Are you ready to partner with a Community Development Financial Institution (CDFI), but aren’t sure where to start? We’ve talked a lot about the value and power of CDFI partnerships over the last few weeks, and I know it can be overwhelming to get started. Today I’m going to share a few tips with you to help you take that first step to support you and your Community Reinvestment Act (CRA) program.
Start by identifying the CDFIs that serve, or overlap with, your assessment area. The CDFI Fund list of CDFIs can be a great resource for locating CDFIs in your local communities. Some of the CDFIs on this list are nonprofits, credit unions, or even banks. They may have different service areas or different focuses of interest. Once you’ve identified the CDFIs in your area you can start learning about what they do and how they support the community. So get Googling! One thing they’ll all have in common though, any of them can be a great partner for your CRA program.
Before you consider investing your financial resources, look for ways to include CDFIs in what you are already doing right now. One low cost but high impact option to support and get to know your CDFIs is to invite CDFI staff to bank sponsored conferences, seminars and even internal bank training sessions to support their professional development. By simply opening up a few spots in events you are already hosting, CDFI staff get access to resources that they would not otherwise have.
Maybe you want to dive right in and target specific needs your potential CDFI partner has today. You have a wealth of talent in your bank that CDFIs could learn from or utilize to move their mission and operations forward. You naturally have experts in marketing strategy, information technology, loan operations, human resources, and many more areas that overlap with your CDFI partners. Recruit some of your bank employees to work with the CDFI to create marketing strategies, improve their information systems, or any other special project that would improve the capacity or efficiency of your CDFI Partners. Reach out to other employees across your bank to identify employees who might be a good fit to serve on the board of directors or as an officer on a standing committee.
Once you get more comfortable with each other, you can deepen your relationship with your chosen CDFI partners by collaborating on efforts that improve the CDFI’s core services or serve their credit needs. Consider assisting the CDFI in developing or revising their loan application and underwriting standards/processes for their suite of loan products. Create a formal (or informal) referral process between the bank and the CDFI to bridge the relationship between the CDFI and customers that need a little extra help.
These deeper relationship-building techniques can eventually lead to some of the investment and lending options we’ve discussed in previous articles, like EQ2 investments and loan servicing agreements. Getting to know several CDFIs in your assessment area will help you find the CDFI that’s the right fit for the type of partnership and investments your bank is seeking.
Want another overview of CDFIs? Check out this Forbes article: What Is A Community Development Financial Institution (CDFI)? – Forbes Advisor
Cheers to your CDFI partnerships! Linda
P.S. Did you hear about the Community Development Loan Workshop I am hosting? Check out the details here: