In 2015, Aeris will expand on its work to increase the visibility and transparency of CDFIs among investors (and potential investors) by establishing a set of common CDFI impact metrics. Aeris believes that standardized impact data, which can be aggregated across investor portfolios and the industry, will make CDFIs more attractive and accessible to emerging, mission-driven investors. It will also lead to simpler, more efficient reporting of community impact for CDFIs, when stakeholders adopt the newly-identified common standards for impact reporting.
The project will involve a scan of the current state of impact reporting, taking into account existing impact data in the Aeris Cloud, as well as those data collected by large data aggregators in the CDFI industry. The project will also gather CDFI and investor input through one-on-one meetings and the formation of an advisory board of CDFIs. In the final stage of the project, Aeris will construct working groups of CDFIs according to their impact focus (e.g., housing, environment) to identify and agree upon 3-5 standardized impact metrics for each impact area.
Funders and partners include the Annie E. Casey Foundation, the Ford Foundation, the MetLife Foundation, and the Global Impact Investing Network (GIIN). Aeris will be identifying additional philanthropic funders and implementing partners in the coming months. The partnership with the GIIN will leverage that organizations deep connections with impact investors, and Aeris relationship with the CDFI sector (including CDFIs, government, and depository institutions, to establish a set of impact metrics that are meaningful to investors; and that are useful and relevant for CDFIs to collect and report. Critical to the success of the project will be the formation of partnerships with large aggregators of CDFI data whose input on and adoption of standardized metrics will be central to reducing the reporting burden on CDFIs.
By the end of Q1 2016, Aeris will have identified 3-5 impact metrics and definitions for multiple impact areas. After the conclusion of the commitment period, Aeris will build out its database to allow for the aggregation and analysis of impact data, and by early 2017 will begin offering impact data reports to CDFIs, investors, and other stakeholders.
June 2015: Kick off project
1. Public announcement/press release
2. Partner and fund development activities
3. Roundtable conversation at CGI America
July-August 2015: Review state of impact reporting in CDFI industry
1. Mine existing impact data in Aeris Cloud to identify most-commonly-reported metrics
2. Review overlap of Aeris metrics with those collected by largest data aggregators in the CDFI industry and the GIIN
3. Review historical efforts to standardize impact metrics and results of those efforts
4. Produce (internal) summary of findings
July-October 2015: Gather CDFI and investor input
1. Working in partnership with the GIIN, gather investor input, including a list of investor driven/desired metrics; analyze for similarities and differences from what CDFIs currently collect
2. Define the impact sectors from the investor perspective; draft brief description of each sector
3. Meet with industry data aggregators to share investor comments and identify common metrics and definitions
4. Organize and meet with an advisory board of CDFI practitioners to discuss findings to date, issues, and ways forward
5. Summarize findings
October 2015-March 2016: Discuss and finalize proposed metrics with CDFIs
1. Create CDFI working groups based on impact sectors (e.g., women and minorities, energy and environmental sustainability, housing, economic opportunity, education, healthy food)
2. Prepare lists of 5-10 impact metrics for each sector that resonate with investors and stakeholders including definitions commonly in use
3. Share metric lists with working groups, holding 2-3 calls to get agreement on 3-5 impact metrics and definitions that are consistent with current practice or could be adopted without undue disruption
4. Meet with data aggregators to share CDFI decisions on metrics and definitions for inclusion in industry databases
5. Finalize and roll-out list of agreed upon metrics and definitions to the approximately 125 CDFI loan funds that report data to the Aeris Cloud
While America is frequently referred to as the land of opportunity, it is actually much harder for a poor child born in America to move up the economic ladder than in other developed countries, such as Canada or Denmark. Community development financial institution loan funds (CDFIs) strive to level the playing field by deploying targeted loans to promote economic opportunity in Americas overlooked communities. However, the vast challenges facing these communities currently far outstrip the amount of capital available to CDFIs to lend.
Aeris (formerly CARS Inc.) is a nonprofit information service for CDFI investors. Aeris mission is to increase investment and knowledge that benefit under-served markets. By promoting transparency and standardization through performance data, analysis, ratings, and advisory services, Aeris is connecting new sources of capital with the communities in America that so desperately need it. In particular, a growing source of new capital is seeking investment opportunities that make a difference in local communities. These emerging impact investors want reliable data that help them assess the difference their investments make in communities.
In recent years, Aeris launched a cloud-based data collection system that for the first time enables investors to access standardized CDFI financial data that are on par with those available for other types of financial institutions. However, Aeris database lacks standardization in the area of impact performance data, hampering investors understanding and appreciation of the CDFI industry's impact over time. Currently, CDFIs report every manner of impact metrics, without the benefit of standardized definitions to support data aggregation that would help stakeholders understand the impact CDFIs have on creating opportunities in low-income markets.