Do You Know the Value of Your Local CDFI?

 

May 4, 2014; Minneapolis Star Tribune

An article in the Star Tribune highlights the role of the Nonprofit Assistance Fund among Minnesota’s nonprofits. The specific case it references is the first million-dollar loan made by the Nonprofit Assistance Fund (NAF). The loan was made to help the Aliveness Project move to a space more conducive to their HIV/AIDS program.

NAF is a community development financial institution (CDFI) led by Kate Barr, one of NPQ’s favorite authors on nonprofit financial dynamics. CDFIs provide not just loans but financial advice, and there are around 400 of them in the United States. Barr is well suited to leadership of a CDFI, having had 20 years of experience as a banker at Riverside Bank before she joined NAF.

Over the last ten years, NAF has raised $19 million in capital from individuals, foundations, and banks to make grants or long-term loans to nonprofits at good rates and with flexible terms. Participation in the fund helps the banks to meet their Community Reinvestment Act obligations and serve organizations that might otherwise fall outside of their loan guidelines.

Ron Zweber, a senior vice president at St. Paul-based Bremer Bank, said, “NAF bridges the space between the nonprofit and banking sectors. Not all nonprofit organizations will meet bank loan underwriting criteria. NAF has historically been a direct lender to these organizations. And NAF’s ability to provide technical assistance, training and coaching [also] is very important.’’ And Barr says, “In fairness, bankers today can’t make these kinds of [small] loans. There are so many regulations. And they can’t get the loan-to-value ratio [they need to secure the mortgage].’’

CDFIs are certified by the CDFI Fund of the U.S. Department of the Treasury. They have been among us for 20 years and were designed to increase economic activity in markets not fully served by traditional financial institutions.—Ruth McCambridge