CDFI Impact Blog



On Cue: The CDFI Fund's Innovation Challenge Cue: The CDFI Fund's Innovation Challenge<div class="ExternalClassAA5A0048A703431BB57CF197AE8E35E4"><p> <i> By: William Girardo</i> </p> <p>In November 2015, the CDFI Fund <a href="/news-events/news/Pages/news-detail.aspx?NewsID=185" target="_blank">announced</a> that the Association for Enterprise Opportunity (AEO) had won its 2015 Innovation Challenge. The CDFI Fund created the Innovation Challenge to seek new ways to expand or increase investments in underserved communities across the country. AEO won the Challenge with a proposal to develop a screening and assessment tool to connect small businesses searching for loans with a CDFI that may be able to meet their needs when a bank or other lenders cannot.</p><p>The Innovation Challenge directly supports the first of the <a href="/news-events/Pages/story-detail.aspx?StoryID=4" target="_blank">CDFI Fund’s Guiding Principles</a>: “Increase the impact of the CDFI Fund network by supporting the growth, reach, and performance of CDFIs and CDEs.” AEO proposed to design, build, and demonstrate a web-based solution that allows financial institutions and other lenders to direct small business credit applicants they can’t serve to CDFIs that can provide safe and affordable loans and financial education opportunities. If successful, the solution may expand the reach of CDFIs and provide more small businesses with a path to capital. </p><p>The one-year initiative is structured in three phases: solution design, proof of concept, and lessons learned. To date, AEO has completed the solution design phase and is moving into the proof of concept phase. More than a dozen banks, non-bank lenders, and industry experts shared insights in the design phase about their processes and what “pain points” need to be solved to allow AEO’s solution to work for them. Banks and non-bank lenders need the solution to avoid “double-declines,” wherein clients they refer to another lender are declined again: it’s an experience that frustrates clients and can affect how they feel about the lender. CDFIs need the solution to lower their costs of customer acquisition and support the scaling up of their own application processing: it reflects their goals of better meeting the needs of different customer segments in their target markets. All stakeholders expressed a need for more and better data to make investment and resource allocation decisions. </p><p>Now, as the project moves into the proof of concept phase, the AEO team has started working with four “early adopter” CDFIs to test the viability of a shared-services platform for CDFIs and other financial institutions. The participating CDFIs are Access to Capital for Entrepreneurs (Georgia), the Intersect Fund (New Jersey), Justine PETERSEN (Missouri), and LIFT Fund (Texas). The goal is to develop a platform that could be adopted or replicated as an industry-standard solution. </p><p>At the end of the project, AEO will share lessons-learned to strengthen future efforts to meet needs in low-wealth communities, mobilize investment, and make better use of scarce resources. If the developed platform proves to be viable, it will be made available to any certified CDFI who wants to use it, expanding access to capital for small businesses operating in economically distressed areas.</p><p>The CDFI Fund will provide another update on the Innovation Challenge later this year. In the meantime, follow along with AEO’s efforts (which they have named Connecting Underserved Entrepreneurs, or Project CUE) by reading their <a href="" target="_blank">blog series</a>. </p><p> <i>William Girardo is a Portfolio Manager for the CDFI Fund’s Community Development Financial Institutions Program and Native Initiatives.</i></p></div>2016-04-15T12:00:00ZFramework for the Future15GP0|#0eabfb68-e7e3-40d3-8ca9-949a19428ed8;L0|#00eabfb68-e7e3-40d3-8ca9-949a19428ed8|Innovation Challenge;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532
New Members to the Community Development Advisory Board Members to the Community Development Advisory Board<div class="ExternalClass08BB7BA289764A4C9A0939DB5914DFE3"><p>​<em>This blog post was originally posted on <a href="">Treasury's Notes Blog</a>.</em></p><p> This week, the Community Development Advisory Board (Advisory Board) convened a public meeting at Treasury. <a href="">Secretary Jacob J. Lew delivered opening remarks</a> and swore in two new members. The Advisory Board provides advice to the Director of Treasury’s Community Development Financial Institutions Fund (CDFI Fund) on the policies and activities of the CDFI Fund. CDFI Fund Director Annie Donovan presided over Wednesday’s program, which included discussions on current programs, the direction of the CDFI Fund, and presentations by professors Michael Swack and Gregory Fairchild on their recently published research on the CDFI Program.</p><p style="text-align:center;"> <img src="/PublishingImages/CDFI%20Advisory%20Board%20Swear-in%20052115.jpg" alt="" style="margin:5px;" /> </p><p style="text-align:center;"><em>Secretary Lew swears in new Advisory Board members Calvin L. Holmes, President of the Chicago Community Loan Fund, and Brian E. Argrett, President and CEO of City First Bank of DC. </em></p><p>At the meeting Director Donovan announced that the CDFI Fund has issued a Request for Proposals for a CDFI Fund Innovation Challenge. The goal of the Innovation Challenge is to finance the development of a method, model, tool, or product that Community Development Financial Institutions (CDFIs) can use to build capacity to expand CDFI investments in underserved target markets, especially those that are in rural areas. The Innovation Challenge Request for Proposals is available at <a href=""></a>. </p><p> The CDFI Fund was created to promote economic development and revitalization in America’s underserved and distressed low-income communities. Through its programs and resources, the CDFI Fund supports real estate developments, businesses, healthcare facilities, workforce training centers, and jobs in urban and rural areas across the county. For more information on the impact of the CDFI Fund’s programs, please visit <a href=""></a>. </p><p> You may view Wednesday’s meeting <a href="">here</a>. </p><p> <em>Dan Cruz is a Media Specialist and Spokesperson for Domestic Finance at the U.S. Treasury Department. </em></p></div>2015-05-21T18:00:00ZCommunity Development Advisory Board5GP0|#0eabfb68-e7e3-40d3-8ca9-949a19428ed8;L0|#00eabfb68-e7e3-40d3-8ca9-949a19428ed8|Innovation Challenge;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532