LITTLE ROCK, Ark.–During a panel discussion hosted by President Bill Clinton, Inclusiv CEO Cathie Mahon discussed the role CDFI credit unions play in economic growth and serving underserved urban and rural communities.
Mahon appeared as part of the "Economic Inclusion and Growth: The Way Forward" conference at the Clinton Presidential Center in Little Rock on Thursday.
The goal of the conference was to bring together leaders and bipartisan representatives to address the “continuing need for scalable impact that narrows the income and racial wealth gaps that plague underserved communities,” organizers said. The conference was held as the Community Development Financial Institutions (CDFI) Fund, created during the Clinton administration, is marking its 25th anniversary.
Mahon appeared as part of a panel titled "How Do We Scale the Field," moderated by President Clinton.
“The CDFI Fund is one of the Federal government's best market-based strategies for leveraging private dollars,” said Mahon. “CDFIs leverage $12 of private capital for every $1 of public investment. Investing in CDFIs generates billions of dollars annually in the form of loans to create jobs and grow businesses, build homes, increase job mobility, expand access to affordable healthcare and childcare, and create financial capability to expand consumer purchasing power."
During her remarks Mahon also shared details on the newly launched Southern Equity Fund, a partnership between Inclusiv and the Kresge Foundation to address economic insecurity in low-income and communities of color in 17 southern states.
‘Catalytic Philanthropic Capital’
“By using catalytic philanthropic capital in the form of a Program Related Investment (PRI) to serve as a guarantee, Kresge and Inclusiv have leveraged $45 million in senior and subordinate loan capital to invest in high-impact CDFI credit unions in some of the region’s most distressed and persistent poverty areas,” the organization said.
Southern states have the highest concentrations of persistent poverty and the highest concentrations of predatory financial services, including payday lenders, Inclusiv added.
The Fund will make investments of up to $5 million in secondary capital loans to high-impact community development credit unions, providing a systems based approach to scale community-based equity.
Response to Climate Change
Mahon further shared that CDFI credit unions are leading efforts to build resiliency in their communities that are often most impacted by climate change. Inclusiv recently launched the Center for Resiliency and Affordable Renewable Energy. The Center, created in partnership with the Center for Impact Finance at the Carsey School of Public Policy, University of New Hampshire and the Hewlett Foundation, is designed to build a network of credit unions committed to jointly designing and scaling solutions to climate change, with a goal of promoting affordable and sustainable energy for all people.
“Severe weather events can have an outsized impact on people and communities least able to withstand them. In the aftermath of recent natural disasters, credit unions have been among the first to open their doors and provide cash to their members even when their own systems were impaired,” according to Inclusiv.
Best Practices Shared
Inclusiv said the Center's participating credit unions and partners will develop and share best practices in lending to consumers on energy efficient and clean energy solutions such as solar panels and electric vehicles. Also planned is the development of commercial lending opportunities that will help businesses retrofit their facilities with clean energy solutions and stimulate the growth of renewable energy businesses, it said.
In addition to the development of clean energy lending programs, the Center will raise and deploy capital to grow lending programs, will conduct research needed to design policy solutions, and will develop and disseminate training programs.
Helped Create CDFI Fund
Inclusiv, formerly known as the National Federation of Community Development Credit Unions, noted it played an instrumental role in establishing the CDFI Fund, is a permanent member of the national CDFI Coalition, and is a certified CDFI intermediary.
Inclusiv said that since the signing of the Riegle Community Development and Regulatory Improvement Act which established the CDFI Fund in 1994, CDFI Fund awardees have provided more than $29 billion in loans and investments across the U.S., including $6.1 billion in small towns and rural communities, $757 million in Native communities, and $726 million to women-owned businesses.