Voices From the Field/Spotlight On: Best Practices
Voices from the Field: CDFIs Serving Rural Areas
The 2015 survey gave respondents several opportunities to comment on the challenges that they currently face, and many respondents discussed the particular challenges involved with serving rural communities. The quotes below are direct excerpts from survey respondents:
“A large pool of CDFIs [is] competing for limited and/or shrinking resources to deliver services and deploy capital to low-income families in rural communities.”
– Community Development Loan Fund in Washington, D.C.
“Our greatest challenge has been finding new sources of funding. Because we work in rural areas, our interest rates tend to be below average.”
– Community Development Loan Fund in Virginia
“We have the desire to offer ‘big banking options’ to the rural, underserved markets we serve. We are constantly assessing bank liability, cost to implement new services and how to make it happen in an organization of our size.”
– Community Development Bank in Louisiana
“Our service area includes many rural and remote areas that are impoverished. The cost to bring capacity building to these communities is high, making delivery challenging.
– Community Development Loan Fund in Kentucky
Spotlight On: Best Practices for CDFI Expansion
Once a CDFI has determined that expansion into a new geographic market is strategically viable and beneficial, there are a number of resources available to help ease the expansion process. For certified and emerging CDFIs looking to expand their geography or break into a new market, the CDFI Fund’s Capacity Building Initiative has an ongoing training and technical assistance program called Expanding CDFI Coverage in Underserved Areas that is provided by the Opportunity Finance Network, the nation’s largest network of CDFIs. This series of webinars and technical training workshops is designed to help CDFI senior leadership understand the product needs of underserved markets and plan for an expansion into these markets.
There are also numerous case studies and reports that detail best practices for CDFI expansion. Among these is a 2013 report from Living Cities — an organization that partners with foundations and financial institutions to develop best practices in urban policy that address the needs of low-income individuals — entitled “Expanding the Geographic Reach of Community Investment: The IFF Case Study.” Several best practices from that report are summarized below:
Identify and address local market gaps: Expansion is easiest when the expanding CDFI seeks to fill an existing gap in the market that has been identified by local stakeholders.
Maintain a physical presence: Having a local presence demonstrates commitment to the community, fosters trust with key partners and helps increase community awareness.
Engage with community leaders across business sectors: Building cross-sector relationships in a new market helps integrate the incoming CDFI into the community and may increase awareness among potential clients and partners.
Balance a strategic plan with the ability to adapt: Markets and communities evolve, and it is important to have both a clear strategic vision and the ability to adapt to unanticipated circumstances.
Focus on markets that are geographically close or where there is a preexisting relationship: Being able to easily access a new market and having ties to the community often eases the expansion process.
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