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How community lenders are boosting the pipeline and diversity of investable projects

ImpactAlpha, March 25 – The Reinvestment Fund’s research on food systems, for example, increased the collective capacity of community development financiers to lend to grocery stores in food deserts. To lend to real estate developers of color in Detroit, Capital Impact Partners, a national CDFI, partnered with National Development Council and other local lenders to prepare minority developers to take on capital.

“Our goal is to align capital with justice,” writes Joe Neri, CEO of IFF, a community lender focused on the midwest that is working with nonprofits serving communities of color in Chicago. That requires “making sure that we have ‘investable’ projects that restore and promote justice wherever there is injustice.” Here’s how:

  • Re-engineer financial products. Lenders’ terms and covenants “greatly increases or reduces eligibility for our capital,” says Neri. Community development finance institutions should ask: How would we change our terms and conditions if we applied a racial equity lens to our lending programs?
  • Support community organizers. CDFI leaders can serve on local boards and governmental task forces, and provide valuable data. Many community-based organizations lack capacity to organize their resources and collectively call for specific changes in their communities.
  • Strengthen the community investment system. A functioning ecosystem requires a community-endorsed vision to shape investments and a robust pipeline of deals and projects to deliver that vision (see, “The Capital Absorption of Places and Community Investment: Focusing on the System).

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