CDFI Capitalization

Wednesday, December 5, 2012


I. Capitalizing Your CDFI -- An Overview

II.  Types of Investors in CDFIs

III. General Tools and Presentations on CDFI Capitalization

IV. How CDFIs Are Capitalized Today

  • Program-Related Investments
    • Overview
    • Examples and Tools
    • Mission/Impact Investing
      • Examples and Tools
        • Connecting CDFIs to the Socially Responsible Investor Community: This Ford Foundation-sponsored document provides a thorough overview of barriers and opportunities for CDFIs to raise capital from socially responsible investors, and identifies approaches CDFIs can adopt that may increase their ability to connect to socially responsible investors.
        • Equity Advancing Equity: This document describes community foundations that are targeting some of their investment portfolio toward investments that advance racial and social equity.
        • Investing for Social and Environmental Impact: This report from Monitor reviews the growth potential of socially motivated investment (“Impact Investing”), and discusses barriers and recommendations to accelerate the growth of this space.
        • Compounding Impact: Mission Investing by US Foundations: This document from FSG Social Impact Advisors offers a “comprehensive look at the landscape of mission investing by US foundations.”
        • The Power of Strategic Mission Investing: This article from the Stanford Social Innovation Review offers a summary of the Compounding Impact study, and reviews the types of mission-related investments that foundations are making.
        • Trillium Asset Management MRI Primer: This document provides a primer for foundations interested in getting involved in making mission-related investments.
        • Responsible Endowments Handbook: This document from the Responsible Endowments Coalition discusses the potential for college and university endowments to be invested in local communities, including local community financial institutions.
        • Heron Overview: This document describes the activities of the FB Heron Foundation, including details on an investment it made in the Community Reinvestment Fund, a CDFI.
        • Heron Foundation Frontiers: This document, “New Frontiers in Mission-Related Investing,” discusses the Heron Foundation’s decision to engage in mission-related investing.
        • Religious Investors:
          • SIF Faith-Based Toolkit: This document from the Social Investment Forum provides an overview of religious institutions and their experiences with community investing. The document is targeted toward religious investors (rather than the recipients of their investments) as the audience.
        • Program Related Investors:
          • Investing in CDFIs webinar: This presentation by the PRI Makers Network provides a review of investment opportunities in the CDFI field for an audience of funders interested in making program-related investments.
          • PRI glossary: This document from the Annie E. Casey Foundation provides a glossary of terms often used in association with program-related investments.
          • PRI Makers Network Profiles: This document provides links and descriptions of foundations making PRIs.
          • PRI Primer: This document from the PRI Makers Network provides an FAQ on PRIs.
  • Debt Investments in CDFIs
  • EQ2
  • Loan Sales, Participations, and Lender Consortia
    • Examples and Tools
      • Loan Sale Model Agreement from Opportunity Finance Network: This document provides a model loan sale agreement between a CDFI and a loan purchaser, in a context in which the CDFI is working with multiple purchasers. The model document was created by NCCA (now Opportunity Finance Network).
      • Participating Loan Pool Agreement: This document provides a loan pool agreement in which several banks agreed to purchase mortgage loans made by a CDFI. The names of the organizations have been redacted.
      • NHS Chicago Mortgage-Backed Certificates: This document provides an overview of a CDFI that established a mortgage-back certificate program to sell loans to investors.
      • Manchester Loan Pool Winning Strategies: This document discusses the Participating Loan Pool set up by Manchester (New Hampshire) Neighborhood Housing Services. The loan pool is not currently operational, but the document provides some background on the process of setting up the pool and its structure.
      • Fannie Mae Selling Guide: This website provides an exhaustive (1,000 page+) guide to what is needed to be able to sell single family mortgage loans on the secondary market.
  • Raising Investments from Individuals
    • Overview
      • Aspen Institute webinar: This document presents slides from an Aspen Institute webinar on how CDFIs can raise capital investments from individual investor.
    • Examples and Tools
      • NHCLF individual investor handout: This document was created by the New Hampshire Community Loan Fund and provides an example of how a CDFI can communicate to prospective individual investors about an investment opportunity, as well as a model loan agreement between the individual investor and the CDFI.
  • Federal Government Funding Programs

The compilation of these documents was funded by the CDFI Fund, under Contract TPD-CDF-10-C-0003, Task Order 0003. The curriculum and opinions expressed in these documents are those of the authors, who are solely responsible for the content, and do not reflect the opinions of the CDFI Fund or any other person, entity, or organization.