Care giver helps older man in assisted living community play bingo.

What is a CDFI?

By Michelle Betton, Writer

​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 volunteer helps with dinner.

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.

Volunteer with Meals on Wheels brings a meal to an older woman

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.


Health care worker with a female patient

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’s Role in the Space


Children play with toys in a classroom

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 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.

Detroit residents walk past renovated building in Detroit

Through it’s place-based focus, Capital Impact has played an integral role in revitalization efforts in Detroit.

Since its inception, Capital Impact has deployed more than $2.5 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 Equitable Development Initiative 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 and other CDFIs help create equitable and inclusive spaces that lead to communities of opportunity for all. 


About Capital Impact Partners: Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We deliver strategic financing, incubate new social programs, and provide capacity-building to help ensure that low-to-moderate-income individuals have access to quality health care and education, healthy foods, affordable housing, and the ability to age with dignity. A nonprofit community development financial institution, Capital Impact Partners has disbursed more than $2 billion to revitalize communities over the past 30 years. Our leadership in delivering financial and social impact has resulted in Capital Impact earning a “AA” rating from S&P Global “AA” and being recognized by Aeris since 2005 for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Detroit, MI, and Oakland, CA. Learn more at

Ellis Carr, president and CEO of Capital Impact Partners

Expanding Equity for Underserved Communities in 2017 and Beyond​​

By Ellis Carr, President and CEO

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.

Capital Impact Answer Key guide to charter school construction

Capital Impact’s Answer Key walks charter school operators step-by-step through facility construction.

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.

Minority developer Richard Hosey

Capital Impact’s Equitable Development Initiative will support minority real estate developers with resources and capital.

In Detroit, where lending and resources for minority real estate developers are limited, we launched the Equitable Development Initiative. 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 supports community food and education needs

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 developmentMartha’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.


A mother and children participate in a Joyful Food Market; photo: KIPP DC

Commitment to Community Drives Engagement Through Healthy Food Access

By Olivia Rebanal, Director, Loan Programs

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.

Some of Washington D.C.’s districts, or wards, are more impacted than others: Wards 7 and 8 are hard-hit as it relates to food access. According to a report by DC Hunger Solutions, only 3 supermarkets serve the 150,000 residents in Wards 7 and 8, whereas the 82,000 residents of Ward 6 have 10 supermarkets.

Recently, we combined our expertise in and devotion to community engagement and healthy food by hosting a volunteer session as part of Martha’s Table’s Joyful Food Markets program during the annual conference of the Opportunity Finance Network (OFN), a national network of CDFIs.

Bringing communities together around healthy food

Martha’s Table, a local non-profit, launched its Joyful Food Markets (JFM) program in 2015, and it is now offered in 39 schools exclusively in Wards 7 and 8. Each month, the markets offer families the opportunity to sample produce, enjoy chef-led culinary demonstrations, dance to music, get excited about healthy recipes, and bring home selections of fresh produce and healthy non-perishable items for free.

Chef Jojo and volunteers at a Joyful Food Market.

Chef Jojo chats with volunteers at a Joyful Food Market at KIPP DC’s Promise Academy.

Martha’s Table relies on the engagement of a robust volunteer corps to keep these markets running, which was a perfect opportunity for OFN conference attendees to pitch in and see how the model works. Representatives from my team at Capital Impact, along with others from the Self-Help Ventures Fund, Finance Fund of Ohio and ICA Fund Good Jobs put on aprons and gloves and got to work.

The Joyful Food Market event was hosted at KIPP DC’s Promise Academy, a public charter school in Washington D.C.’s Ward 7 offering a college preparatory curriculum in addition to a suite of enrichment programs. Among the 721 students enrolled in kindergarten through fourth grade, 168 children and their families were served at the inaugural market, in addition to the 23 school staff members.

Martha’s Table’s Chef Jojo showed volunteers how to make batches of kale and apple slaw to showcase the food items that were being offered at that month’s Joyful Food Market. Students were eager for taste-tests, watching our volunteers prepare the slaw before their eyes.

Volunteers help families choose produce; photo: KIPP DC

Volunteers help students and families choose fresh produce at a Martha’s Table Joyful Food Market. Photo: KIPP DC

By the end of the day, we had moved pallets of onions and apples, trimmed kale into bunches, and watched student after student enjoy crunching into apples. The kids who came through the market were excited, happy and smiling, asking their parents and guardians to let them help make some of the recipes they’d seen at home. It was just another day at a Joyful Food Market, but all the volunteers were glad to be a part of it and the impact it was having on the local community in that moment.

Addressing food access in American communities

Some of our communities have experienced historical disinvestment in fresh food access, resulting in a replacement of healthy and local food establishments with a disproportionate concentration of highly processed, low-nutrition fast food.

Capital Impact works with communities across the country to expand access to healthy foods. In D.C., for example, we are working with Martha’s Table on its relocation and expansion as part of “The Commons at Stanton Square,” a new three-acre, community-services campus development project in Ward 8. It will address key disparities in this low-income community by bringing together a variety of key social services including health care services and affordable housing while spurring community development.

Martha’s Table’s contribution to the city is not small. Services provided at the new headquarters will include a branch of its popular preschool program, food distribution, nutrition and parenting workshops. Opened 35 years ago, Martha’s Table now reaches more than 18,000 people through its food, education and thrift store programs with significant support from 18,000 volunteers every year. In 2015, Martha’s Table served more than 1 million meals, distributed free clothing and housewares to more than 10,000 neighbors in need, and provided education to more than 200 children and older youth.

The Michigan Good Food Fund (MGFF) is another example of Capital Impact’s commitment to healthy food access. More than 30 percent of Michiganders are obese—the second highest rate of obesity in the Midwest region. This disproportionately impacts communities of color. MGFF is a public-private loan and grant fund created to finance healthy food production, distribution, processing, and retail projects that benefit underserved communities throughout Michigan. This includes supermarkets, grocers, community markets, co-ops, food distributors and others working to increase access to healthy food for Michigan children and families. Created in partnership with the Fair Food Network, Michigan State University Center for Regional Food Systems and the W.K. Kellogg Foundation, this unique program supports projects that increase access to healthy food, spark economic development, and create jobs in the communities that need it most.

Turning the tide on systemic exclusion

Every community deserves the ability reach its full potential, and healthy food is a major force in achieving future success. Healthy food, education, affordable housing and many other factors intersect on the path to inclusive growth and shared prosperity. Supporting communities and organizations to address their healthy food needs empowers individuals to overcome structural barriers and achieve greater equity. It’s a privilege to bring both our capital and our personal commitment to support Martha’s Table and our greater Washington, D.C. community in achieving just that.

CDFIs revitalize underserved communities

Op-Ed – Congress: Continue to Invest in America’s Struggling Cities and Towns

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.

CDFIs revitalize underserved communities

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.

Capital Impact Investment Notes align investments with values.

Now You Can Invest In Underserved Communities with Capital Impact

By Ellis Carr, President and CEO

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.

Capital Impact Investment Notes align investments with values.

With Capital Impact Investment Notes, you can invest in your values.

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.

On our website you will find the current Prospectus and Pricing Supplement and terms and highlights associated with the offering of our Notes. I invite you to discuss these details with your broker.

This announcement is 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.




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 visiting 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.

Ellis Carr discusses community development on More Than Money podcast.

How CDFIs Expand Economic Opportunities in Underserved Communities

More than Money Podcast Interviews Ellis Carr, President & CEO of Capital Impact

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

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 means 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.

Dawn Carpenter: Ellis Carr, welcome to the More than Money Podcast.

Ellis Carr: Thank you, Dawn. I’m really happy to be here.

Dawn Carpenter: Excellent. Well, let’s get started with a bit about your background and the history of Capital Impact Partners.

Ellis Carr: 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.

Dawn Carpenter: 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?

Ellis Carr: 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 with private sector capital from larger institutions. And we’re able to do that because we’re imbedded 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 a 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 imbed 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 imbedding the right benefits and the right controls in place in the community.

Dawn Carpenter: 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.

Ellis Carr: 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.

Dawn Carpenter: Well, on that note, how does your private sector background, how has that prepared you for the work that you do at Capital Impact?

Ellis Carr: 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.

Dawn Carpenter: 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?

Ellis Carr: Great question. So, I think we measure our success in two ways. The first, and I mentioned this earlier, is impact 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.

Dawn Carpenter: 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?

Ellis Carr: 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.

Dawn Carpenter: Well, kudos, again, to all the work that you and your colleagues are doing.

Now where can our listeners find you on the web?

Ellis Carr: So, we are, we have our own YouTube channel, but you can find us at

Dawn Carpenter: 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.

Ellis Carr: Thank you, Dawn.

How To Use Historic Tax Credits To Promote Community Development

By Danielle Graceffa, Senior Director, Legal Services

Real estate development has always been a risky proposition, fraught with numerous challenges that must always be carefully balanced against the promise of reward.

Throw in the possibility of rehabbing historic properties and that risk-reward scenario is certainly amplified. The city of Detroit, where we have our Midwestern office, is a perfect example.

Founded in the 1700s, the city has witnessed various transformations, with Henry Ford setting the stage for Detroit to become the booming manufacturing center that it is best known as. During that time, the population swelled from around 200,000 residents to well over 1.5 million. Fast forward to 2008 when Detroit, like many cities, suffered through a massive economic recession that ultimately required the city to file for bankruptcy. By that time, half of the local population had left the city, leaving behind thousands of beautiful, but vacant, homes and buildings that had been an integral part of the city’s history.

Typically, returning historic buildings to their former grandeur is a win-win for the city and its residents, especially now as we work to support Detroit’s revitalization. As a mission-driven lender, we are big advocates of this effort.

That is where the Federal Historic Preservation Tax Incentives Program, or what we normally call historic tax credits, comes into play.

Starting in 1976, the Federal tax code became aligned with national historic preservation policy to encourage voluntary, private sector investment in preserving historic buildings. It has since grown into one of the federal government’s most successful and cost-effective community revitalization programs.

Turning history into future reality

We’ve been fortunate to partner with a number of developers who have utilized this program to create great projects. Two in particular stand out:

Detroit developer in front of his finished building project Kirby Center Lofts.

Richard Hosey stands in front of the now-renovated Kirby Center Lofts, providing affordable housing in Detroit.

Richard Hosey returned to Detroit in 2008 after nearly 15 years away from the city. Among his many projects was the former Tushiyah United Hebrew School in the Midtown neighborhood. Built in the 1920s to support the rising Jewish population, the building has served many purposes, including serving as the home for the first African-American Methodist Episcopal congregation in the city. Long abandoned and in poor shape, Richard saw promise in the building and transformed it into an affordable multi-family residential property in a mixed-income neighborhood.

Nearby, local developer Joel Landy has amassed 50 dilapidated properties over 20 years. While each one is a labor of love, it is the James Scott House that Joel is currently focused on.

James Scott House in Midtown Detroit under construction, creating housing and retail space.

Funded in part by federal and state historic tax credits, James Scott House will help expand housing and opportunities in Midtown Detroit.

The castle-like Romanesque-style Scott House was built in 1897 by an individual Joel calls “gambler playboy” James Scott, who also financed the fountain on Belle Isle that bears his name. The original building was narrow; only 85 feet wide and 15 feet deep. Scott died soon after it was constructed and is believed never to have lived in it. When complete, it will become home to 27 new market-rate apartments and small-business retail.

How do federal historic tax credits work

On its face, it’s pretty simple. Current tax incentives for preservation include:

  • 20% tax credit for the rehabilitation of certified income-producing (non-owner occupied) historic structures.
  • 10% tax credit for the rehabilitation of non-historic, non-residential buildings built before 1936.
Ribbon-cutting ceremony for Detroit’s Rainier Court, supported by Capital Impact.

Detroit’s Rainier Court, supported by Capital Impact, was financed with federal historic tax credits.

The tax credits provide for a dollar-for-dollar reduction of federal income tax liability. The dollar value is calculated as a percentage of the qualified rehabilitation expenditures incurred during the course of the rehab construction. The reality of bringing these buildings back to life using this credit, however, can be complicated. Developers must go through a multi-step approval process, which is managed by the National Park Service and the State Historic Preservation Office. This includes determining the building’s eligibility for the credit, submitting a detailed rehabilitation plan, and proving that the work was performed to the Secretary of the Interior’s Standards for Rehabilitation.

Many developers also find that their incomes do not allow them to take full advantage of the historic tax credit. That’s where tax credit investors come in. Tax credit investors are typically banks, insurance companies and real estate investors who receive the tax credits as a pass-through in exchange for partnering with and providing capital to the project. Capital Impact Partners has collaborated with tax credit investors such as Enhanced Capital and InSite Capital.

Throw in the fact that you may have many lenders at the table to complete the financing package for the project, and developers quickly find working on a historic property is rarely a straightforward real estate deal! But the end-result for the developer and the people of Detroit is worth the effort.

Overcoming the challenges of financing historic renovations

Melinda Clemons of Capital Impact works with a Detroit developer on plans for a building project.

Capital Impact’s Detroit Lead Melinda Clemons works with developer Cliff Brown on his project plan.

Luckily, Capital Impact is one of the few Community Development Financial Institutions with an in-house legal team. Our expertise, combined with our personal interest in seeing the social impact of these projects, helps make these transactions run smoothly. In my role, I’m able to make sure all of the multiple parties and pieces are coordinated and moving in the same direction, including making sure that the various legal documents are consistent, with all agreements among the parties properly reflected within them.

Another particular challenge – though one I find particularly interesting – is the need for other credits or incentives at the local level in order to make the project financially feasible, such as real estate tax abatements or incentives. Utilizing these various credits and incentives requires engagement with political bodies as well as the various lenders and the tax credit investor. Working with city government requires a level of familiarity with city processes and personnel, and often means going through a public hearing process.

Developers survey a historic building and learn how to finance and manage historic building projects.

Developers can combine federal incentive programs, making revitalization projects more affordable.

Many developers may also not realize that you can layer in other federal incentive programs to make projects financially viable. These include New Markets Tax Credits and the Low-Income Housing Tax credit, both of which are programs that Capital Impact has experience working with.

I’m sure not everyone would agree with me, but I think these types of deals are exciting and challenging. Every single deal has different aspects, unique issues, and to me, that’s more interesting than just straight-up, run-of-the-mill, easy loan deals where you’re not challenged to get it done. It just makes it interesting.

So, if you are a developer interested in renovating a historic property to create social impact anywhere in the country, my team is here to help. Please don’t hesitate to contact us.

Why and How We Finance Charter Schools

By Emilie Linick, Senior Loan Officer, and Quanic Fullard, Impact Strategy Specialist

Capital Impact Partners has long been driven by a mission to help people build communities of opportunity that break barriers to success. To that end, we continually look to expand our lending and incubate, scale, and advocate for new ideas that advance community development for those most in need.

A Big “IDEA” to Address Inclusion, Diversity and Equity

By Kimberly Dorsett, Human Resources Director

The concept of identity politics has had a lot of press of late. How do we, as professionals, as voters, as members of our community, as individuals, apply our own identity and personal narrative to our actions and convictions? Given the diversity of our organization and the communities we serve, is the act of presenting and leveraging our own backgrounds an appropriate starting point for our professional work?

Capital Impact staff working on team building project

Our challenge is to find a way to unite and harness our diversity in order to improve how we serve the communities we work with every day.

At Capital Impact Partners, we think so. The fact is, while we are all here to fulfill our mission, each person brings his or her different life experiences to his or her job. Some of our staff members interact with our communities daily or weekly, while others spend their time focused on activities at the office. Our challenge is to find a way to unite and harness that diversity in order to improve how we serve the communities we work with every day.

This is why we organized our Inclusion, Diversity, Equity and Awareness (IDEA) Committee—a reincarnation of a previous endeavor we called Cultural Awareness to Create Harmony (CATCH).

The new name and evolved focus aligned the team’s efforts with the five-year strategy—our 2020 Vision for Communities—that Capital Impact launched in 2016. Through that strategy we are focused on addressing poverty, creating equity, building healthy communities and promoting inclusive growth.

While the IDEA team is made up of a variety of staff members, I’m proud to say that this effort is supported throughout the organization, including being sponsored by our President and CEO, Ellis Carr.

As Emilie Linick, one of our senior loan officers who serves on the committee, noted, “that sends a clear signal that all suggestions are welcome…Ellis encourages us to think big.”

Since IDEA launched under its new name in 2016, its members have taken that sentiment to heart.

Two Capital Impact colleagues speaking outside

IDEA committee members Emilie Linick and Khaliff Davis share a moment at our Detroit retreat.

At our corporate-wide offsite in Detroit, Michigan, the IDEA members lead the organization in a facilitated group activity called the Privilege Circle. IDEA members had drafted a series of statements related to “earned privilege” and “unearned privilege” (i.e., “I grew up with money,” “I went to a good school,” “I grew up with books in my home”). With staff facing outward and eyes closed, the statements were read aloud and members who identified with each clapped. In this trusted environment, generally accepted concepts of privilege were identified while others considered surprising also surfaced.

As one participant reflected on the exercise, “Someone who grew up with a single parent may have had certain thoughts on privilege when others clapped in response to being raised with both parents. That same person also recognized when others didn’t respond when asked if they grew up in a loving household. That helped create introspection on what privilege meant to each of us. It was very powerful.”

Capital Impact staff members have a group discussion.

Capital Impact staff member Uriah Summers participates in a discussion with colleagues at our Detroit retreat.

Recognizing both “earned” and “unearned” privilege is an important activity, as it allows staff members to reflect on their privilege and leverage that understanding in how they interact with others to enhance their own work.

After a series of violence in the summer of 2016, the IDEA team facilitated a discussion about the events among nearly half of the Capital Impact staff gathered in our offices and virtually. The discussion reflected on social injustice and intolerance in the country as evidenced by shootings of people of color. But it also allowed the staff members to reflect on the incidents on a personal level. They also engaged with each other directly about how social injustice and intolerance affect their own identity or the lens through which they engage with their community and the communities Capital Impact serves.

“The Brown Bag discussion effectively pulled positivity out of a very dark series of events,” recalled on IDEA team member.

Linick echoed a similar sentiment. “Everyone was very receptive of each point of view shared.”

Group of staff members watch a television show.

Capital Impact staff watch an episode of “America Divided,” as part of an IDEA Committee hosted event honoring the ‘National Day of Racial Healing.’

Most recently, staff members at Capital Impact Partners honored the National Day of Racial Healing by holding a screening of the documentary series America Divided: In a Divided Country, Our Stories Unite Us on inequality in housing, health care, criminal justice and the political system. The screening was spearheaded by the W.K. Kellogg Foundation, a funder and investor of ours, as “a response to the broad call for racial healing following the contentious rhetoric, hate crimes and vivid expressions of racism.” Following the screening, an IDEA member facilitated a guided discussion about the film and gave attendees the opportunity to reflect on the holiday.

Addressing these issues and making sure everyone comes away from the discussion or activity feeling engaged rather than shut down is not an easy task. There is an inherent discomfort in talking about privilege. And there is also the question: How do we leverage our individual privilege in a productive way?

Capital Impact's president and CEO addresses staff.

Ellis Carr, Capital Impact’s president and CEO, notes that the IDEA Committee efforts are also “a distinguisher for attracting talent.”

“It’s a distinguisher for attracting talent to Capital Impact Partners,” says Carr, “and for our existing constituents, funders, partners and investors. Lots of agencies are big on talk but not on action. Capital Impact is a community development organization, and IDEA helps us raise the level of security for both borrowers and funders. People and investors can invest in us knowing that we are a leader in our sector. They see us directly applying what is embedded in our strategic plan. Our conversations require us to be introspective.”

In order to be successful in implementing any strategy, an organization needs to be knowledgeable and do its research—both quantitative AND qualitative, externally and internally. In order to best serve our communities, we need to understand them institutionally and personally.

Capital Impact Partners understands the societal structures in place that affect underserved communities. IDEA helps us raise awareness of these communities on a personal level. The sharing facilitated by IDEA members brings a level of closeness and fosters trust. It puts a human face on the staff and those for whom we are working.

We recognize that we come from diverse backgrounds and diverse areas of privilege. Sharing these insights strengthens the organization as a whole. And, it allows staff members to leverage strengths, address weaknesses, learn where understanding is lacking and foster an ongoing sense of safe and progressive communication.

In order to meet the demands and goals of our work at Capital Impact Partners, it is clear that we need to understand the root of how our own values were formed, and, subsequently, our class and privilege. Also, we need to recognize the identities and circumstances of our own colleagues to help us better serve our customers.

IDEA is one great idea to move us in that direction.

Young male stands in front of abandoned building.

COIN: Building economic clout to fight neighborhood poverty

By Ellis Carr, President and CEO and Scott Sporte, Chief Lending Officer

Note: This Op-Ed originally appeared in the publication Capital Weekly.

According to the U.S. Census Bureau’s report The Supplemental Poverty Measure: 2015, nearly eight million people in California were living in poverty in 2015. The report indicated that the state’s poverty rate was 20.6 percent—well above the national rate of 15.1 percent—and surpassed the rates of every other state in the nation.


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