CDFIs are high-impact investors that boldly bring innovative and transformative capital to the hardest to serve markets. As we deliver affordable, responsible financing solutions we also pursue new and challenging strategies to fundamentally changing market forces and create good for individuals and communities. We strive for long-term impact, helping disinvested communities recover and flourish—hopefully to become the new drivers of the economy.

As the U.S. financial marketplace experiences seismic shifts that are not only reshaping where capital is available but how this capital is delivered, CD FIs are needed more than ever. Proven, flexible, and mission-driven, we weather market volatility and adapt to change, continually creating sustainable access to opportunity in urban, rural, and native communities.

Exemplifying this everyday perseverance is a group of CDFIs—recipients of the Wells Fargo NEXT Awards for Opportunity Finance—that have developed innovative ways of confronting critical issues facing the communities CDFIs serve best. Whether it’s with a new product, service, or approach or the scaling and expansion of an existing one, NEXT Awards recipients illustrate what high-impact looks like. Their innovative, scaleable, and replicable strategies for consumer financial services, affordable housing, small business financing, energy efficiency, and more have created meaningful change in many low-income and low-wealth communities.

Below are a few examples of NEXT recipients whose solutions are highimpact investing at its best.


In the U.S. 57 percent of American households struggle with financial health, and a growing number turn to high-cost alternative financial products and services to fill financial gaps. CDFIs like Minnesota-based Sunrise Banks are using Fintech to provide safe, affordable alternatives to predatory lenders. The bank was recognized by the 2015 NEXT Awards for its plan to expand TrueConnect, a small-dollar employer-based loan. Convenient and affordable, the loan integrates with employers’ payroll systems through proprietary software that Sunrise and its technology partner designed to scale. After a successful pilot in Minnesota, Ohio, and California, the CDFI is now expanding the product in new states, starting with Oklahoma, Arizona, Texas, and Florida, and then nationally.


Nationwide, nearly 8 million minorityowned small businesses owned by people of color and nearly 9.1 mil lion women-owned small businesses help  power  their  communities.  But even still entrepreneurs and entrepreneurs of color struggle to obtain the credit they need to start their businesses or keep them going. Female entrepreneurs start companies with 50% less capital than male entrepreneurs, and minority business owners are denied loans at nearly three times the rate of non-minority owners.

Opportunity Fund, the largest nonprofit CDFI microlender in California, won a 2013 NEXT Award to expand EasyPay, its new customized loan product for small businesses. EasyPay enables small business owners who do not qualify for traditional financing to access capital and repay their loans automatically through daily credit and debit card sales, rather than as a lump-sum term payment each month. This new product incorporates Fintech solutions that will allow the product to scale in new markets. In EasyPay’s first two years, Opportunity Fund originated 242 loans, many to businesses owned by women or people of color, that have generated more than $14 million of economic activity.


Nationwide, the demand for rental housing is increasing while financing for preservation of affordable housing is shrinking. Real estate developers are buying up unsubsidized affordable housing, taking it out of affordable stocks, increasing rents, and displacing low-income families. Housing Partnership Network (HPN), a Boston-based business collaborative of 100 housing and community development nonprofits, is preserving housing for low-income people by giving nonprofit affordable housing developers a chance to compete to buy these properties.

The 2014 NEXT Award recipient partnered with some of its members, major foundations, and financial institutions to create the first-ever real estate investment trust (REIT). The first ever nonprofit owned and operate REIT solves the struggle among nonprofit housing  organizations  to  access  financing quickly so they can bid competitively against for-profit developers on the purchase of unsubsidized properties. HPN’s innovative capitalization structure provides acquisition funds that enable members to close on real estate purchases within 90 days, compared to the more typical time frame of one to two years.

As of the end of 2015, the REIT’s portfolio consisted of nine transactions, which translates into saving 2,066 affordable housing units in areas  of California, Maryland, and Illinois. HPN expects in the near future to grow this portfolio to $500 million, preserving 12,000-15,000 units of affordable housing across the U.S.


Home energy costs can be a significant hardship for low-and moderate-income households, but most families do not have enough savings to invest in energyand carbonsaving solutions. And yet, improving the efficiency of housing, businesses, and community facilities can lower operating costs for business and homeowners, create new jobs for communities, and reduce carbon emissions for a healthier planet.

Craft3, a leading Pacific Northwest CDFI, received a 2010 NEXT Award for its innovation in green financing to mitigate the effects of climate change and

overcome barriers to participation through inclusive finance. Craft3’s home energy loan provides affordable and inclusive financing for projects that generate energy savings while providing living-wage work for local contractors. Loans are repaid on the borrower’s heating utility bill and energy savings help offset the loan payment. This on-bill feature of the loan allows Craft3 to provide loans to people who could not otherwise access financing, and contributes to the portfolio’s low default rate.

Craft3 has now deployed more  than $42 million for home upgrades. This financing helped more than 3,200 families save more 40 million kWh and reduce greenhouse gas emissions by more than 8,700 metric tons.

Also through this program, Craft3 took an innovative approach to capitalization by successfully completing two secondary market sales of loans in their energy efficiency portfolio over the past three years. Combined in those transactions, Craft3 sold $22.1 million in single-family, energy-efficiency improvement loans to North Carolina-based Self-Help Credit Union. The deals provide strong evidence that on-bill repayment loans perform extremely well while providing homeowners affordable, inclusive, energy-efficiency financing. The two sales improved Craft3 liquidity and ability to continue delivering inclusive home energy loans to strengthen resilience in Washington and Oregon.

Poised to grow the opportunity finance industry to new levels of success, CDFIs, like these NEXT Award recipients, are expanding into new geographies, asset classes, and products, and are using innovative capitalization models and Fintech solutions to do so. They are exploring collaborations and partnerships—deeper engagements with bank partners, community partners, government, technology partners, and others—including borrowers themselves. This is what high-impact investing looks like

This article is republished from Avenues to Affordability, a magazine by OFN Member Cinnaire. This issue is the second in a series of Avenues to Affordability publications focusing on CDFIs. Read the full publication for an exploration of the connections between CDFIs and high-impact investing. To subscribe contact Mary McDaniel.

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