognizes that it takes financial institutions of different types and sizes to meet the various needs of communities across the nation. One of the primary objectives of the BEA Program is to encourage mainstream financial institutions to provide financial support to certified CDFIs. The BEA Program achieves this objective by prioritizing awards to applicants that provide loans and investments to certified CDFIs and in FY 2016, 59 BEA Award Recipients provided more than $61 million in qualified loans and investments to 56 certified CDFIs. </p><p>Each of these investments was beneficial to the CDFI that received it, and I’d like to tell you about one that I thought was creative and unique. In 2015, Regions Bank, a large FDIC-insured depository institution, donated two brick-and-mortar branch locations in rural Mississippi to HOPE Enterprises, a Certified CDFI credit union. In addition to donating the branches, Regions Bank also provided HOPE with a $500,000 grant to cover operating expenses which helped to ensure that HOPE’s presence in these communities would be a success. </p><hr /><p style="width:48%;text-align:center;font-size:9pt;margin-right:1%;margin-bottom:0.5em;"> </p><p style="text-align:center;"> <img alt="Moordhead Branch" src="/SiteCollectionImages/Project%20Images/MoorheadBranch2.png" style="width:450px;" /> </p><div> <span class="ms-rteFontSize-1"> <em>In 2015, Regions Bank conveyed two empty branches in rural Mississippi to HOPE Credit Union. In addition, Regions provided HOPE an operating grant to support HOPE’s expansion into the highly economically distressed communities of Itta Bena and Moorhead. This donation qualified Regions for a Bank Enterprise Award and will allow HOPE to expand into a banking desert. </em></span></div></div><p> </p><hr /><p>The branches are located in highly distressed census tracts in the cities of Itta Bena and Moorhead, Mississippi. According to the 2006-2010 American Community Survey data: the Itta Bena branch is located in a census tract that has a poverty rate of 40.2 percent and an unemployment rate of over 15 percent; and the Moorhead branch is located in a census tract with an poverty rate of 48.4 percent and an unemployment rate of more than 24 percent. </p><p>This investment counted towards Regions Bank FY 2016 BEA Program Award of $172,199.00. More importantly, however, it provided the physical infrastructure needed for HOPE to expand into these highly distressed rural communities which will ensure that their customers will have access to affordable and safe financial products and services for many years to come. In June 2017, CDFI Fund Director Annie Donovan was able to visit these branches. Director Donovan noted that, “what I saw in the Mississippi Delta is consistent with our findings in the<a href="/news-events/news/Pages/news-detail.aspx?NewsID=260&Category" target="_blank"> BEA Evaluation</a>. Program participants are reaching deeply distressed communities.” </p><p>In nearly six years of working on the BEA Program, I cannot recall seeing a more unique example of a mainstream financial institution collaborating with a certified CDFI. I encourage others to think creatively about how they participate in the BEA Program. </p><p> <i>David Fleites is a Senior Policy and Program Officer for the Bank Enterprise Award Program and New Markets Tax Credit Program</i></p>David Fleites2017-10-12T14:52:00ZLocal Impact38GP0|#6977010d-91c8-405e-8f44-4df9b1fb4ec9;L0|#06977010d-91c8-405e-8f44-4df9b1fb4ec9|Bank Enterprise Award Program;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#1df1c2cf-45f2-4333-8365-93be361333ee;L0|#01df1c2cf-45f2-4333-8365-93be361333ee|Mississippi;GP0|#7b1b324b-5c91-4ed6-af66-b40a11835afb;L0|#07b1b324b-5c91-4ed6-af66-b40a11835afb|Credit Unions;GP0|#6c6d17ef-fcb5-4e67-b444-d90ca9e01872;L0|#06c6d17ef-fcb5-4e67-b444-d90ca9e01872|Banks