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Community Scope

Volume 4, Issue 1 2016

Non-Lending Programs and Services

Key Findings

In addition to their lending activity, respondent CDFIs perform a range of social impact functions, including financial counseling and advocacy. Demand for these functions is high, but as many CDFIs are already limited-capacity operations, they struggle to fund and measure additional programs and services.

  • 88.4 percent of 121 respondent CDFIs provide products and/or services in addition to their lending activity.
  • Of these additional services, financial counseling was the most prevalent; 63.6 percent of 121 respondent CDFIs provide financial counseling.
  • Of the CDFIs that provide additional programs and services, 85.4 percent measure the impact of these programs in some way.
  • The most popular method of impact measurement is collecting measures of program productivity, including number of clients and size of audience.

Figure 13: In addition to lending, what other functions do CDFIs in the survey sample perform?

Source: Survey results from the Federal Reserve Bank of Richmond’s 2015 Survey of CDFIs in the Southeast.

Figure 14: How do respondent CDFIs measure the impact of their non-lending programs and services?

Source: Survey results from the Federal Reserve Bank of Richmond’s 2015 Survey of CDFIs in the Southeast.

Respondents had the opportunity to share the greatest challenges facing their CDFIs with regard to non-lending programs and services. These quotes are direct excerpts from their responses:

“It is difficult to allocate staffing resources to data collection and measurement. These programs are in various offices and require cross-office coordination.”
-Community Development Bank in Mississippi

“Programs and technical assistance also take financial resources to maintain and grow. The ‘pie’ is not getting any bigger, but more slices are coming out of it.”
-Community Development Loan Fund in Kentucky

“Data collection is one of the greatest challenges for our organization. We have systems and software in place to track organizational outputs, but tracking the more quantitative impact is much more challenging.”
-Community Development Loan Fund in Washington, D.C.

Impact Investing and Angel Investors

In recent years, investment in ventures that produce joint social and financial returns — traditionally the domain of CDFIs — has developed into a more widely pursued investment strategy known as “impact investing.” Among those private investors interested in impact investing are angel investors — high-wealth individuals who provide capital to ventures and often play an advisory role. This increased interest among both private investors and angel investors has led to the creation of impact investment groups and angel investor circles that may work with CDFIs to pursue socially impactful investment opportunities.

To better understand the effect that this broader pursuit of impact investing has on CDFIs, the 2015 Survey of CDFIs in the Southeast asked several questions about CDFI interaction and collaboration with angel investors and social impact investment groups.

Of the 30 respondent CDFIs that have been approached by angel investors and/or social impact investment groups, 16 reported substantive outcomes from these interactions. These outcomes included capital for CDFI operations, program-related investment and the creation of a designated fund to serve borrowers in the 80 to 120 percent Area Median Income (AMI).

Figure 15: Have CDFIs in the survey sample ever been approached by angel investors and/or social impact investment groups to discuss investment opportunities?

Source: Survey results from the Federal Reserve Bank of Richmond's 2015 Survey of CDFIs in the Southeast.

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