The Finance Justice Fund is a new socially responsible investment that aims to bring $1 billion in capital from corporate and philanthropic partners to individuals and communities in America most underestimated by mainstream finance. The Finance Justice Fund will help address long-standing disinvestment issues, the racial wealth gap, and persistent poverty nationwide.
The goal of the Finance Justice Fund is to help accelerate the work of OFN member CDFIs serving rural, urban, and Native communities experiencing disproportionately high rates of poverty and disinvestment. The Fund will support CDFIs of different sizes, varying balance sheets, and operational capacities with low-cost, long-term debt and grant capital.
In November 2020 Twitter was the first investor in the fund, committing $100 million in debt capital and $1 million in grant capital. In June 2021 Wells Fargo committed a $25 million grant, the largest grant in OFN’s 35-year history.
Contact OFN Chief Investment and Network Officer, Amir Kirkwood, to learn more about becoming an investor or funder in the Finance Justice Fund.
How To Apply
The following is a list of answers to likely questions regarding the Finance Justice Fund. For additional information about becoming an investor in the Finance Justice Fund, please contact OFN Chief Lending and Investment Officer, Amir Kirkwood, and to learn more about applying for a loan from the Finance Justice Fund, please contact OFN Lisa Wright.
Question: What are the minimum and maximum loan sizes?
The minimum loan size is $250,000 and the maximum loan size is $10 million. The maximum loan size may increase over time as OFN raises additional capital.
What will the size of the grants be?
CDFIs approved for Finance Justice Fund loans will be considered for a grant. If approved, grant amounts will typically range from $125,000 to $250,000. A CDFI may apply for a grant amount up to 20% of the loan amount, but we suggest that the success of your strategy should not assume a Finance Justice grant greater than $250,000. This amount may increase in the future as OFN raises additional grant capital.
Is there any type of lending that is ineligible for the Fund?
No, lending to all sectors is an eligible use of funds.
What are the permitted/required uses of loan capital?
Loan capital is intended to support new lending activity.
Are CDFIs that applied for the Grow with Google Fund eligible to apply for the Finance Justice Fund?
Yes. If your CDFI applied for the Grow with Google Fund, you may apply for the Finance Justice Fund. Applications from CDFIs that have not already been approved or selected for underwriting for a loan from the Grow with Google will receive priority. However, OFN will consider all applications and encourages all interested CDFIs to apply.
The Finance Justice Fund application says that the full amount of an approved loan must be drawn at closing. What if I know I cannot draw all the capital I want to borrow from the Fund at closing?
As long as capital is available, CDFIs are eligible to reapply for both additional debt and grant funds.
If I submitted an application in the first round of the Finance Justice Fund, when will I be notified if my CDFI has been selected to be underwritten for a loan? Will my application receive priority consideration over new applications?
Those applications that were submitted by the first round deadline will be notified if their application has been selected for underwriting by August 30, 2021. In general, these applications will receive priority consideration over new applications. Applications not selected for underwriting will automatically remain in the Finance Justice Fund applicant pool for future evaluation.
If my organization did not apply in the first round of Finance Justice Fund, can we still apply?
Yes, we encourage all OFN members to apply to the Finance Justice Fund. Complete the online form to apply. Access to the application requires a password emailed to all members. For applications submitted by July 30, 2021, we anticipate notifying the next round of applications selected for underwriting by August 30, 2021, and anticipate funding these applications in 2022. Applications not selected for underwriting will automatically remain in the Finance Justice Fund applicant pool for future consideration.
How quickly can I be approved for these funds?
Overall, OFN will balance deployment speed with our commitment to reach more of our members, particularly those with less access to capital. The Finance Justice Fund’s goal is to provide long-term financing. Applicants that are currently in underwriting are expected to be funded in 2021. We anticipate notifying the next round of applications selected for underwriting by August 30, 2021, and anticipate funding these applications in 2022.
Will CDFIs be able to renew their Finance Justice Fund loans?
Renewals will be subject to capital availability and a reapplication process where your application will be evaluated against other existing applications.
What can grant funds be used for?
Grant proceeds can be used for operations, loan capital, loan loss reserves, capacity building, or other purposes that support the Fund’s objectives to support CDFI work serving rural, urban, Native, and other communities (e.g., women and veterans) experiencing disproportionately high rates of poverty and disinvestment.
What selection criteria will you use for grants?
OFN will select CDFIs for grants based on the extent to which the grant is necessary to support its strategy, and/or to support innovative strategies.
I see that the term sheet specifically calls out African American and Latinx beneficiaries/clients in the impact reporting requirements. Does that mean that the Fund is primarily focused on these groups? What if my CDFI’s mission is to serve under-resourced rural communities regardless of race, or women, or Native communities. Does this mean that my CDFI is less likely to be selected for a loan or grant?
OFN strives to raise capital that supports the work of all our members. This is not the Fund’s only focus but are these are two of the priority communities we seek to serve with the fund. The other priority communities include rural, Native, and urban communities experiencing disproportionately high rates of poverty and disinvestment.
Can I make multiple draws?
In most cases no. As long as capital is available, CDFIs are eligible to reapply for both debt and grant funds. OFN expects the fund to be open-ended and will continue to fundraise for the Finance Justice Fund.
When are grant decisions made?
Grant decisions are made at the same time as loan decisions.
What are the reporting requirements?
Client/beneficiary impact reporting is required on an annual basis through OFN’s Annual Member Survey. In some cases, a CDFI will be required to report annually on the percentage of different demographic groups of clients/beneficiaries served with the proceeds of the Finance Justice Loan. Financial reporting is required on a quarterly basis including, financial, portfolio, and covenant compliance. There is a requirement for Borrower stories.
Is there a deployment period requirement?
There is not a required deployment period but the loan must be fully drawn at closing and interest will begin accruing at that time.
Are for-profit CDFIs eligible for a grant?
Yes, but there may be some limitations.
Does FJF financing enable consideration for a Google.org grant?
This is possible, but current Google.org grants will be prioritized for Grow with Google or OFN Financing Fund loans.
I am a member of OFN but not yet a certified CDFI. Am I eligible to apply for the Finance Justice Fund?
What is the definition of a client/beneficiary?
Beneficiaries/Clients are defined, consistent with OFN’s Annual Member Survey, as all individuals served by your organization in a fiscal year. To the extent that your CDFI provides products and services to organizations, as opposed to individuals, beneficiaries/clients refers to the end individuals served by those organizations. For example, the beneficiaries/clients of a small business loan are the employees of that business borrower. The beneficiaries/clients of a loan to an affordable housing developer are the number of expected tenants in the property financed.
Is Finance Justice loan capital allowed to be used to provide a down payment assistance loan to housing borrowers?
Yes – this is a permitted use of funds.