With the implementation of our CDFI strategy, which confers CDFI characteristics to one of our affiliates (Finance Fund Capital Corporation or FCAP), there was an opportunity for some funding to do a more in depth study of this market enabling us to frame, more definitively, our lending strategy. As part of moving toward CDFI certification for FCAP, the CDFI fund awarded funding to do a study of community lending.

In March the study, Financial Intermediaries For Community And Economic Development In Ohio: Market Assessment, was released by The Center for Economic Development & The Center for Housing Policy Research of the Maxine Goodman Levin College of Urban Affairs, Cleveland State University. The purpose of this research is to describe and quantify the needs of Finance Fund’s current and potential clients, identify the role the Fund’s partners play, and understand the market potential for the services provided by Finance Fund.  There weren’t a lot of surprises, but there were some impactful affirmations.

1.    The type of projects funded by partners includes commercial revitalization, community facilities, homeownership, and small business entrepreneurship.
2.    The study indicates that financial intermediaries seeking to expand their services can play a vital role in providing funding assistance to the organizations that need to fund projects in their respective communities.
3.    Some organizations that had used or attempted to use financial intermediaries in the past had difficulty in navigating through the application process, whereas other organizations were not sure how financial intermediaries could benefit them.
4.    The responding partners indicated a low level of collaboration with funding partners and intermediaries.  One reason may be unfamiliarity with financial intermediaries. Other reasons include staffing constraints, types of projects, geographic criteria, and real or perceived difficulty of partnering and constraints imposed by the intermediary.
5.    The study identifies a gap between the balance of activities revealed in the client survey and the available funding resources identified in the inventory. The inventory also offers possible funding avenues in new project areas where funding relationships have not yet been established. For example, the inventory identifies 25 sources for funding in the area of environmental programs and green communities.

The study’s overall conclusion is that there is room for financial intermediaries such as Finance Fund to do more marketing and provide more information to partners and organizations that may need their services. This was not a surprise but an affirmation, and is part of the reason you are reading about it in this forum. The complete market assessment will be published to our Web site, www.financefund.org in the next couple of months.