Increasing Economic Opportunities Available in Communities by Supporting Community Development Financial Institutions
About This Investment
To boost financial opportunity in communities with deep poverty and economic and racial segregation, the Robert Wood Johnson Foundation (RWJF) dedicated a $10 million program-related investment to the Opportunity Finance Network (OFN) for its Finance Justice Fund.
Launched in 2020, the Fund aims to accelerate the work of OFN-member community development financial institutions (CDFIs) serving rural, urban, and Indigenous communities that experience a disproportionate lack of investment and high rates of persistent poverty.
With an anticipated $1 billion Finance Justice Fund, OFN expects to strengthen and grow more than 250 CDFIs over a 15-year period.
Why It Was Needed
OFN researched the capital and capacity needs of small to midsize CDFIs serving communities that are underinvested as part of a 2018 RWJF grant, finding that these organizations are constrained by a persistent lack of long-term, low-cost loans, as well as grant support to build operational capacity. OFN also found that for every $1 in flexible grants, CDFIs catalyze an average of $12 of community investments.
As a response, OFN created the Finance Justice Fund to pool capital from corporate and philanthropic sources and use it to make loans and grants to CDFIs.
How It Works
The Fund supports CDFIs of varying sizes and balance sheets with low-cost, long-term loans and grant capital. The Fund prioritizes investing in CDFIs with less than $50 million in total assets, many of which face challenges raising growth capital.
Headquartered in Washington, D.C., and founded in 1986, OFN is the national association of CDFIs. It was created to support and enhance the work of individual CDFIs by offering a national perspective and a collective voice. OFN provides capital, advocacy, and capacity building to help member and nonmember CDFIs create impact in rural, urban, and tribal communities nationwide.
OFN’s membership has grown into a network of more than 300 certified CDFIs that manage nearly $27 billion in assets nationally. These members have spent up to 50 years embedding themselves in communities otherwise disenfranchised from mainstream financial products. They serve critical market segments, including affordable housing, education, healthcare, renewable energy, small-business and economic development, with a focus on low-income communities of color.
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