Resilient Community Development Finance Initiative

Resilient Community Development Finance Initiative
group of people working on a computer

Welcome to ResCDFI: the Resilient Community Development Finance initiative. We invite all community development lenders to join us as we seek to understand, develop, and accelerate holistic, equitable resilience—including but not limited to decarbonization, climate mitigation, resilience, and environmental justice—for low-income and disadvantaged communities (LIDACs).

ResCDFI 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 and partners are uniquely positioned to build a ground-up, deal-by-deal, lender-by-lender foundation for resilience in all communities, and for all people. Lenders influence housing and 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 can "normalize resilience" by integrating the assessment of resilience into underwriting and development services, promoting a new type of value engineering that seeks to increase the impact of every loan by identifying opportunities to build a return on resilience value. Capital moments are the perfect time to assess and build resilience because decisions are being made and funds are primed to flow, often leveraged by government and private entities. Indeed, many community development lenders are already financing projects and providing services that build resilience.

The 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, led by Opportunity Finance Network (OFN) and Precovery Labs, with support from Bank of America, Rockefeller Philanthropy Advisors, and The Rockefeller Foundation. Phase One 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 led the implementation of Phase Two to expand this work so more financial institutions can have the right tools to make sound investment decisions and build holistic equitable resilience. The Center collaborated with Opportunity Finance Network, Inclusiv, Resilient Cities Network, and Precovery Labs on this effort with support from the New York State Energy Research and Development Authority (NYSERDA). Phase Two invested in research, impact measurement, and data management and developed recourses 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 social injustice, and the widening wealth gap—has confirmed that we are far from realizing the vision of ResCDFI 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 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 critical 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 new economy. Lenders’ 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 finance combines 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) with the mission to provide social, economic, and environmental "dividends" to communities beyond the basic functions of a given loan.

CDFIs are positioned and equipped to deliver resilience to their target communities—many already are! 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 the 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.

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, not known as the Resilient Community Development Finance Initiative. Special recognition is due to the leaders who were intensively engaged in the development and piloting of the Resilient Development Finance Principles and initial resources:

The cohort that drove the Initiative defined its purpose with the vision, mission, and objectives. Further, the Cohort detailed core beliefs to guide their work. These principles have been widely embraced and continue to guide the work in Phase Two. Countless additional individuals contributed valuable input, creativity, and commitment to the initiative and creation of these tools and resources—thank you!

Goal

Accelerate equitable decarbonization and build holistic resilience in low-income and disadvantaged communities through community development finance.

Objectives
 

  • Develop and support a robust, learning community of practice that engages meaningfully with community development finance practitioners and other stakeholders; is anchored in research, best practices, and an iterative process; and is committed and moving forward efficiently and effectively to understand, assess, and accelerate holistic, equitable resilience.
  • Develop, test, and promote a practical set of tools and standard operating practices for assessing, building, and tackling holistic, equitable resilience in and through community development finance for low-income and disadvantaged communities.
  • Increase awareness, commitment, and capacity of community development lenders to build resilience at and through every capital moment for low-income and disadvantaged communities.

Participants