Financing Equitable Resilience

Resilient Community Development Finance Initiative, Phase Two

The Resilient Community Development Finance Initiative is a nascent but bold effort grounded in the belief that equitable resilience is possible, for and through community development finance. Community Development Financial Institutions (CDFIs) and their investors/partners are uniquely positioned to build a ground-up, deal-by-deal, institution-by-institution foundation for resilience in all communities, and for all people. Lenders influence real estate development, business expansion, climate solutions, and all projects seeking financing, every day.

This initiative believes that CDFIs, other mission lenders, and partners across the community development ecosystem can—and should— do more with the leverage they have. Lenders could “normalize resilience” by integrating the assessment of resilience into development services and underwriting, as well as promoting a new type of value engineering—one that seeks to increase the impact of every loan by identifying opportunities to build a return on resilience value. Because decisions are being made and funds are primed to flow, often leveraged by government and private entities, capital moments are the perfect time to assess and build resilience. Many community development lenders are already financing projects and providing services that build resilience.

The Resilient Community Development Finance Initiative launched in 2019, building on the work of 100 Resilient Cities to help investors, CDFIs, and related partners build systemic resilience through community development finance with support from Bank of America, Rockefeller Philanthropy Advisors, and The Rockefeller Foundation and led by Opportunity Finance Network (OFN) and Precovery Labs.

The first phase tested a vision, mission, objective, core beliefs, and beta versions of a Resilience Assessment Tool for CDFI Lending Programs and Implementation Guide with a small group of financial institutions.

The Center for Impact Finance is now implementing Phase Two to expand this work and increase the use of resources listed above so more financial institutions can have the right tools to make sound investment decisions and build holistic equitable resilience. We are collaborating with Opportunity Finance Network, Inclusiv, and Resilient Cities Network on this effort—which is supported by the New York State Energy Research and Development Authority (NYSERDA).

Phase Two is investing in research, impact measurement, and data management and will develop resources to raise awareness and build capacity around equitable resilience while optimizing existing resources. 

Equitable Resilience Is Possible, For and Through Community Development Finance 

The global pandemic--combined with the climate crisis, the increasing spotlight on racial injustice, and the widening wealth gap--has confirmed that we are far from realizing the vision of the Resilient Community Development Finance Initiative of creating “...a world in which communities are socially, economically, and environmentally safe and healthy with the capacity to survive, adapt, and thrive no matter what kinds of chronic stresses and acute shocks they experience, and where all people—especially communities of color, Native Nations, and those who are under-resourced—are able to reach their full potential, supported by equal access to responsible capital.” 

Individuals, organizations, and communities suffer economic, environmental, and social harms from acute shocks—the sudden events that strike at the fabric of a community or system; and chronic stresses—the slow-moving impacts that weaken the fabric of community facilities, housing, or systems on a day-to-day or cyclical basis. The under-resourced, underestimated, and systemically marginalized communities that CDFIs serve are often the hardest hit and the least resourced or equipped to recover. The damage from the policies of redlining and disinvestment is visible in devastated local economies and infrastructure and the acute affordable housing shortage. Many individuals are experiencing physical and mental trauma from this enduring global pandemic. Homes and farms are damaged by changing weather patterns and severe weather events. Workers and businesses suffer from ongoing shifts to a low-carbon economy. CDFIs’ collateral, revenue streams, and ability to deliver on mission are threatened. The shocks and stresses are increasing and continue to collide, often leaving our communities in a constant state of recovery. 

Equitable resilience is possible, for and through community development finance. Resilient community development includes both resilience—the capacity of individuals, communities, institutions, businesses, and systems to survive, adapt, and thrive no matter what kinds of chronic stresses and acute shocks they experience; and community development—the capacity to provide social, economic, and environmental “dividends” to communities beyond the basic functions of a given project. Community resilience describes, in the broadest of terms, the defined community of the lender and/or borrower and the holistic resilience of that community, based on the core definitions above. 

CDFIs are positioned and equipped to deliver resilience to their target communities. Many CDFIs are already financing projects and businesses and providing services that build resilience. Financing solar and storage in an affordable multifamily building builds resilience, especially in areas where the electrical grid is unreliable. Financing the minimal extra costs to raise the foundation on a single-family home above what is required by code adds resilience in areas with increased flooding. There are many more examples. CDFIs can join their public and private sector institutions to plan with a “precovery” mindset, one that focuses on the future and the needed preparation for building long-term equitable resilience.

History of the Resilient Community Development Finance Initiative

What began as a simple concept note to bring resilience to the world of CDFIs and their related funding and finance partners in the spring of 2018 blossomed into a robust awareness-building, educational, and tool development project, now known as the Resilient Community Development Finance Initiative. 

Through an inclusive, iterative process to ensure buy-in from CDFIs, their funders and investors, and community stakeholders, this first phase developed and tested Resilient Community Development Finance Principles, a beta Resilience Assessment Tool for CDFI Lending Programs, and a beta Implementation Guide. 

Special recognition is due to the leaders who were intensively engaged in the development and piloting of these guiding principles and resources. Without their creativity and commitment, there would be no tool or guide:

• Black Business Investment Fund
• Coastal Enterprises
• Enterprise Community Partners-Capital Division
• Genesis Community Loan Fund
• NDN Fund
• Self-Help

Countless additional individuals contributed valuable input to the initiative and the creation of these tools—thank you!

The CDFI Cohort that drove the Initiative defined its purpose with the following vision, mission, and objective. Further, the Cohort detailed core beliefs to guide their work. These principles have been widely embraced and will continue to guide the work in Phase Two.

Vision of the Resilient Community Development Finance Initiative: We envision a world in which communities are socially, economically, and environmentally safe and healthy with the capacity to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience and where all people—especially communities of color, Native Nations, and those who are under-resourced—can reach their full potential, supported by equal access to responsible capital. 

Mission of the Resilient Community Development Finance Initiative: Build the capacity of low-income, low-wealth, and other underserved people and communities to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience by ensuring access to affordable, responsible financial products and services that embrace resilience planning and implementation. 

Objective of the Resilient Community Development Finance Initiative: Achieve widespread adoption of resilience finance by the CDFI industry, impact investors, foundations, and other supporting stakeholders, including the integration of resilience principles, the resilience assessment tool, and/or other materials into planning, business development services, lending, and organizational practices and policies, while recognizing our role in service to the wellbeing of the earth and global citizenry. 

Core Beliefs of the Resilient Community Development Finance Initiative: 

• Investing in resilience will improve quality of life. Investing in resilience will reduce and help prevent the impact of shocks and stresses on a community’s people, physical environment, and economy; accelerate recovery; and improve the quality of life for a community’s residents. 
• Responsible resilience requires consideration of lifespan. Responsible resilient investing requires that the lifespan of the project, program, or service be considered and addressed at every capital moment. 
• Shared resilience requires a focus on equity/anti-racism, climate change, and globalization. Resilience cannot be achieved through the broader community development sector without a focus on the intersection of equity/anti-racism, climate change, and globalization that adversely and disproportionally affects communities and people who are already burdened and marginalized. 
• Community resilience is most effectively delivered through integrated, holistic efforts. Addressing resilience challenges in an integrated and holistic way will help communities realize multiple benefits across sectors and stakeholders. 
• Everyone is entitled to participate equally in social, economic, and political life. Every facet of our work should be directed toward and reflect an unwavering commitment to fair and equal access to, opportunity in, and responsibility for social, economic, and political life. 
• Our customers deserve excellence. The people and the communities that CDFIs serve have a right to expect excellence, and we have a responsibility to provide it. A commitment to excellence is a statement of respect for our customers, investors, funders, staff, Board, and members, as well as those stakeholders in the community that this work touches. 
• Input from a wide-ranging and diverse group of stakeholders must shape our work. The work products/tools we create together shall be designed with input from a wide-ranging and diverse group of representatives and stakeholders and piloted, market-tested, and refined before rollout. 
• Our work is for the good of all; therefore, all work products shall be freely available. The work products/tools we create together shall be “open source,” available for use and adoption by all in the broader sector.