Theory of Change: Practice of Resilient Community Development Finance
Use the Strategic Planning and Impact Measurement Workbook to customize the following needs, opportunities, and objectives to reflect your community and your organizations, and the included Impact Measurement worksheet to set outcome objectives and SMART Goals.
- Threats and harms are increasing. Acute shocks and chronic stresses—economic, environmental, and societal in nature—are greater, stronger, and more frequent. Acute shocks are the sudden, sharp events that threaten a community. Chronic stresses weaken the fabric of a community on a day-to-day or cyclical basis.
- Low-income and disadvantaged communities (LIDAC) suffer "first and worst." Chronic stresses and underlying vulnerabilities make them particularly exposed to acute shocks. For example, harms from climate change fall disproportionately on LIDAC and communities, households, and individuals.
- The asset quality, revenues, impact, and organizational sustainability of community development lenders suffer as the communities they serve suffer.
- Community development lenders of all types are strategically positioned to help. CDFIs and other community development lenders have the expertise, resources, and relationships necessary to build resilience for LIDAC communities, households, and individuals.
- Investing in resilience is good business for community development lenders. As they build resilience for the LIDAC communities that are their customers, clients, and target communities, community development lenders improve their asset quality, increase and protect revenues, and build their own organizational sustainability—as well as protect and furthering the impacts they seek.
For R-CDL
- Evidence-informed, "best practice" decision-making, at the lender level, applicant/borrower level, and community level, based on a thorough investigation of the mix of shocks and stresses related to the program/products/service at hand, including environmental, social, and economic elements; understanding of the best available information and science; and careful evaluation.
- Lender is embedded in, reflective of, and engaged with clients and community members and demonstrates real accountability to them.
- Articulated commitment to equitable holistic resilience by community development lenders and concrete evidence that the lender is operationalizing that commitment proactively, relentlessly pursuing and protecting equitable, holistic resilience for borrowers, stakeholders, and community in the face of the mix of shocks and stresses that threaten them.
- To the extent practicable, at the lender and borrower levels, all projects are designed first and foremost to achieve their primary objectives for their defined client/target market and to meet defined performance standards in both routine and extraordinary situations under all reasonably foreseeable conditions over the delivery lifespan.
- Equitable access to sufficient, affordable, responsible capital to finance investments in health, well-being, and holistic resilience for LIDACs, communities of color, Native Nations, those who have and continue to suffer "first and worst" and those who are under-resourced.
For R-CDL
- To the extent feasible, the community development lender's investments of time, money, and other resources perform reliably, as intended, in both routine and extraordinary situations under all reasonably foreseeable conditions over the delivery lifespan of the project.
- To the extent feasible, the community development lender's investments of time, money, and other resources meet standards of excellence equal to or exceeding those of market-rate investments and/or those considered best practice.
- To the extent feasible, the community development lender's investments of time, money, and other resources contribute to the safety and health of the organization's borrowers and beneficiaries and build their capacity to survive, adapt, and thrive no matter what kinds of chronic stresses and acute shocks they experience.
- To the extent feasible, the community development lender's investments of time, money, and other resources support the well-being of the community, helping community members reach their full potential.
- Stronger, more sustainable, and resilient community development lenders.
- Greater health, overall well-being, and resilience for borrowers, physically, socially, financially, economically, and environmentally.
- Greater health, overall well-being, and resilience for beneficiaries, physically, socially, financially, economically, and environmentally.
- Stronger, healthier, more equitable communities and greater systemic resilience.
- Limited negative cascading events and unintended consequences.
- Sufficient, affordable, responsible capital is invested in health, well-being, and holistic resilience for LIDACs, communities of color, Native Nations, those who have and continue to suffer "first and worst" and those who are under-resourced.
Needs and Opportunities
- Threats and harms are increasing. Acute shocks and chronic stresses—economic, environmental, and societal in nature—are greater, stronger, and more frequent. Acute shocks are the sudden, sharp events that threaten a community. Chronic stresses weaken the fabric of a community on a day-to-day or cyclical basis.
- Low-income and disadvantaged communities (LIDAC) suffer "first and worst." Chronic stresses and underlying vulnerabilities make them particularly exposed to acute shocks. For example, harms from climate change fall disproportionately on LIDAC and communities, households, and individuals.
- The asset quality, revenues, impact, and organizational sustainability of community development lenders suffer as the communities they serve suffer.
- Community development lenders of all types are strategically positioned to help. CDFIs and other community development lenders have the expertise, resources, and relationships necessary to build resilience for LIDAC communities, households, and individuals.
- Investing in resilience is good business for community development lenders. As they build resilience for the LIDAC communities that are their customers, clients, and target communities, community development lenders improve their asset quality, increase and protect revenues, and build their own organizational sustainability—as well as protect and furthering the impacts they seek.
Process Objectives for the R-CDL
- Evidence-informed, "best practice" decision-making, at the lender level, applicant/borrower level, and community level, based on a thorough investigation of the mix of shocks and stresses related to the program/products/service at hand, including environmental, social, and economic elements; understanding of the best available information and science; and careful evaluation.
- Lender is embedded in, reflective of, and engaged with clients and community members and demonstrates real accountability to them.
- Articulated commitment to equitable holistic resilience by community development lenders and concrete evidence that the lender is operationalizing that commitment proactively, relentlessly pursuing and protecting equitable, holistic resilience for borrowers, stakeholders, and community in the face of the mix of shocks and stresses that threaten them.
- To the extent practicable, at the lender and borrower levels, all projects are designed first and foremost to achieve their primary objectives for their defined client/target market and to meet defined performance standards in both routine and extraordinary situations under all reasonably foreseeable conditions over the delivery lifespan.
- Equitable access to sufficient, affordable, responsible capital to finance investments in health, well-being, and holistic resilience for LIDACs, communities of color, Native Nations, those who have and continue to suffer "first and worst" and those who are under-resourced.
Performance Objectives for the R-CDL
- To the extent feasible, the community development lender's investments of time, money, and other resources perform reliably, as intended, in both routine and extraordinary situations under all reasonably foreseeable conditions over the delivery lifespan of the project.
- To the extent feasible, the community development lender's investments of time, money, and other resources meet standards of excellence equal to or exceeding those of market-rate investments and/or those considered best practice.
- To the extent feasible, the community development lender's investments of time, money, and other resources contribute to the safety and health of the organization's borrowers and beneficiaries and build their capacity to survive, adapt, and thrive no matter what kinds of chronic stresses and acute shocks they experience.
- To the extent feasible, the community development lender's investments of time, money, and other resources support the well-being of the community, helping community members reach their full potential.
- Stronger, more sustainable, and resilient community development lenders.
- Greater health, overall well-being, and resilience for borrowers, physically, socially, financially, economically, and environmentally.
- Greater health, overall well-being, and resilience for beneficiaries, physically, socially, financially, economically, and environmentally.
- Stronger, healthier, more equitable communities and greater systemic resilience.
- Limited negative cascading events and unintended consequences.
- Sufficient, affordable, responsible capital is invested in health, well-being, and holistic resilience for LIDACs, communities of color, Native Nations, those who have and continue to suffer "first and worst" and those who are under-resourced.
