Boyle Heights is a bustling Latino neighborhood just east of downtown Los Angeles with a history dating back before the Mexican-American War. However, it’s the pressures of the present day that weigh heavily here. Approximately 66 percent of the population lives below 200 percent of the federal poverty level, 22 percent are uninsured, and few primary care doctors remain. The systemic poverty the residents grapple with creates ripple effects throughout their lives.
The ability to access affordable health care is among the most critical challenges. Many in Boyle Heights, and similar communities across California, wait until they are so sick that they are forced to visit the emergency room because they cannot afford health insurance. Having to make such decisions can have negative ramifications not only on their own long-term health but for the entire health care system in the region.
OLE Health and other CHCs have become frontline providers of many kinds of care, taking on care that they historically have not provided.
In the face of such struggles in Boyle Heights and communities like it, there are a few health care providers that provide a safety net for local residents. In the northwest area of Boyle Heights, for example, White Memorial Community Health Center serves approximately 20,000 patients. This community health center (CHC) provides crucial primary and preventative care, behavioral health and dental services, and serves as an alternative to emergency room care for low-income patients in a generally underserved community.
East of San Francisco, Tri-City Health Center offers primary and preventative health care services to low-income and uninsured patients in the Alameda County area. In a new 20,000 square foot facility amid a large immigrant population, Tri-City implements a Patient Centered Medical Home model — which coordinates care across teams (i.e. medical, behavioral health, lab) — serving 8,000 patients and employing staff that cover 20 languages, which is reflective of the surrounding community.
Urban and rural communities alike would fall through the cracks without the services provided by CHCs like White Memorial and Tri-City. It is their ability to serve residents, no matter their socio-economic status or ability to pay, that creates an equitable system of care necessary to build healthier communities.
In order to continue providing this kind of high-quality community care, CHCs need adequate financing to grow to reach more patients and provide more patient-centered, whole-person care. But financing can be hard to come by. Too often, CHCs operate in areas deemed too risky by traditional financial institutions.
As a mission-driven organization focused on social impact and equitable access, it is critical to Capital Impact Partners to help CHCs fill that gap. That is why we collaborated with long-term partner The California Endowment (TCE) to find ways to better support the growth and innovation of CHCs and ensure that communities do not have to go without the critical health care services on which they depend.
Adapting to Create Sustainable Community Health Impact
Our teams at Capital Impact Partners have spent time talking to health center operators to better understand their needs and how we could help. What struck us most during those conversations was how clinics are expanding their services to take on care that they historically have not provided.
As more older adults seek care at CHCs, health care providers are expanding these services to address their needs.
Hospitals and Federally Qualified Health Centers (FQHCs) are partnering to better serve local populations. FQHCs mainly focus on primary care, but some are moving into urgent care to reduce emergency room visits at local hospitals. CHCs are incorporating dental and urgent care, as well as new wellness and preventative care services, including healthy food counseling, yoga, and disease prevention and management support.
Ensuring that we could create sustainable social impact for California communities meant that we had to adapt alongside CHCs. To meet that need, Capital Impact and TCE established The Healthier California Fund, a $20 million initiative providing loans, grants, and capacity building. Our goal with this new effort was not only to support traditional growth and expansion, but also to foster new innovations in care among CHCs. By helping these organizations meet their range of needs, the CHCs can focus on what they do best: support each patient with care from physical and dental care to behavioral health and overall wellness.
“Health centers provide a core service for their communities,” said Ian Wiesner, manager, Business Development at Capital Impact. “They increasingly are stretching above and beyond their normal mandate, both integrating additional services to address the complete wellness of their patients and taking on new patient segments to address the needs of the whole community. Creating the Healthier California Fund provided a unique opportunity to support this expansion of innovative care, particularly for communities where patients struggle to access vital health services affordably from traditional providers.”
“The California Endowment is committed to improving the health of all Californians,” said Amy Chung, director, Program Related Investments at The California Endowment. “Our partnership with Capital Impact Partners through the Healthier California Fund has not only increased access to critical health services but also supported innovative models of holistic, whole patient care.”
We were able to put this effort into action with LifeLong Medical Care, which serves the Richmond community twelve miles north of Oakland, California. A high proportion of the city’s racially diverse population lives below 200 percent of the federal poverty line. Providing for the needs of this underserved community as the only FQHC meant, for years, that Lifelong had to find any space possible to accommodate patient visits. After working out of three separate sites throughout the city, LifeLong needed to centralize its operations out of one location so it could better serve 7,400 local residents.
With financing through our Fund, that site will become the William Jenkins Health Center, a new three-story, 34,784 sq. ft. clinic offering primary care, behavioral health services, dental care, urgent care, and lab and imaging services. The new medical center will also provide wellness services such as diabetes prevention, smoking cessation, music and art groups, and stress management classes. In addition, LifeLong is increasingly serving older adult patients referred to them by regional hospitals.
Like the residents of Richmond, patients of both White Memorial and Tri-City have benefitted from more whole-person care financed through the Healthier California Fund, including behavioral and dental health and urgent care services.
Empowering Community Health Centers Through Capacity Building
Before CHCs could expand their innovative services, they needed the skills to manage the process. Many small community health centers work with a lean administrative staff and often do not have the capacity or expertise to take on the additional work involved with planning and constructing a new health care facility. They needed assistance before taking on these projects to make sure they were prepared and had fully considered the impacts the project could have on their operations. Grants were given to prospective CHCs at the beginning of the Healthier California Fund to build their capacity to manage the loans they later received.
“We knew that in order to support innovation and help grassroots health centers grow, we needed to provide more than capital. The Healthier California program allowed us to match our capital with the technical assistance these administrators needed to properly plan their projects,” said Wiesner.
One grantee that has benefitted from this capacity building element is Roots Community Health Center. Roots CHC was created to reduce health disparities and improve health outcomes among residents of East Oakland, California, one of the most disinvested neighborhoods in the city. Roots CHC serves nearly 10,000 patients, most of whom either use Medi-Cal or are uninsured. Roots provides a range of services, including primary care, behavioral health, workforce navigation, and job creation programs for formerly incarcerated people. Its services also link to transitional housing and entrepreneurship training.
Roots needed a loan to purchase and renovate a building and transform it into a health facility to better meet the demands of their community. But this small community organization had never taken on this type of project before, and had to be sure that taking on this building — and the associated construction — was financially and logistically feasible. A grant from the Healthier California Fund enabled Roots to bring on a consultant to help forecast the financial implications of the project and prepare the team for the construction process. Now Roots is ready to bring the project to fruition.
Capital Impact is currently working with several more health centers to provide capacity building to get them ready for financing and construction. Combined, these grantees could impact more than 21,000 patients.
Overall, the Healthier California Fund has financed seven community health centers that will provide more than 91,000 patients with vital health care. Community members will receive more and more diverse kinds of care as clinics and hospitals collaborate to divide and conquer the health care needs of their patients.
Combining capacity building and financial support through Healthier California has helped CHCs expand high-quality and efficient health care for their target clientele. Our continued partnership with TCE will help us expand our work as the largest health care lender in California; we have provided financing to more than 50 percent of all FQHCs in the state. We remain committed to ensuring that CHCs acquire the skills and capital that they need to remain vibrant, vital parts of their community fabric.
To learn more about how Capital Impact supports expanding equitable health care access nationwide, visit our Health Care page.
In 1982, Capital Impact was created with a single focus — support the development of cooperatives in communities.
Charter schools create opportunities for innovation that drive academic success for students in communities.
Along the way, we gradually expanded our scope to meet the growing needs of the communities we served by working to increase access to health care, education, housing, and healthy food.
A handful of loans slowly grew into a truly diversified portfolio of offerings as we took the risk to partner with those organizations that traditional financial institutions shied away from. Twenty-five years after we began lending in 1984, we hit an incredible milestone of deploying $1 billion into low- and medium-income communities across the country.
We are humbled that just eight years after that initial milestone, we more than doubled that achievement by deploying more than $2.5 billion through the end of our record-breaking efforts in 2017.
It is a true testament to our mission-driven team for living our mission statement by delivering both the capital AND commitment that enables those most in need to build communities of opportunity that break barriers to success.
While we pause to celebrate, we also know that we must increase our resolve. Too many of us continue to struggle, with a disproportionate impact on people of color.
To help solve the key social and racial justice issues facing our society, we must continue to make inroads in achieving our strategic pillars to address systemic poverty, create equity, build healthy communities, and promote inclusive growth.
Innovative health care models support older adults to age with dignity in their communities.
This requires supporting our lending work by deploying new and innovative programs backed by cutting-edge research; making the case for support from lawmakers at the federal, state, and local levels; amplifying our impact investing efforts with both individuals and large institutions; and forming partnerships that ensure that our solutions are grounded in what communities both need and can act on.
We did not get to this point alone, and for that I want to thank all of those who have supported us, as well as those organizations who are working directly with often-neglected communities every day to deliver the services they need to thrive.
By working together, I know that we can empower communities to achieve transformative progress in 2018 and beyond.
As wildfires burned through California’s Napa and Sonoma Counties in late 2017, Sandy Cesario was forced to evacuate her home and all she knew. Like many of the 5,000 residents of her small Calistoga town, she took refuge at one of the county’s evacuation centers filled with uncertainty.
That was the last place she expected to see her personal doctor.
Despite the challenges, positive outcomes are achievable. Capital Impact aims to fund schools willing to rise to the challenge and create and maintain diverse by design school campuses.
Our extensive research yielded examples of several best practices for schools pursuing the diverse by design model, including:
Locating schools in naturally diverse neighborhoods or on the border of racially or socio-economically diverse communities;
Instituting a weighted lottery system for student recruitment that takes into account socio-economic status, parental education levels, and/or census tract;
Training teachers and staff on equitable and culturally responsive pedagogical practices and recruiting diverse personnel; and
Promoting the benefits of integration to students, families, and communities.
Montessori for All students help break ground on their “diverse by design” school building.
Capital Impact has presented these findings, in partnership with thought partners and schools at the National Charter School Conference, the Central Valley Leadership Program, and a gathering hosted by the Diverse Charter Schools Coalition.
These schools are promoting academic excellence for all by creating inclusive and nurturing environments in which all students have equitable opportunities to succeed, and we look forward to collaborating to continue this progress.
For more about how Capital Impact is working to support the “diverse by design” model, we invite you to learn more about our overall education work and strategy behind why we finance charter schools.
Across the country, unemployment numbers are down and the news talks of economic recovery and the booming stock market. Outside of that news, however, are many people who are still struggling to achieve equal opportunity and prosperity with the rest of the country.
Transformative investments are needed to get struggling Americans into the mainstream economy and working toward a brighter future.
This means access to health centers, charter schools, affordable housing, grocery stores that sell fresh and healthy food, transportation, and other infrastructure improvements. However, access to financing can be a major barrier to these projects getting off the ground.
Financial services, investment capital, and affordable credit from traditional financial institutions has historically been limited for those looking to serve low-income communities.
Community Development Financial Institutions (CDFIs) have played a major role in empowering communities to address the structural barriers that exclude them from shared prosperity.
What are CDFIs exactly? How do they work? Whom do they serve? Here is a breakdown…
Insight into CDFIs
Martha’s Table provides healthy food to Washington, D.C. communities daily.
CDFIs as we know them today began more than three decades ago as private financial institutions focused on increasing economic prosperity for low-income and underserved communities by providing affordable lending for community projects. Today, more than 1,000 CDFIs operate across the United States.
Over time, their work has evolved to address key issues of economic, social, racial, and political justice. These mission-driven institutions provide support in disinvested areas that traditional lending institutions deem too risky to finance; in fact, they are mandated to embrace risk in order to create social impact.
CDFIs fall into four sectors: community development banks, community development credit unions, community development loan funds, and community development venture capital funds. Each has a slightly different way of operating, but the end product is the same: communities of opportunity that break down barriers to success.
CDFIs work as market creators and market catalysts by supporting community businesses—including small and family businesses, micro-enterprises, cooperatives, non-profit social service organizations, mixed-use real estate, and affordable housing. CDFIs’ ability to foster catalytic change comes from loans and grants from government institutions like the CDFI Fund, loans and grants from large financial institutions, and program-related investments from major donors and foundations.
Meals on Wheels support older adults to age within their communities.
Financing from CDFIs targets specific populations – often low-income individuals in both urban and rural settings, and heavily concentrated with women and people of color. These high-impact interventions build community infrastructure and resilience.
CDFIs work for and with the communities they serve, developing strategic financing packages – ranging from pre-development to real estate acquisition, from construction to refinancing – for vital projects needed to help communities succeed. Generally smaller than mainstream financial lenders, CDFIs come in different sizes and provide loans ranging from $50,000 to $5 million. CDFIs have also jointly raised capital to deploy larger loans in the multi-millions.
In addition to core lending services, some CDFIs also provide capacity building, help build and scale social innovation programs and support policy advocacy as a means of further supporting local organizations. Combined with our lending services, these efforts promote increased job growth and retention, improving communities’ economic outlook and viability.
Importantly, CDFIs are not in business to maximize profits. Instead, CDFIs maximize support for community needs and empowerment.
CDFIs’ Immense Impact on Communities
The impact of CDFIs shows in their support and empowerment of underserved communities to address the barriers that hold them back from shared prosperity.
Axis Community Health provides high-quality health care services for its clients.
In 2016, CDFIs supported by the CDFI Fund financed nearly 12,000 businesses, created 37,600 jobs, and created 34,000 affordable housing units. Nearly 450,000 individuals received financial literacy capacity building through CDFIs. As part of the CDFI Fund’s Bond Guarantee Program, $119 million was spent on rental housing, $102 million on charter schools, $13.3 million for health care facilities, $2.7 million on daycare centers and $2.9 million on small businesses.
Capital Impact Partners’ Role in the Space
Equitas Academy is one of many charter schools preparing students for future success.
Since 1982, Capital Impact has served often-neglected communities, starting with the cooperative model to foster economic development for low- and moderate-income areas.Our non-profit, mission-driven lending began in 1984 and progressively expanded to support communities nationwide, including establishing offices in Oakland, California and Detroit, Michigan. Capital Impact also grew to support access to quality health care, education, housing, healthy food, dignified aging and cooperative development.
Capital Impact Partners works to improve the lives and futures of individuals and communities through four strategic pillars: addressing systematic poverty, building equitable communities, creating healthy communities, and ensuring inclusive growth.
Through it’s place-based focus, Capital Impact Partners has played an integral role in revitalization efforts in Detroit.
Since its inception, Capital Impact has deployed more than $3 billion for community development projects nationwide. In that time, our lending has created more than 36,500 units of affordable housing, helped more than 2 million patients receive quality health care, facilitated access to quality education for 240,000 students in 235 charter schools, financed 86 retailers to provide healthy food for 1 million people, helped 37,000 older adults age with dignity through 191 projects, and supported cooperative services for 870,000 customers. Our place-based strategy has also facilitated the revitalization of Detroit neighborhoods, creating mixed-use spaces and multi-family housing to help the city rebound.
In addition to our lending, we advance programs to create equity and opportunity. For example, our EDI program provides catalytic capital and training to minority real estate developers in Detroit so that they can participate in the city’s revitalization efforts. We are also investing nationally in efforts to scale worker-owned, home care cooperatives that are creating quality jobs for women aged 50 and older who care for our loved ones as they age.
Capacity building is another service we extend to organizations. A great example is the Answer Key, a step-by-step guide with practical tools designed to help charter school operators successfully navigate the often difficult process of building or expanding charter schools.
Like several other CDFIs, Capital Impact also embraced impact investing in 2017 by creating Capital Impact Investment Notes as a means to drive more capital from socially conscious investors – big and small – into the communities that need it most.
All that individuals and communities want is the opportunity to succeed. When traditional financial institutions refuse to invest in communities, CDFIs offer a chance of living a dream that so many Americans hold: providing their children with a quality education so that they can achieve greater gains. Receiving quality health care and healthy food access so that they can enjoy many years with family. Having affordable housing to call home.
In supporting communities to reach these goals, Capital Impact Partners and other CDFIs help create equitable and inclusive spaces that lead to communities of opportunity for all.
This year has been a whirlwind for our country and for Capital Impact Partners.
For all the headlines of stock market records and rising incomes, the reality is that too many of us across America are struggling. People of color are disproportionally impacted, with black households still lagging behind where they were in 2000, and Hispanic households not doing much better.
Due to this stark reality, the question “How can we bring about improved outcomes in access, income, health and opportunity in the communities we serve?” remained central to our efforts.
Through our dedicated focus on breaking the barriers to success — and with your support — I am proud to report that this has been our most impactful year ever in working to turn underserved communities into communities of opportunity.
Fostering Innovation to Address Inequity
To answer that central question, we concentrated on identifying and addressing inequalities within systems and driving equitable means for individuals to propel themselves out of poverty and live the dream America is known for.
Several resources were researched and developed to inform practitioners and communities and influence policy makers about best practices in our areas of practice.
We heard from many charter school operators that the school construction process can be daunting. In support of their efforts to build or expand high-quality charter school facilities, Capital Impact published The Answer Key, a step-by-step guide to the school construction and financing process.
With the influx of development in Detroit, long-term residents face the risk of relocation or displacement. Capital Impact published a report to help groups involved in development manage processes to reduce resident displacement.
Alongside these resources, we also developed programs to directly address inequity in access to services and economic participation.
In Detroit, where lending and resources for minority real estate developers are limited, we launched the EDI program. This two-year, $5 million program is designed to help minority developers participate in Detroit’s continued economic recovery by providing them with critical training opportunities and access to capital. Our longtime partner JPMorgan Chase provided initial support.
More broadly across Michigan, the Michigan Good Food Fund invested more than $10 million in statewide healthy food programs since its launch two years ago, creating approximately 213 construction jobs, 366 full-time jobs and 32 part-time jobs.
Cooperatives can provide a considerable economic and social benefit for communities. Our cooperative work focused on expanding racial and economic equity to the communities we serve by supporting worker, food and housing co-ops. We gave our third year of Co-op Innovation Awards to Project Equity and the Food Co-op Initiative for exemplifying innovation in the co-op space with a focus on communities of color.
Additionally, there has been movement in the home care worker cooperative space. Capital Impact partnered with the AARP Foundation to create quality work options for women 50 and older through a national effort to scale worker-owned, home care cooperatives. With women – mostly women of color – making up 90% of all home care workers and wages for these jobs keeping workers hovering around the poverty line, worker ownership is a viable option for giving older women employment empowerment while providing quality care for their clients.
Supporting Communities to Succeed
Our lending team also had an incredibly full year. Fueled by a record-breaking projected loan volume of more than $200 million, 2017 will be our largest year ever.
Martha’s Table’s relocation and expansion in a new community-services campus will help address local disparities.
As we have expanded our lending, we have also expanded our footprint. We’ve reached into new geographic areas to continue addressing the increasing need of communities across the country, including work in the Southeast and Midwest. I am particularly excited about our growing focus in the “backyard” of our headquarters. We helped launch a number of impactful projects in Washington, D.C., including a focus on education with the Mamie D. Lee development, Martha’s Table and the D.C. International School.
Setting a Foundation for the Future
Along with these outward successes to empower new communities of opportunity, we made great strides in focusing inward to further position ourselves to address the nation’s biggest challenges. In January, S&P Global, the world’s leading provider of independent credit ratings, assigned Capital Impact a “AA issuer credit rating.” Being one of a few Community Development Financial Institutions (CDFIs) that have received an S&P rating is not only an honor, but it improves our ability to access financial tools that allow us to support vibrant economic opportunity and shared prosperity.
That set the stage for the October launch of our Capital Impact Investment Notes. This first-of-its-kind offering from a CDFI — with its own “AA” S&P rating and offered on a continuous basis — gives us the flexibility to invest in new programs and initiatives in communities needing support. It has already been incredibly well-received, selling more than $41 million in the last quarter, making it among the most successful in the impact investment space by a non-profit.
We closed the year by launching a unique partnership with Annaly Capital Management. Through this first-of-its-kind $25 million joint venture with the world’s largest REIT, we were able to raise direct equity for our mission. We are thrilled to embark on this partnership, as it enables us to expand our work to new communities.
Of course, these numbers mean little without impact. We reached more than 200,000 beneficiaries this year and created more than 750 jobs.
I am immensely proud of the work that our team has done to make this year our best yet. Their commitment allowed us to increase access to health care, education, affordable housing and healthy food for many deserving individuals. You can learn more about our approach and focus on equity from my interview with the More Than Money podcast.
More than ever, communities across the country need support to help themselves out of poverty, and Community Development Financial Institutions are becoming an ever greater tool for realizing that goal.
Capital Impact is well placed to continue affecting positive change for communities in 2018 and beyond.
Of course, we can’t do it alone. Thank you for all of your support, this year and in the future.
Community engagement is a critical component to our work at Capital Impact, particularly as supporters of innovative community-based work. As a Community Development Financial Institution (CDFI), we support community-driven solutions that address the economic, social and racial justice barriers to success in our most underserved communities. Having first-hand knowledge of our communities and their needs helps us ensure that the projects we support have the outcomes our clients need.
With our home base in the Washington D.C. area, we strive to be present and engaged in the city’s communities. We work with organizations across the city to address various issues of structural exclusion and poverty. One of the areas that Capital Impact focuses on in this effort is healthy food access. Our strategic focus on health care and healthy food ties directly into our call to help communities achieve their full potential. We all need access to healthy food to thrive.
By Nancy O. Andrews, Ellis Carr, Donald Hinkle-Brown and Joe Neri
As leaders of four of the nation’s largest nonprofit community development financial institutions (CDFIs) with the mission of investing in low-income communities and entrepreneurs, we ask Congress to protect the desperately needed flow of investment capital to America’s struggling cities and towns.
In short, we ask Congress to ensure full funding for the U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund), whose support enables us and more than 1,000 other CDFIs nationwide to provide patient, innovative capital solutions to help small businesses, expand educational opportunities, and build affordable homes. These investments provide a tremendous bang for the taxpayer buck: On average, CDFIs leverage every federal dollar with at least 12 additional dollars from other sources, including banks, foundations, and impact investors.
CDFI investments in underserved communities promote economic opportunity and inclusive growth.
Last year, $233 million in CDFI Fund appropriations led to more than $2 billion worth of investments and loans across the U.S. Most importantly, this capital has fueled economic growth in thousands of distressed cities and towns, providing economic opportunity for millions of Americans. In 2016 alone, with support from the CDFI Fund, CDFIs nationwide created 36,000 jobs, made 11,000 business loans, and financed 24,000 affordable housing units in urban and rural communities that need it most.
Yet, despite a solid track record of success and consistently strong bipartisan congressional support since its founding in 1994, the CDFI Fund is on the chopping block. The Trump administration’s proposed budget for fiscal year 2018 would eviscerate the CDFI Fund’s vital programs, cutting all but $14 million of its current $248 million budget.
The House voted to restore some of that funding, and although that’s a good first step, we need more than that. The CDFI Fund must continue to operate at full strength. Without the CDFI Fund, small businesses like veteran-owned Honor Capital, which brings affordable grocery stores and jobs to underserved neighborhoods, wouldn’t exist.
Honor Capital’s seven grocery stores in Kansas, South Carolina, Virginia, and Oklahoma have all been financed with CDFI loans. In Wichita and Winfield, Kan., for example, Honor Capital opened two stores that have brought fresh, affordable foods to their communities, created jobs, and attracted new businesses. Each Honor Capital grocery store serves thousands of customers every week.
As part of Honor Capital’s ambitious plan to increase access to healthy foods and support veteran entrepreneurship nationwide, the company will expand to operating a total of 10 stores by the end of 2017, including new stores in North Carolina and Georgia. This growth is made possible by $9 million in innovative financing provided by a partnership of three CDFIs—IFF, Reinvestment Fund, and Enterprise Community Partners. CDFI financing is essential because many start-up and early-stage businesses like Honor Capital have difficulty accessing credit.
In the District of Columbia’s Congress Heights neighborhood, a $14.4 million capital infusion from two CDFIs, the Low Income Investment Fund (LIIF) and Capital Impact Partners (CIP), enabled the Charter School Incubator Initiative to renovate a building that houses two charter schools. Somerset Prep DC and Community College Preparatory Academy serve students in grades six through 12, as well as adult learners. These two schools expand the opportunities for youth and adults to secure high-quality education in their community. Congress Heights, a predominantly African-American and low-income neighborhood, is undergoing pressure from the rapid public and private-sector development in the District. Like other CDFIs, LIIF and CIP are working to ensure inclusive growth by enabling all residents to participate in the revitalization of their community.
The impact of the CDFI Fund’s support goes well beyond dollars and cents.
CDFIs help communities realize their visions of prosperity. They work closely with local nonprofits, businesses, and government to ensure that they are addressing community needs and priorities. They seek out opportunities that traditional financial institutions often overlook: in neighborhoods where median incomes and school test scores fall below national averages, and in businesses like grocery stores that have thin profit margins and higher risk.
CDFI financing is about helping Americans live better lives—through good jobs; safe and affordable housing; access to fresh, healthy foods; high-quality education from early childhood to college; and excellent health care.
America’s cities, towns and rural areas need the CDFI Fund in order to thrive. Congress should ensure that funding for CDFIs is fully restored in the 2018 budget and keep investment capital flowing to vulnerable communities.
Nancy O. Andrews is President and CEO of the Low Income Investment Fund, which is dedicated to creating pathways of opportunity for low income people and communities. Ellis Carr is Capital Impact Partners’ President and Chief Executive Officer and has more than 20 years of experience in the financial services and mortgage industries. Donald Hinkle-Brown is President and CEO of Reinvestment Fund, a national CDFI which integrates data, policy and strategic investments to improve the quality of life in low-income neighborhoods. Joe Neri is President & CEO of Chicago-based IFF, the Midwest’s leading non-depository, diversified Community Development Financial Institution, which focuses on strengthening nonprofits and the communities they serve.
The idea of “community” often conjures images of a geographic place, a shared space where people congregate. While true, communities can be so much more. Their true potential can manifest itself when they foster connections between individuals who share mutually beneficial ideals. Through championing those shared values, community members can create a future of shared prosperity.
This idea of community inspires us here at Capital Impact to look beyond the boundaries of space and place and take action to create ‘communities of opportunity’ built on a foundation of equity and inclusion. In doing so, we can create a network of connections that supports successful outcomes for all.
In an effort to fulfill that vision, we are announcing a new opportunity that allows you to embrace this broader concept of community and support the values that matter to you. Beginning this week, we are offering Capital Impact Investment Notes, the proceeds of which will support investments in underserved communities across the country. I am excited that S&P assigned a long-term issue credit rating of AA to our Notes*, marking the first time an S&P rated Notes offering is being made available by a Community Development Financial Institution on a continuous basis.
For as low as $1,000, you — as an individual or institution — will have the ability to invest in our mission-driven efforts to create jobs, support equitable access to critical services, foster good health and drive economic development — things that our country so desperately needs.
For more than 30 years, Capital Impact has lent to, invested in and developed programs with the residents in underserved communities, communities that traditional lenders are reluctant to support. Central to that effort is our work to partner with and empower communities to identify locally driven solutions that help address their most pressing needs.
I encourage you to read our stories of impact and see that work through the eyes of those individuals in communities who are benefiting from this collective social impact effort. Now you can help us create more stories of positive social change.
This announcementis an important step in providing another way for you to align your investments with your values and truly make a difference in the lives of others.
I hope that you will join us in creating communities of opportunity that break down barriers to success and expand equity for all.
Ellis Carr
DISCLAIMER
This is not an offer to sell or a solicitation of an offer to buy any securities. Such an offer is made only by means of a current Prospectus (including any applicable Pricing Supplement) for each of the respective Notes. Such offers may be directed only to investors in jurisdictions in which the Notes are eligible for sale. Investors in such states should obtain a current Prospectus by visitingwww.capitalimpact.org/invest/capital-impact-investment-notes. Investors are urged to review the current Prospectus before making any investment decision. No state or federal securities regulators have passed on or endorsed the merits of the offering of notes. Any representation to the contrary is unlawful. The notes will not be insured or guaranteed by the FDIC, SIPC or other governmental agency. As of October 16, 2017, the Notes will be offered for sale in all 50 states and the District of Columbia, excluding the States of Arkansas and Washington and the Commonwealth of Pennsylvania.
*S&P Global assigned a long-term issue credit rating of AA to the Notes on September 7, 2017. Please check the current Pricing Supplement at the link above for the S&P credit rating assigned to Notes currently being offered for sale. An S&P credit rating is not a recommendation to buy, sell or hold Notes and may be subject to suspension, reduction or withdrawal at any time by S&P.
More than Money Podcast Interviews Ellis Carr, President & CEO of Capital Impact Partners
Expanding opportunities for residents in low-income communities is the focus of community development financial institutions (CDFIs). These mission-driven institutions prioritize social, economic and racial justice for underserved communities over and above profits, meaning that CDFIs invest in places and projects that traditional lenders are often reluctant to support.
Central to that effort is working to partner with and empower communities to identify locally driven and sustainable solutions that help address their most pressing needs.
What does that look like in practice?
More Than Money, a podcast that explores how “we can use our values to inform how we engage with our work and invest our wealth,” recently sat down with Ellis Carr, president and CEO of Capital Impact Partners, to discuss the organization’s approach to community development and the role of CDFIs in communities.
Listen as Ellis talks with host Dawn Carpenter about our values and how we work as market maker and market catalyst to help communities thrive. We also invite you to read the full transcript below.
More Than Money – Ellis Carr Interview Transcript
Dawn Carpenter (DC): Welcome to More than Money, a podcast that explores how we engage with our work and invest our wealth.
I’m your host, Dawn Carpenter, and for the next 30 minutes, we will explore what our work and wealth mean to us and to others. Our guests share their personal stories of why they work and how they engage as fiduciaries of the material world.
Welcome to the More than Money Podcast. I’m your host, Dawn Carpenter. And for the next 30 minutes, we are going to be on a journey to look at how capital is brought to underserved communities. We are going to be joined in the studio today by the CEO of Capital Impact, a CDFI, yes, more acronyms in this world. CDFI means Community Development Financial Institution. CDFIs are special financial organizations, be they loan funds or regulated banks or financial institutions, who have a special commitment to deploying a large portion of their lending capital into underserved communities. They are designated as such by the U.S. Treasury Department, and some work locally, but today we’re going to hear from Capital Impact, who happens to be located in the Washington D.C. market but is working all throughout the country.
And to complement our conversation about CDFIs with Capital Impact, we are going to hear from one of the users of capital from Capital Impact, Axis Health, a community health provider in the Bay Area of San Francisco, California.
Community Development Financial Institutions, or CDFIs as we call them, share the common goal of expanding economic opportunities in low income and low wealth communities. They do this by providing access to financial products and services for residents and businesses in those disinvested communities. Now CDFIs can be banks, credit unions, loan funds, microloan funds, or even venture capital providers. But what they have in common is that CDFIs are helping families finance sometimes their first homes, by supporting residents who are starting or expanding their businesses, and investing in local health centers, schools, or community centers. The goal of CDFIs is to foster economic opportunity and revitalize neighborhoods.
Now today, we have with us in the studio Ellis Carr. Ellis is the President and CEO of Capital Impact Partners. Capital Impact Partners is a CDFI and is headquartered in Arlington, Virginia, and whose ambitious agenda is anchored by four strategic pillars; addressing systematic poverty, building equitable communities, creating healthy communities, and ensuring inclusive growth.
Ellis Carr, welcome to the More than Money Podcast.
Ellis Carr (EC): Thank you, Dawn. I’m really happy to be here.
DC: Excellent. Well, let’s get started with a bit about your background and the history of Capital Impact Partners.
EC: Sure. So, Capital Impact is a national nonprofit CDFI, and as you mentioned, we’re headquartered in Arlington, Virginia. We have offices, although, in Oakland, California and Detroit, Michigan.
Our mission is to help people and communities break the barriers to success, and we accomplish that by providing financing and technical assistance to help expand access to quality healthcare, education, housing, and food. We got our start a little over 30 years ago, at a time where high-interest rates, inflation, unemployment had a disproportionally adverse effect on low-income communities. And we leveraged the co-op model, the cooperative model, as a means of increasing economic participation, and also a way to build community wealth. We still do those things today.
Since our inception, I’m really happy that we’ve been able to invest over $2 billion in communities across the country, and we currently have about $800 million in assets under management today.
DC: Well, how does your CDFI fit in the financial ecosystem? What are the sources of capital, how do you evaluate risk and return, and probably most importantly, impact?
EC: Great questions. I’ll start with the first one.
So, Capital Impact, and CDFIs like it, primarily serve a group of people that are currently not being served by mainstream financial institutions. And for that reason, we play three distinct roles in communities, the first as a market maker. Capital Impact and CDFIs like us are often market makers because we oftentimes work in the distressed community that has a need that’s not being fulfilled by an existing product or service. And that’s where Capital Impact, and CDFIs like us, that then partner with residents in that community and create tailored resources to address that need.
I think the second role we play in the financial ecosystem is as a market catalyst. Because we can’t and don’t do our work in a vacuum or alone, we develop public-private partnerships that combine capital that invests federal dollars alongside private sector capital from larger institutions. And we’re able to do that because we’re embedded in communities and we have a strong track record, and the ability to de-risk a transaction for a large and, frankly, regulated institution, so that we can bring the much-needed resources into communities that may not otherwise have those resources.
And then, I think the third way that we play, and this has been an evolving role for CDFIs, is what we call the role as a community quarterback. And that really is effectively an organization that brings people together, articulates the vision, aggregates capital, and aligns efforts from multiple parties or stakeholders towards the common goal.
I think a good example of that would be some of the work that we have done across the country, around developing strategies that really help build healthy communities. And you talked a little bit about kind of our four strategic pillars around equitable communities to have access to quality schools, quality and affordable housing, and options for healthcare and healthy food.
In terms of capital, we get our capital from a variety of sources. Primarily, we get our capital from; we both raise both debt and equity, and because we’re nonprofit equity translates into grants from really a few key sources; large financial institutions and banks. Larger financial institutions would be pension funds and banks, foundations, government, from the federal government and state government, and also from individuals, and we do that effectively.
And that gets to your other comment question around looking at risk and return and impact. We are able to combine those sources to provide solutions that work for the community, that embed most of the benefit of the work that we do into communities, while also encouraging private investment into those communities as well.
And so, we evaluate risk and return much like all of our traditional financial services organizations would, but we also look at impact. And impact is kind of our reason for being, and so that really is one of the primary ways that we look at the transaction. We look at it holistically, but we tend and can take more risk because impact is first and foremost.
I think it’s also important to say from our return perspective that we are profitable but we’re not profit maximizing. So, that allows us a good amount of flexibility to be able to really push for impact and ensure that we’re embedding the right benefits and the right controls in place in the community.
DC: Well, that’s a whole lot to accomplish. What type of skills do your bankers have to have to do this work? It sounds like you almost have to be magical storytellers.
EC: So, I would say first and foremost you have to have a passion for the mission and for helping others.
To your point, you have to be extremely communicative, and the ability to interact effectively with a ranging group of people from residents in the community to community leaders, to bankers on Wall Street. You have to be able to communicate effectively with them and so speak the very languages that each one of those constituencies can relate to you.
I think that you have to be able to multitask, right? We are an organization of about 80 folks, and so we have to wear multiple hats. And so, having the ability to multitask is critical.
As well as having great analytical skills. Because we are kind of a hybrid between a traditional financial services organization, and also fighting for social and economic justice in these communities, that’s not a typical role that you can find just anywhere. And so, we have been really focused on developing an associate program here at Capital Impact that really helps people to come in and understand credit, understand the sectors we work in, and how to lend to them.
DC: Well, on that note, how does your private sector background, how has that prepared you for the work that you do at Capital Impact?
EC: Sure. I mean, I have been fortunate to work for a few great companies before I came to Capital Impact and held positions in operations, corporate finance, strategy, and capital markets. And I think I’ve been able to leverage all of those experiences at Capital Impact.
I think for me, one of the most important things that I’ve been able to leverage from my background is, what I’ve just mentioned, the ability to speak and be conversant in multiple different constituencies, specifically, kind of to our Wall Street investors and our large investors. Because it’s important for them to have the confidence to invest in us as a financial intermediary so that we can more effectively do our work on the ground. So, ensuring to them that we have the right procedures and protocols in place, and also have the right skillsets to be able to do the work we have, has been truly important.
And I’d say, also, just working for larger organizations you get a really good understanding of best practices across the continuum of business that we’ve been able to implement effectively here at Capital Impact.
DC: Well, I’ll tell you, measurement is key. So, how do you measure the success of what you’re doing, and what’s some of the work you’re most proud of?
EC: Great question. So, I think we measure our success in two ways. The first, and I mentioned this earlier, is impacting in the community; and the second is financial sustainability.
Again, our reason for being and for doing what we do is to create real and true long-lasting impact in communities. So, we measure and evaluate both the outputs; i.e., the number of school seats that we create and the jobs that create in communities. But we also look at the outcomes; things like the number of students who graduate from high school, and also go on to graduate from college and are able to give back to their communities.
We also kind of look at financial self-sustainability as well, which means that we need to be profitable. While we’re not, again, profit-maximizing we also recognize that for us to continue to invest in communities like we are, we need to ensure that we also reinvest in Capital Impact so that we can double-down and do the things that we do across the country.
DC: Kudos to all of you because you’ve been doing some extraordinary work.
But you know, before I let you go, I would be very remiss by not telling you that we’ve snagged one of your biggest fans for the next segment here on the More than Money Podcast, Axis Community Health from the San Francisco Bay Area.
Now tell us, what about the project with the Axis Community Health Partners best illustrates the work that you’re doing at Capital Impact?
EC: I think I’m really proud of the work that we’ve been able to do with Axis. They provide critical healthcare resources for low-income residents around them.
And what I’m most proud about with that is the number of people that now we are able to help provide access for, healthcare access for, but also Axis is doing things and providing dental resources, and also mental health. All those things are significantly critical in underserved communities and really help for people to thrive, people to be able to go to school and to get a great education, and also for people to go to work.
So, I’m really happy that we were able to work with them and think they have been doing a fantastic job.
DC: Well, kudos, again, to all the work that you and your colleagues are doing.
Now, where can our listeners find you on the web?
EC: So, we are, we have our own YouTube channel, but you can find us at CapitalImpact.org.
DC: Excellent. Well, I urge all of our listeners to go out and learn more about the good work of Capital Impact.
And Ellis, thank you for joining us on More than Money. We hope to have you back soon.
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
