Transcript External Affairs

Governor’s Housing Conference
What's a CDFI and How Are They Helping Communities Access Capital
Tracy Kartye
October 16, 2012
The Annie E. Casey Foundation
Annie E. Casey Foundation
 Established in 1948 by founder of UPS
 Mission is to build better futures for vulnerable
children and their families
 Geographic and programmatic initiatives
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Center for Community and Economic Opportunity
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Family centered community change
Center for Effective Family Services and Systems

Juvenile Detention Alternatives, Inc.
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Investment Approach and Philosophy
 Complement grantmaking and provide additional
philanthropic tool

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Double bottom line – financial and social return
Financing gap
 $125 million endowment allocation
 Different risk profile from many foundations
 Place based and thematic investments
 Flexible terms but invest through financial
intermediaries
 Leverage/co-investment requirement
 Influence other investors and share risk
 Systems to track financial and social return
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Social Investment Definitions
 PRIs only category with legal IRS definition
 Primarily to achieve program goals
 Terms must be below market on a risk-adjusted basis
 Does not support lobbying
 Must be investigated, documented and monitored
Grants
Program
Related
Investments
Endowment
Investments
Programmatic Returns
Financial Returns
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Benefits of Financial Intermediaries
 Increased program impact

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Leverage co-investment and revolve for multiple projects
Provide technical assistance to local nonprofits
 Reduced Risk
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Diversification in multiple projects
Eliminate direct project risk
 Lasting infrastructure
 Efficient operations for foundations and end users
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Single transaction vs. multiple one-off
Reduces transaction costs
Shortens underwriting period
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Overall Results
Investment Summary
 $102MM invested
 $45MM in guarantees
Selected
Social Impact
Cumulative
since
Investment
% Target
Achieved
7,631
178%
 7 foundation program areas
Jobs created
163
54%
 14 CDFIs
Small businesses
financed
 4.9% one-year financial return
Affordable housing
units
2,389
46%
 $690MM in direct co-investment
Child care slots
329
188%
 $150MM leveraged via guarantees
Car loans
3,533
10%
 Significant indirect public and
private leverage at project level
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Example: East Baltimore
 Invested $100MM to support East Baltimore
revitalization
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Loans
Loan guarantees
 Co-investment / leverage
 New Markets Tax Credits
 Federal, state and local government
 Banks, foundations, Johns Hopkins
 Highlight: The Reinvestment Fund
 $5MM, 10-year 2% loan
 Finance development projects in or adjacent to EBDI footprint
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Baltimore CDFI Capacity
 Opportunity Finance Network
 National network of CDFIs
 Conduct Baltimore and Atlanta scans
 Assess financing needs and gaps
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Assess lending sectors and capacity of Baltimore CDFIs
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Identify CDFIs in surrounding states and regions that might
expand to meet identified financing needs in Baltimore
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OFN Stakeholder Interview Findings
 Philanthropic leaders
 Better understanding of partnership potential
 Examples of effective collaboration
 Potential CDFI borrowers
 Viewed CDFIs as transactional dollars source not as
community development partners
 CDFIs interested in
 Developing partnerships
 Working with others to source and fund deals
 Offering joint programming
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Common Interview Themes
 Need for TA especially among small / micro
businesses
 Human capital development critical to economic
development
 Financing needs:
 Fresh foods
 Green / energy efficiency
 Small / medium business lending
 Charter schools
 Key institutional players drive economic demand for
neighborhood “amenity” businesses
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CDFI Landscape Findings
 More CDFIs than expected, but little known
 CDFIs with capital constraints could be valuable
resource / loan servicer partners
 CDFIs increasingly interested in expanding
operations
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Regional CDFIs expanding to Baltimore
Regulated CDFIs adding community-based lending / TA
 New tools could be beneficial to collaboration
 NMTC presents partnership opportunities
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