We’ve all heard the CDFI industry referred to as a movement, and there’s some truth to that.
To those of us “in the know,” who’ve dedicated our working lives to lifting up left-behind families and communities, on the good days, it’s much more than a job. We know our communities, we know what’s at stake, and we know that CDFIs are change agents for moving things in the right direction.
But, to my mind, “movement” implies a grander scale than what we’ve achieved so far. That’s not to minimize all the notable things happening around our industry today, or the visionary folks who’ve brought us this far. But I think it’s too easy to sit at an OFN conference, in a cavernous ballroom filled by 1,500 folks just like you, “in the know,” and feel like a movement.
The reality is that too many of the people in the world who know what a CDFI is and does are sitting in that room. Which leaves a whole lot of people beyond those ballroom doors who aren’t familiar with CDFIs, our mission and our track record of success.
If we want to truly be the movement we believe is possible, and so needed in America today, we need more of those people to join us. MANY more.
So where do we find our movement?
We’re already finding it in the populations we serve. Entrepreneurs, community leaders, developers, providers: more than anyone else, they understand the power of CDFIs as economic engines in their communities. We probably need to get better at helping them understand our industry, and their essential place in it, but they’re definitely a piece of our puzzle.
The good news is that so many more Americans are ready for us. They see the problems in our country, and they want to be a part of the solution. They want to feel empowered to be the change they imagine. They just need to know how. CDFIs can be that “how.”
My grandfather was a Presbyterian minister, serving a couple country parishes in Vermont’s Northeast Kingdom. He understood the bond of community, the power in every tiny village to come together to take care of their own, in need, in celebration and in grief. One of his favorite spirituals was “Brighten the Corner Where You Are.” (Ella Fitzgerald’s version is the best, naturally. Check it out; I’ll wait…)
I think about that song a lot in the context of the Vermont Community Loan Fund’s work. The biggest segment of the money we lend comes from “Main Street investors”: Vermonters from all walks of life who want to move a little bit of their assets out of the traditional investment world, and lend it to us instead. They decide for how long, and they earn interest over that term, so there’s some financial return.
But if you ask our investors, the real return on their Vermont Community Loan Fund investment is something more. Through us, they activate their assets in their own community, building affordable homes, growing local businesses & organizations and revitalizing downtowns, creating a stronger, more inclusive, more just Vermont. VCLF investors are brightening the corners in virtually every Vermont town and village.
Our investors aren’t the first of their kind, and they’re definitely not alone. “Impact investors,” who seek both financial and values returns, are a rapidly expanding class today, but they’ve always been here. “Community investing,” “socially responsible investing”…investing for the common good has gone by many names over the years. Today, impact investing as a class is modernized and growing, with new ideas, approaches and instruments moving things forward every day.
Even if they don’t know us by name (yet!), these impact investors are looking for CDFIs. We’re already doing the work they value. They’re ready to brighten their corners. As an industry, we need to mainstream the public policy, products and practices that will bring them into the fold.
Most CDFIs have forgone capital from Main Street investors in favor of larger institutions. Individual investors are perceived as too time-intensive, too costly, too much effort for too little money.
But, like impact investing, the return from individual investors for your CDFI is much more than financial.
Individual investors bring with them the bond of community, a shared connection that inspires and binds them to our mission and our work, no matter what’s going on in traditional markets. Last year, individual investors supplied the Vermont Community Loan Fund with 48 percent of our total capital raised; their commitment helped us achieve a record year for loan closings. What’s more, they’re with us for the long haul: 90 percent of VCLF investors renew their investment upon its maturity, often adding to the principal. Their focus on specific impact areas has helped us launch dedicated loan pools like our Food, Farms & Forests Fund and Next Generation Fund. Our individual investors also tend to include us in their personal philanthropy, and are our best source for referrals to other potential investors. Yes, they lend us their money, but besides that, they give us their energy, they tell our story and they open doors. Because of them, we can do more.
That bond of community, that active participation in our work: those are the seeds of the CDFI movement.
Our industry’s future, the future of our movement, is in people. Folks like the “Main Street investors” that power the Vermont Community Loan Fund. They’re everywhere, and they’re ready for us.
Are we ready for them?
Jake Ide is the Director of Investment and Philanthropy at Vermont Community Loan Fund.
How is your CDFI thinking about impact investing? Share your experiences, successes, and insights in the impact investing field. Whether you are working with individual investors like Vermont Community Loan Fund, larger family foundations, or you have had success with an online marketplace, we want to hear from you. Contact Lindsay Li to suggest a guest blog on this topic.