Assets under Management - The commitment of $50 million will be reached through a combination of new equity investments into CDBIs and the financing of high-impact real estate and small business transactions utilizing New Markets Tax Credits. Over the next three years, NCIF and its Network of CDBI Banks will substantially increase the level of economic activity within low-income communities. This strategy will result in both increases in the number of individuals who will gain access to much needed financial products and services, and in the total amount of financial services offered in the country's most distressed communities. In addition, NCIF's community investing strategy will result in various other positive impacts within LMI communities. NCIF's investments into CDBIs will result in increased levels of financial inclusion as middle and working-class families will have increased access to sustainable financial products and services. Also, NCIF will be creating a New Markets Tax Credit Small Business lending fund thereby increasing small business lending activity to entrepreneurs in LMI and minority communities. As an example of a high impact project, NCIF will provide NMTC support to finance a non-profit center in Chicago that mentoring, advocacy and violence prevention services. The increase in investment has a significant multiplier effect in these communities- Tier 1 capital can be leveraged eight to ten times to increase loanable funds while direct lending has the effect of increasing access to financing that the market would only offer at exorbitant prices or not at all.
Industry Building - NCIF will enhance its impact with its industry-building activities relating to enhancements in business model of the mission-oriented banking sector that will eventually bring scale to the sector. NCIF's equity investment and project financing strategy will emphasize the need for collaboration and effective networking and the innovation and cost savings that can be fostered through better partnership. NCIF is working with the industry to promote collaborative strategies like small business lending with a shared infrastructure, a shared back-office or even friendly mergers to increase scale.
Social Performance Metrics and research work to better 'tell the story' to investors and other stakeholders. Since implementation, the metrics are becoming a standard for the sector. NCIF is working to improve the presentation of its Development Impact Dashboards. In 2012, 23 CDFI banks (out of 88) provided data for the Dashboards and NCIF expects to increase this participation level going forward. This research and communications work is crucial to build the asset class of CDBIs so that the sector as a whole is better positioned to absorb increased amounts of investment.
NCIF is committing to a multi-phase strategy to achieve the below annual goals. NCIF has already secured over $48 million of the $50 million commitment in the form of grant funding and New Markets Tax Credits allocations. NCIF will seek additional NMTC and other grants to meet its commitment and to further grow investing and lending.
Assets under management - NCIF will invest $22 million into LMI communities nationally in a combination of equity investments into CDBIs, direct project financing, and small business lending.
NCIF's equity investments will be made into institutions that have exhibited both strong financial and social performance and that have a plan to be innovative anchor institutions in the communities that they serve. Equity investments will be leveraged eight to ten times by deposits to generate a sizable increase in loanable funds that will be used to spur economic and community development.
NCIF's project and small business financing will support high-impact community facilities and small businesses in highly-distressed neighborhoods throughout the country. NCIF works with partner CDBIs to source transactions that generate strong community development impact, but that require government subsidy to fill a gap in financing. As part of the above mentioned investment, NCIF will launch a $10 million New Markets Tax Credits enhanced small business fund along with CDBI Bank partners. This will support our CDBI Bank partners in making loans to small businesses that create jobs.
Industry Building - NCIF will host its Annual Development Banking Conference in November, 2013 seeking to increase participation and covering topical issues like capital raising, small business lending, corporate governance and technology. NCIF will continue the evolution of the Social Performance Metrics by engaging an increasing number of CDBIs to provide both impact reporting data and insight into improving social impact data measurement and communication. This will lead to an increase in the flow of capital to the sector as investors will have more information on the social performance of each bank when making investment decisions. In addition, NCIF is experimenting with a mechanism to provide incentives to member banks and borrowers by reducing the cost of funding if the impact is demonstrably increased.
Assets under management - NCIF will invest $26 million into LMI communities in a combination of equity investments into CDBIs, direct project financing, and small business lending.
Like in 2013, NCIF's project financing will continue to support high-impact real estate and operating business transactions in distressed neighborhoods throughout the country. NCIF will complete deployment of the $10 million small business fund and work to raise additional funds to leverage its success. The fund will be part of NCIF's New Markets Tax Credit program wherein NCIF will utilize these credits to support job-creating small businesses around the country.
Industry Building - NCIF will host its Annual Development Banking Conference in November. NCIF will continue the evolution of the social performance metrics by engaging an increasing number of CDBIs to provide both impact reporting data and insight into improving social impact data measurement and communication.
Assets under management - NCIF will invest an additional $2 million into LMI communities in equity investments into CDBIs. NCIF also will continue to grow its project financing and small business lending programs. In addition to this commitment, NCIF will be raising additional capital as part of its internal plan to invest over $250 million into these communities.
Industry Building - NCIF will host its Annual Development Banking Conference in November. NCIF will continue the evolution of the Social Performance Metrics by engaging an increasing number of CDBIs to provide both impact reporting data and insight into improving social impact data measurement and communication.
Community Development Banking Institutions or CDBIs are depository institutions that have a mission of operating in underserved markets. CDBIs include, but are not limited to, banks that are certified by the US Department of Treasury as Community Development Financial Institutions or CDFIs and some Minority-owned Depository Institutions, designated by the FDIC. These institutions operate in and provide needed banking products and services in some of the most difficult neighborhoods and communities nationally with a mission of providing financial products and services to low- and moderate- income (LMI) communities - these include inner cities, rural areas, suburban and metropolitan communities, and Native American reservations. The credit and financial services that CDBIs provide are critical to the economic vitality and growth of LMI areas, injecting much-needed capital and financial services into small and mid-sized businesses to support growth and job creation, to individuals and families for a home purchase or renovation, or to a local non-profit organization that provides social and community services.
These CDBIs play a critical role in supplying capital to communities facing unrelenting poverty, high rates of unemployment or informal self-employment, persistent population loss, high proportions of underbanked households, or a combination of several of these factors. Moreover, in some instances, the CDBIs are the only financial institutions within the town; miles away from another provider of necessary financial services. The recession has further compounded this reality as it has disproportionately affected the LMI communities in which CDBI Banks serve and operate. To a greater degree than other communities, these neighborhoods are experiencing elevated unemployment rates and low real estate values. The result is that low-income borrowers, who have historically demonstrated strong credit performance, are now unable to make payments, and these local economies, including CDBI Banks serving these economies, are being hit hard. National Community Investment Fund (NCIF) calls this sector 'too important to fail' for the above reasons.
The biggest challenge faced by these CDBIs is the availability of capital and access to mainstream knowledge resources that can help them continue to meet the needs of these tough neighborhoods in a safe and sound manner. The current financial crisis has disproportionately impacted CDBIs due to the unbalanced negative impact in the LMI communities.
NCIF estimates that there are over 400 CDBIs throughout the country. This number includes 180 Minority Depository Institution banks, and 88 CDFI certified banks. Total assets of the CDFI Banks are in excess of $30 billion (representing over 50 percent of the total assets of the overall CDFI sector) even though they represent less than 10 percent of the certified institutions (88 out of over 1,000).
National Community Investment Fund was established in 1995 as a non-profit private equity fund with a mission to invest capital in above CDBI institutions, primarily banks that increase access to responsible financial products and services in underserved communities. NCIF generates reasonable financial, social, and environmental returns for its investors and funders, and contributes to their success by aggregating capital and knowledge and leveraging opportunities. NCIF is the country's leading financial intermediary investing in mission-oriented banks around the country. It is also the largest investor in the sector (by numbers with equity investments in 19 CDBIs), and has $195 million under management (including $173 million in New Market Tax Credits).
Capital and Financial Resources - NCIF seeks $50 million in equity capital to be invested into CDBIs and small businesses located in or benefitting low- and moderate-income communities.
NCIF is looking for investors who will commit $25M to $50M in fully FDIC insured deposits into mission-oriented banks selected using NCIF's Social Performance Metrics.
Implementation Partners - NCIF seeks partners who will help in capital raising and in structuring the funds to support the industry of community development banks and other mission-oriented financial institutions.
Media support - NCIF seeks visibility and promotion from the media - print, online and others - to highlight the work being done by mission-oriented financial institutions.
Leveraging the NCIF Network - NCIF can offer access to its Network Banks with the end goal of increasing financial products and services into LMI communities and also in strengthening the CDBI sector. NCIF can also work with financial technology partners to work with our community of banks.
Leveraging the NCIF network NCIF can offer access to its Network Banks with the end goal of increasing financial products and services into LMI communities and also in strengthening the mission-oriented banking sector. NCIF can also work with financial technology partners to work with our community of banks.