For more than 40 years, CDFIs have led the charge in how impact dollars reach the people and places that need it most. We believe that CDFIs now have an opportunity to be the next wave of alternative financial institutions, on par with hedge funds and alternative asset managers.
To succeed in building the next alternative financial institutions, here is what CDFIs will need to do:
- Become Market Makers
- Reach a new level of scale
- Establish a Financial and Social Risk/Return Framework
- Provide Integrated Capital
- Seek New Technology & Talent
The opportunity is there but the question remains: Will CDFIs seize the moment?
CDFIs are well-positioned to be the next alternative financing entities of choice for those seeking to place their capital in investments that have both financial and social returns. CDFIs knowledge of the communities in which they operate positions them well to be the intermediary of choice. However, CDFIs will need to think more broadly about their financing capabilities and really understand what it will take to deploy capital and services at scale
