Loans remain difficult to acquire for many people in working-class and lower-income neighborhoods in the U.S. Even community development financial institutions (CDFIs) with the mission to provide affordable, responsible lending to disadvantaged communities can struggle to provide large-scale credit because of low balance sheets or lack of operating capital. However, as Next City Equitable Cities Fellow Oscar Perry Abello reported in “Groundbreaking CDFI Deal Will Make a Difference in Chicago” last October, CDFIs can increase their impact by collaborating, and leveraging their resources to create greater outcomes.
Today JPMorgan Chase announced a five-year, $125 million initiative to create economic opportunity in struggling neighborhoods by boosting community development organizations, in part by fostering collaboration among regional CDFIs.
PRO Neighborhoods will focus on three areas: It will supply CDFIs with capital that encourages them to pool their resources and expand their lending activities, which support the creation of health centers, education facilities and other supportive services. The initiative will also provide seed capital to local organizations to acquire, refurbish and create affordable housing in neighborhoods at risk of gentrification. And it will dedicate funding to research on cities’ demographic shifts, with the goal of helping community development organizations to make more data-driven decisions about resource allocation.
The initiative builds upon a $33 million 2014 pilot program also focused on disadvantaged neighborhoods. According to an impact assessment by the Harvard Joint Center on Housing Studies, that pilot allowed 26 CDFIs to raise more than $226 million, seven times JPMorgan’s initial grant. Because of this, the CDFIs were able to make $100 million in loans, finance the preservation and development of over 2,000 units of affordable housing, and lend to over 130 small businesses.
Jen Kinney is a freelance writer and documentary photographer. Her work has also appeared in Philadelphia Magazine, High Country News online, and the Anchorage Press. She is currently a student of radio production at the Salt Institute of Documentary Studies. See her work at jakinney.com.