2012 FIR Summary

Over the past twelve years, the Financial Innovations Roundtable (FIR), located at the Carsey Institute at the University of New Hampshire, has worked with a range of community development and other types of financial institutions, government agencies, foundations and trade associations to address and solve problems related to access to capital. The FIR does this by tapping the expertise of thought leaders from the institutional investment, banking, philanthropic, and community development industries.

According to recent research by the Carsey Institute for the CDFI Fund, the community development finance field has reached an important milestone – the ability, even during a recession, to fill a capital gap and do so in a way that successfully manages risk and maintains good portfolio performance. Since the creation of the CDFI Fund in 1994, the CDFI sector has grown to over 900 certified CDFIs. Significant scale effects exist in all sectors of the CDFI industry, and operating expenses play the driving role in determining whether CDFIs achieve self-sufficiency. Notwithstanding these trends, most of the industry remains fragmented and vertically integrated, leading in many cases to capital underutilization and operational inefficiencies.

The 2012 Financial Innovation Roundtable focused on how the sector might address the opportunity of increased impact and efficiency through networking and collaboration. Drawing from practitioner examples, FIR participants addressed important questions including:

• What are leading examples of collaboration and industry networks? What have been the challenges and lessons learned from these examples?
• What are the most crucial needs of the industry in terms of collaboration and infrastructure?
• Who needs to be involved in creating the solutions? What next steps can industry work groups take to help craft a solution? What are the key actions various participants could take?

This report summarizes key points that arose from the FIR presentations and discussions. It also foreshadows strategic next steps over the year ahead. At this point, there appears to be particular interest in a CFO task force on industry standards; a convening of smaller CDFIs to explore sharing the cost and risk of innovation; a research project on the path to growth; and a workgroup exploring the relationship between community development finance and impact investing and raising “impact capital.”