Capital Impact Partners 2014 Annual Report

Terry Simonette CEO - Capital Impact Partners

Terry Simonette
President & CEO

2014 was a milestone year for Capital Impact Partners.

Among our many achievements is the fact that we crossed the $2 billion line in loan disbursements to projects in underserved communities. Even more impressive is that, while it took 25 years to reach the $1 billion mark, it only took five to reach our second billion. Behind these numbers is what matters most - our ability to work with partners and borrowers and touch the lives of those most in need.

In this report, you will meet Devon, who recently graduated from the Henry Ford Academy in Detroit and is now attending the College for Creative Studies. You will experience a day in the life of one our Green House homes and witness how this innovative model is helping its residents age with dignity. You will see how San Francisco’s South of Market Health Center is serving as the safety net for patients like Ray Sullivan and Susan Gouveia, who would otherwise have gone without health care.

Confidence in our ability to create impact was again recognized in expanded partnerships with investors like JPMorgan Chase as well as a number of awards given through the U.S. Department of Treasury’s Community Development Financial Institutions Fund. I invite you to read our interview with Aaron Seybert at JPMorgan Chase and see our award details in the following pages.

Behind these numbers is what matters most, our ability to work with partners and borrowers and touch the lives of those most in need.

We also continued to demonstrate our ability to take small innovative models and scale them nationally. Since 2010, our Village-to-Village Network—which allows elders to age in their homes with community support—has increased 200 percent, to 141 villages across 41 states, serving 25,000 seniors. With approximately 100 villages in the development stage, we felt that the organization was well-positioned to transition to an independent group of village leaders for ongoing management.

Lastly, given the dedication to our mission both internally and externally, I am particularly proud that Capital Impact was named a Top Workplace by The Washington Post.

Through our ingenuity and strategic financing, Capital Impact remains a leader in improving the lives of low-income individuals and the communities in which they live. And, as our 2020 strategy begins to take shape, I am excited about the possibilities ahead of us.

The opportunity to build strong, vibrant communities of opportunity in underserved areas is limited only by our imagination.

This Is 30 Years Of Impact

We see communities as a system – a unique collection of people, businesses, products, services and infrastructure that must reinforce each other for residents to prosper. A community’s true strength is only realized when its sectors interweave to make a strong fabric of integrated resources that build off of each other and empower individuals to improve their lives and livelihoods.

As a leading Community Development Financial Institution, we provide the right investment to catalyze that potential in neighborhoods across the country. We invite you to view our newest infographic visualizing what our 30 years of impact looks like.

Lending For Impact

Scott Sporte Chief Lending Officer - Capital Impact Partners

Scott Sporte
Chief Lending Officer

Although lending is a primary activity at Capital Impact Partners, it is a means to an end: we use capital as a tool to effect positive change in underserved communities across the country.

When we consider a new loan, the first question we ask is whether it will create jobs or provide needed services or opportunities for the people who live in the communities we serve. It is only after we have ascertained whether the financing request achieves a positive social objective that we proceed to assessing the project’s financial viability.

We have demonstrated year in and year out that we are able to provide capital at a consistent level to achieve significant community impacts

The projects we finance do not fit a conventional mold, and many of their fundamentals do not fit within the guidelines of regulated financial institutions. Each of our transactions is different and each requires our staff to understand the intricacies of layered structures, to utilize creative approaches to risk mitigation and to provide technical assistance to our borrowers.

We saw this in 2014 through the construction of grocery stores to combat food deserts in California and Michigan; in the expansion of community health centers in New York and North Carolina; in new educational choices in Massachusetts and Florida; and in the skilled nursing care provided in homelike settings in Minnesota and Colorado.

This “artisanal” approach to lending takes time and patience, but we have demonstrated year in and year out that we are able to provide capital at a consistent level to achieve significant community impacts.

We consider Capital Impact to be more than just a lender; to construct grocery stores in food deserts in California and Michigan; to expand community health centers in New York and North Carolina; to provide educational choices for young students in Massachusetts and Florida; and to increase opportunities for elders to receive skilled nursing care in warm, homelike settings in Minnesota and Colorado.

The loans we closed in 2014 benefit 4.5 million people nationwide—including more than 500,000 health center patients and 15,000 students—and created in excess of 1,200 jobs.

We sharpened our focus in Detroit, receiving a substantial investment from JPMorgan Chase to expand our work increasing population density, building walkable communities and expanding services in neighborhoods in new corners of the city. In the process, we helped to preserve the city’s culture by funding a number of projects that saved historic properties.

As we did all this, we polled our stakeholders about their experience working with us. More than 95 percent of our borrowers and investors told us they were satisfied with our services, and another 95 percent said that they would recommend Capital Impact Partners to others. I am as proud of earning your trust and respect as I am of the results we have achieved in the neighborhoods where we work.

As you read the following stories, please join with me in celebrating the accomplishments we have achieved with our partners and borrowers. Looking forward, I have to say that I am incredibly excited about the opportunities lying before us as we seek new ways to increase our impact in the communities we serve.

2014 Impact Highlights

$112 Million Closed

665,000 served

1200 jobs created

15K students

500,000 patients

Healthy Food:
75K people

Throughout 2014, Capital Impact Partners and our staff were honored with a number of awards recognizing our leadership in the community development space.

The Washington Post named Capital Impact among its Top Workplaces for 2014. The Top Workplaces awardees were determined through independent surveys conducted by WorkplaceDynamics, LLP. Factors contributing to the award included our dynamic work environment, flexible work schedule, company-wide volunteer days, employee nominated funding for local nonprofit institutions and an excellent benefits package. Each member of Capital Impact is guided by the institutional core values of cooperation, leadership, commitment, diversity, innovation and trust.

Amy Sue Leavens, Capital Impact's general counsel and corporate secretary, was honored with the Corporate Counsel Award for Community Service. The award was presented by the Washington Metropolitan Area Corporate Counsel Association, the leading regional bar association. These awards honor the work of the region’s leading in-house legal practitioners and departments.

Terry Simonette Chief Lending Officer - Capital Impact Partners

The Community Development Financial Institutions Fund – a department of the U.S. Treasury - promotes economic revitalization in distressed communities throughout the United States by providing financial assistance to CDFIs. Capital Impact was awarded a number of grants including:

  • $55 million in long-term capital through the CDFI Bond Guarantee Program. This federally-guaranteed program allows us to provide borrowers with fixed-rate, long-term financing that helps support long-term financial stability and control facility costs.

  • $43 million in New Markets Tax Credit allocations. We are one of just 87 organizations to receive a financial award through this program, which is designed to help CDFI’s save and create jobs and spur economic development in distressed communities.

  • $2 million Financial Assistance (FA) award to sustain and expand our financial products and services, plus a $2 million Healthy Food Financing Initiative Financial Assistance award (HFFI FA) to expand our healthy food-focused financing activities. We are one of only 12 CDFI’s out of 152 who received both FA and HFFI FA award grants.

From organizational features to stories about our work revitalizing Detroit, supporting affordable homeownership and demonstrating innovation in aging, our impact was featured in a number of national news outlets.

Innovation Fuels Financial Strength

Ellis Carr Chief Financial Officer - Capital Impact Partners

Ellis Carr
Chief Financial Officer

Capital Impact ended 2014 in one of its strongest financial positions to date as both total net assets and unrestricted net assets increased by $8.1 million and $5.3 million respectively.

Our financial results were driven in large part by our lending activities. We ended 2014 with $112 million in loan closings and our credit quality remained strong as we closed the year with a delinquency rate of just 0.2%. The 2014 volume and portfolio statistics highlight a few important themes for Capital Impact and the industry:

  • Consistency in loan demand year over year demonstrates that organizations like Capital Impact can provide critical “gap” financing to businesses across the country. It also shows how, through effective collaboration with a number of our partners, we can create products and programs that are absorbed in the markets we serve.

  • Our portfolio, like those of many of our colleagues, further demonstrates that lending in low-income communities doesn’t translate into additional portfolio credit risk. In fact, our portfolio performance is on par or superior to the performance of conventional loan portfolios.

  • Demand for capital in our markets continues to outstrip supply. The needs in the communities we serve continue to evolve, and flexible, consistent capital is needed for these communities to thrive.
As we look forward to 2015, we continue to explore new and innovative ways of expanding access and furthering our reach while always striving to improve our financial health and sustainability

Our portfolio...demonstrates that lending in low-income communities doesn’t translate into additional portfolio credit risk. In fact, our portfolio performance is on par or superior to the performance of conventional loan portfolios.

Recently, we became a member of the Federal Home Loan Bank of Atlanta and were successful in raising capital through the United States Treasury-sponsored Bond Guarantee Program. Both of these efforts will provide us with the additional flexibility needed to support medium- and long-term projects across asset classes and our geographic footprint.

We also continue to improve our financial health and sustainability through investment in our systems and infrastructure. We made great strides in advancing the multi-year effort launched in 2012 to upgrade our core systems and related processes. As a result, the increased efficiency we are seeing is enhancing the agility of our operating functions and supporting the ability to scale our efforts and better nurture our communities.

Capital Impact Partners and Subsidiaries
Consolidated Statements of Financial Position

2014 (AS OF DECEMBER 31) AND 2013

Assets ($ Millions) 20142013
Cash and cash equivalents - unrestricted$22,973,465$16,824,376
Cash and cash equivalents - restricted 39,260,027 35,529,139
Accounts and interest receivable 1,990,401 2,559,694
Contributions receivable 12,296,545 7,174,778
Investments 4,754,555 4,623,745
Investment in joint venture 2,660,793 2,661,129
Loans receivable 164,914,807 159,897,403
   Less: allowance for loan losses (9,177,796) (8,915,755)
     Loans receivable, net 155,737,011 150,981,648
     Loans receivable - subsidiaries 35,421,220 36,709,530
Other real estate owned, net of valuation allowance
of $0 in 2014 and 2013
- 394,929
Other assets 2,715,301 3,256,266
Total assets $277,809,318 $260,715,234
Liabilities and Net Assets
   Accounts payable and accrued expenses $4,028,078 $2,918,871
   Revolving line of credit 24,950,000 21,000,000
   Notes payable67,637,569 62,363,844
   Subordinated debt 8,218,000 8,218,000
   Notes payable - subsidiaries 35,436,546 36,729,152
     Total liabilities 140,270,193 131,229,867
Net Assets
   Unrestricted 84,554,160 79,213,421
   Temporarily restricted 51,497,490 48,784,471
   Permanently restricted 1,487,475 1,487,475
Total net assets 137,539,125 129,485,367
Total liabilities and net assets $277,809,318 $260,715,234

Key Performance Indicators

On Balance Sheet 62.458.864.6
Investor Portfolio71.1105.1136.7
Total All124.0106.699.4
On Balance Sheet144.0159.9164.9
Investor Portfolio111.5161.7298.8
Total All930.6 912.4891.0
30 Day Delinquent0.2%0.3%0.1%
60 Day Delinquent0.4%0.2%0.2%
Allowance for Loan Loss Reserve (% of Total Loans)6.3%5.6%5.5%


Housing Partnership Network


PRL, Inc.


Red Bird Advanced Learning




Kentucky Highlands Investment Corporation


F.B. Heron Foundation


Council of New York Cooperatives and Condominiums


National Cooperative Bank


Excellent Schools Detroit


PricewaterhouseCoopers LLP


State of Wisconsin, Office of Energy Independence

Partnering for Impact

Philanthropic Partners

  • AARP
  • AARP Foundation
  • Archstone Foundation
  • Appleton Foundation
  • Bill and Melinda Gates Foundation
  • California Community Foundation
  • California Healthcare Foundation
  • Endowment for Health
  • Ford Foundation
  • Harry and Jeanette Weinberg Foundation
  • JPMorgan Chase Foundation
  • Kaiser Foundation Hospital Fund for Community Benefit Programs at the East Bay Community Foundation
  • Kaiser Foundation Hospitals California Southern Region
  • Kresge Foundation
  • Koret Foundation
  • Living Cities
  • Max M. & Marjorie S. Fisher Foundation
  • MetLife Foundation
  • The Mousetrap Foundation
  • National Housing Institute
  • Nationwide Foundation
  • Ohio Community Development Loan Fund
  • Ohio Community Development Finance Fund
  • PNC Bank
  • Rasmuson Foundation
  • Foundation
  • Social Innovation Fund | Corporation for National and Community Service
  • SCAN Foundation
  • The Colorado Health Foundation
  • The Robert Wood Johnson Foundation
  • W.K. Kellogg Foundation

Financing Partners
& Institutional Investors

  • Axa Equitable Life Insurance
  • Bank of America
  • Beneficial State Bank
  • Calvert Foundation
  • Capital Link
  • Citibank
  • Clearinghouse CDFI
  • Community Reinvestment Fund
  • Detroit Development Fund
  • Deutsche Bank
  • Dignity Health
  • EdTec
  • ExED
  • Flagstar Bank
  • Federal Home Loan Bank Atlanta Cooperative
  • IFF
  • Impact Community Capital
  • Invest Detroit
  • JPMorgan Chase
  • Living Cities
  • Local Initiatives Support Corporation
  • Low Income Investment Fund
  • Metropolitan Life
  • Merrill Lynch
  • Morgan Stanley
  • National Co-op Grocers
  • Nationwide Insurance
  • National Cooperative Bank
  • NCB, FSB
  • Nonprofit Finance Fund
  • Northern California Community Loan Fund
  • PNC
  • Prudential Insurance
  • Rural Community Assistance Corporation
  • Seattle Investment Fund
  • Self-Help Credit Union
  • Small Business Lending Fund
  • The California Endowment
  • The Reinvestment Fund
  • U.S. Bank Community Development Corporation
  • U.S. Department of Treasury CDFI Fund
  • Wells Fargo Bank
  • Wespath, a division of the General Board of Pension and Health Benefits of The United Methodist Church

Public Agency
& Nonprofit Partners

  • Alzheimer’s Association
  • American Health Care Association
  • American Medical Directors Association
  • Arkansas Division of Aging & Adult Services
  • Beacon Hill Village
  • California Department of Health Services
  • California Charter Schools Association
  • California Primary Care Association
  • California School Finance Authority
  • Center for Community Progress
  • Centers for Medicare and Medicaid Services
  • Chi Partners
  • CFED
  • Detroit Economic Growth Corporation
  • Fannie Mae
  • Federal Housing Finance Administration
  • Federal Reserve Bank of San Francisco
  • Freddie Mac
  • Grantmakers for Effective Organizations
  • Habitat for Humanity International
  • Housing Partnership Network
  • Harvard University Initiative for Responsible Investment
  • ICA Group, Inc.
  • Michigan Economic Development Corporation
  • Midtown Detroit, Inc.
  • Michigan Lending Solutions
  • Innovative Housing Institute
  • Kirwan Institute
  • Leading Age
  • Ohio Administration on Aging
  • National Association for County Community and Economic Development
  • National Association of Housing and Redevelopment Officials
  • National Association of Local Housing Finance Agencies
  • National Association of Realtors
  • National Community Land Trust Network
  • National Council of State Housing Agencies
  • National Fair Housing Alliance
  • National Family Caregivers Association
  • National Housing Conference & Center for Housing Policy
  • National Housing Institute
  • National League of Cities
  • NeighborWorks America
  • Opportunity Finance Network
  • PolicyLink
  • PHI National
  • Pioneer Network
  • The Eden Alternative
  • The Partnership for Working Families
  • U.S. Department of Education
  • U.S. Department of Health and Human Services, Bureau of Primary Health Care, Health Resources, and Services Administration
  • U.S. Department of Housing and Urban Development
  • Urban Institute