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Keynote Address by Director Annie Donovan at the 2016 Opportunity Finance Networkhttps://www.cdfifund.gov/Lists/CDFI Speeches Testimony/AllItems.aspxhttps://www.cdfifund.gov/Lists/CDFI Speeches Testimony/DispForm.aspx?ID=48Keynote Address by Director Annie Donovan at the 2016 Opportunity Finance Network<p>Thank you, Lori, for that kind and generous introduction. Lori and I do indeed go back a long way and I was delighted when I heard that she was going to introduce me today. </p> <p>In fact, twenty-three years ago, Lori introduced me to proper credit underwriting and I have her to thank for my ability to calculate a debt-service-coverage ratio. I don’t think either one of us imagined then that our work would still be so closely connected after so many years and so many role changes – but I guess like many of you – we are bound by a deep commitment to this mission and to the communities we serve.</p><p>I want to thank OFN for inviting me to speak today. It’s wonderful to be with all of you here in Atlanta, and so appropriate—given where we are in the evolution of the CDFI industry—to convene in a city that offers so much to inspire and challenge us.</p><p>When we look around Atlanta today, we can see a city that is determined to transform itself and bursting with activity.</p><p>From the revitalization of distressed communities in and around downtown that has been spurred on by New Markets Tax Credits; to the creation of the innovative Atlanta BeltLine, a major community revitalization initiative that is bringing together an array of local partners to develop a 22-mile corridor of transit, trails, open space, historic resources, and public art; Atlanta is a city on the move. And CDFIs and CDEs play an important role in ensuring that the benefits of new development activity includes low-income people and communities.</p><p>I recently had an opportunity to visit a transformative project in downtown Atlanta: the expansion of Grady Memorial Hospital, the city’s public hospital. In addition to delivering health care to the city’s uninsured, Medicaid recipients, and other vulnerable populations, Grady is nationally recognized for its emergency and trauma services. Grady’s emergency department was designed to handle 70,000 patient visits each year, but today they handle nearly double that volume. So, recently, the hospital launched a $76 million effort to expand its emergency facilities.</p><p>Three CDEs—Atlanta Emerging Markets, Community Hospitality Healthcare Services, and SunTrust CDE—stepped up to provide New Markets Tax Credit financing that filled a critical funding gap and enabled the project to keep moving forward. The expanded emergency department will be completed in 2017. In addition to allowing Grady to serve 20,000 additional patients each year, the project is expected to create 50 new full-time jobs and 132 construction jobs.</p><p>I’m proud of how CDFIs and CDEs are contributing to Atlanta’s future success. Of course, Atlanta not only has a promising future but also boasts a rich history—a history that is intertwined with the birth and development of the CDFI movement and offers important insights that can help us understand why CDFIs exist and, indeed, who we are as Americans.</p><p>Atlanta was burned to the ground in the Civil War and had to entirely remake itself during Reconstruction. Maybe that’s why it has proven so adept today at embracing change, at being resilient.</p><p>It was during the post-Civil War period, in 1865, that the first African American-owned bank, Freedman’s Savings and Trust Company, was created by Congress to encourage and guide the economic development of the newly emancipated African-American communities. It eventually grew to include 37 branches in 17 states, mainly in the South, including one right here in Atlanta. Freedman’s Bank closed in 1874, but if it were still around today, it would surely be a certified CDFI.</p><p>Its spirit lives on, however. Recently, Treasury Secretary Lew renamed the former site of the bank’s Washington, D.C., headquarters the Freedman’s Bank Building in recognition of its historic importance.</p><p>And many of the minority depository institutions that are certified CDFIs today were modeled on Freedman’s Bank. One of them is an Atlanta institution: Citizens Trust Bank, which opened in 1921 and continues to thrive today after nearly a century. The company was formed because African Americans could not get access to banking services and capital for their businesses. Citizens Trust Bank was instrumental in building Atlanta’s thriving black middle class by providing access to capital that enabled black entrepreneurs to build businesses, and mortgages that enabled black families to own their own homes. Today, Citizens Trust Bank continues to create economic mobility for its customers and has received $3 million in Bank Enterprise Awards from the CDFI Fund.</p><p>Atlanta also claims Martin Luther King, Jr. as its native son, and it is the cradle of the civil rights movement. Like the Civil War, the civil rights movement exposes the complexity of our American identity and the fault lines in the American experiment. The story is very poignantly told at the National Center for Civil and Human Rights, a museum not far from this hotel—financed using New Markets Tax Credits, by the way. If you have the time, I recommend visiting the museum while you are here—and build in some quiet time for reflection afterwards if you can.</p><p>Dr. King’s leadership and the civil rights movement’s commitment to breaking down social and economic barriers to opportunity ignited a flame that still illuminates our work today. In fact, at the CDFI Coalition’s annual conference last March in Washington, a panel of CDFI leaders who had recently retired or were about to retire discussed their motivations for creating or leading a CDFI, and each and every one of them stated that they had been inspired by Dr. King and the civil rights movement. </p><p>For CDFIs, addressing the imperfections of our society and our economy is what drives us. It’s our primary mission: to use the tools of financial capital and financial empowerment to create a more inclusive economy, one that generates opportunity in distressed communities and for underserved people. </p><p>In that spirit, the CDFI Fund has been hard at work this year.</p><p>A few weeks ago, we announced nearly $550 million in investments in CDFIs. That amount included $186 million in Financial and Technical Assistance awards through the CDFI Program, Healthy Food Financing Initiative, and the Native Initiatives; $91 million in awards through the Capital Magnet Fund; $265 million in bonds through the CDFI Bond Guarantee Program; and $1 million through our 2016 CDFI Prize Competition for expanding investments in areas of persistent poverty. In a few weeks, we’ll be announcing a historic $7 billion in tax credit allocations through the New Markets Tax Credit program.</p><p>Throughout the CDFI Fund’s history we have seen the positive effect that program awards have had on low-income communities, ranging from job creation and business development to quality education and health care, to affordable housing, to the provision of safe and affordable financial products and services. </p><p>In 2014, CDFIs that had received Financial Assistance awards through our CDFI Program originated loans and investments totaling $3.4 billion and financed over 25,000 affordable housing units and over 12,000 businesses. New Markets Tax Credit Program allocatees reported making loans and investments totaling $3 billion. These investments created almost 7,000 permanent jobs and more than 26,000 construction jobs, and financed 10.5 million square feet of commercial real estate.</p><p>That is real impact, and having an impact is why we are all here. At the CDFI Fund, we’ve been thinking a lot about how we can increase our own impact as an organization. </p><p>Today, I’m proud to release the <a href="/Documents/Final%20Strategic%20Plan%20102516.pdf" target="_blank">CDFI Fund’s five-year Strategic Plan</a>. The plan reflects the insights we gathered from all of you during our national listening tour in the summer of 2015, as well as the input we received from CDFI Fund and Treasury Department staff and from the CDFI Fund’s Community Development Advisory Board. </p><p>I hope that you will take some time to read the plan. I won’t review it in full today, but I do want to touch on the key drivers of the plan. </p><p>First, the strategic plan has five main goals, and goal #1 is to “increase the impact of the CDFI Fund network by supporting the growth, reach, and performance of CDFI Fund awardees.” If I had to boil this plan down to three words those words would be: INCREASE OUR IMPACT. To do so, our industry must grow. For some CDFIs that means going deeper into distressed communities, for others it may mean expanding your reach, or it could mean both. Over the next five years, the CDFI Fund is going to get better at measuring and rewarding how deep you are going in your markets, how far you are expanding your reach, and how well you are executing on the strategies that we fund you to pursue. </p><p>Another path to growing impact is through partnership. Some of the most impressive and innovative work in our field is happening in places where CDFIs are working with each other more intentionally, like in Detroit, or with organizations that are not CDFIs but share a common purpose, like the Invest Health Initiative. </p><p>Led by the Reinvestment Fund, Invest Health is a cross-sector, place-based initiative designed to accelerate improvements in neighborhoods facing the largest barriers to better health. Diverse leaders from mid-sized cities across the nation—including nine CDFIs, city and county officials, civic leaders, non-profits, and for-profits—are partnering in an effort to uproot the conditions that are creating or perpetuating poverty in their communities. </p><p>Another great example is right here in Atlanta - the Georgia Communities CDFI Coalition. This is a group of experienced CDFIs that are working with the Georgia Department of Community Affairs to finance safe and affordable housing and to develop “communities of opportunity” in the region. This collaborative includes CDFIs that are experts in housing construction and financing, as well as CDFIs that are experts in small business lending and the revitalization of downtown neighborhoods. They are local and national, big and small. By partnering together, they will have a more focused impact than if they were all operating independently. </p><p>So, I urge you to think creatively about expanding your impact through partnership. </p><p>Second, the Strategic Plan reflects our awareness of the critical role of data in our work. Goal #2 is “to build the capacity of the CDFI Fund and its network to capture, produce, and utilize data to improve decision-making, performance, and accountability.” </p><p>As you no doubt realize, the CDFI Fund already collects a tremendous amount of data from our awardees and certified CDFIs, and we thank you for that. But we recognize just how important data can be in helping us measure the outcomes of our work, build on our successes, and communicate about the difference we make. And so creating new tools that enable the CDFI Fund and our network of CDFIs to use data even more effectively is another top priority for us. </p><p>Third, the plan makes an intentional commitment to support the full array of CDFI institution types, geographies, and strategies. I think we have learned enough now to assert that there are no silver bullets in our work. What is needed to transform communities can vary vastly from place to place. And often, communities need a variety of types of CDFIs to create a complete ecosystem and to respond to local market conditions. The CDFI Fund has always supported community-based solutions, and we will continue that practice going forward. </p><p>As we look ahead to 2017 and beyond, let’s recognize that we are at an important point in the evolution of the CDFI industry. It has been more than 20 years since the CDFI Fund was established. The vast majority of certified CDFIs were created sometime between the early 1980s and the late 1990s. </p><p>That means that our industry has been around long enough that it is beginning to experience some fundamental changes, especially changes in leadership. Changes in leadership can create a feeling of uncertainty about the future for many people, but I believe that we can be very optimistic about the future of the industry. </p><p>Why? Well, first of all, a number of CDFIs have already made the transition from a founding or longtime CEO to a new CEO, and the pace of growth and innovation at those organizations continues unabated.</p><p>And the reason that those organizations continue to thrive—and that the CDFI industry will continue to thrive—is that the first generation of leaders has been so committed and so capable. They set out to prove that low-income communities are creditworthy, and they have built strong institutions and robust business models that have done just that. And in so doing, they have helped to establish a new industry that has become successful enough and prominent enough to attract the next generation of committed and capable leaders. This is an industry with substantial talent.</p><p>So, what is the work of this next generation of leaders? What must be done if we are to continue to build this industry? What must we all do if we are to be effective leaders?</p><p>For starters, we must honor our past and the leaders who have come before us. They started this industry with little more than a passion for an economy that works for everyone, plus some spare change that they gathered from like-minded people. We must recognize that we stand on their shoulders, that it was their vision that has led us to the place of strength that we hold today. And, let’s not forget that the core purpose of our work has not changed, in fact, in some ways, it has become harder and more complex in the face of worsening income and asset inequality.</p><p>Next, we must demonstrate that our business model is not only economically viable but also transformative. That means digging deeper to do the transactions that really matter most in your communities. That means maintaining a relentless pursuit of the type of impact that changes lives. It also means becoming indispensable partners with other actors who share our mission but who bring other competencies to the work. Our calling is to become agents of transformation, and to do so we must leverage not only our capital but also our role in the larger ecosystem of community development. Let’s embrace a bigger vision.</p><p>Dr. King often spoke of the creation of the Beloved Community, a vision of the world in which, in the words of the King Center here in Atlanta, “all people can share in the wealth of the earth…and poverty, hunger and homelessness will not be tolerated because…standards of human decency will not allow it.”</p><p>It’s fair to say that we still have a ways to go before Dr. King’s vision of the Beloved Community is realized. But it’s also true that many people are working to build that community and that we in the CDFI industry are a part of that movement.</p><p>I am so proud of everything that CDFIs are accomplishing, and I am especially proud of everything that you are doing to work in partnership with a broader set of actors in your own communities, and with other CDFIs.</p><p>So I urge you to remember that we are not alone. We are part of a much larger community—a beloved community—that is dedicated to creating a more inclusive economy and a more just and equitable society. We must continue to reach out to others to explore new ways to collaborate.</p><p>Collaborative leadership is an imperative for this generation of leaders. Your leadership—the leadership of everyone in this room, and everyone working back home in your communities—is needed to build an America where everyone can prosper.</p><p>Thank you for your great work. Keep it up! I look forward to working with you in the future. </p>2016-10-26T04:00:00Z