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Initiative Capital and Other CDFIs Fuel Community-based Development

nccdiLogoApril 13, 2015 – When Asheville’s Mountain Housing Opportunities wanted to create affordable housing units at the Glen Rock Depot near the popular River Arts District, the nonprofit developer looked to Initiative Capital, the N.C. Community Development Initiative’s lending arm and a certified development financial institution (CDFI). Mountain Housing knew that Initiative Capital’s focus on providing investment capital to underserved communities would align well with its plans.

All businesses and individual residents of communities need access to the kind of credit and capital available through Initiative Capital in order to finance growth and development at the household, business and community levels. Yet underserved, low-wealth and minority communities frequently lack such access.

Without this access, families cannot buy homes or pay for educational opportunities for their children, businesses cannot finance growth and expansion, and critical public and private sector projects stall for lack of investment. Often the communities that most need access to capital are unable to get the debt or equity needed to propel them forward.

Initiative Capital was created in 1999 to respond to such a credit access gap in North Carolina. Initiative Capital and other CDFIs are community-based financial institutions specifically chartered to serve low-income, minority and other underserved populations and communities.

Over the past 20 years, CDFIs have emerged as a safe, secure and highly effective alternative to banks and other mainstream financial institutions. CDFIs achieve reasonable rates of return and have good track records while also filling gaps in credit and capital markets to have a powerful community impact.

CDFIs have played a particularly crucial role since the Great Recession, when recovery has been uneven and slow for low-wealth communities. Were it not for CDFIs, those hard-hit communities would have struggled even more. In the fight for equitable growth and social justice, which is central to the work of community economic development, CDFIs have played a critical role and will continue to do so. (Read more

Jeannine Jacokes, a former senior policy advisor at the U.S. Senate Committee on Banking, Housing and Urban Affairs, recently noted that during the recession CDFIs leveraged a track record of success and stuck to their core principals, utilizing their strong underwriting practices as well as their knowledge of borrowers and their markets to respond to the great challenges of the Great Recession.

Jacokes’ comments and the importance of CDFIs to the community economic development sector were validated by two recent independent reports released by the CDFI Fund, an agency of the U.S. Treasury Department that provides funding, technical assistance and other support to CDFIs and the sector.

These reports together confirm that CDFIs achieve rates of return comparable to the traditional banking sector and have comparable risk profiles. CDFIs achieve these outcomes even while they focus on borrowers and communities that many mainstream lenders see as inherently risky or as having limited economic benefit.

Here in North Carolina, Initiative Capital has an extensive track record of providing successful gap financing for community development projects developed by the state’s nonprofit sector.

The investment with Mountain Housing, for example, helped the organization extend its footprint and ensure more affordable housing, a scarce commodity in the city. In addition to more of those types of investments, Initiative Capital recently added commercial and social enterprise loans to its portfolio and, in the last year, extended more than $9 million of credit to provide liquidity for affordable housing markets in the state.

Initiative Capital and other CDFIs provide the credit and capital needed to fuel the revitalization of communities and achieve inclusive prosperity.

Learn more about Initiative Capital’s loan products at


Recommended read

Keynote Address by CDFI Fund Director Annie Donovan at the 2015 CDFI Coalition Institute