Dear reader, as part of a special report for Shelterforce I sat down with the heads of four of the largest community development intermediaries in the country and asked a simple question: Are you still relevant?
This six part series looks at the evolution of their role in the community development sector and their strategies for the future.
To binge-read the full report, click here.
Part V – Staying the Same = Change
The needs of CDCs themselves have changed. “In the 1980s, NFF was lending to a largely unbanked segment of the nonprofit sector,” says Antony Bugg-Levine. “Now the banks understand that these [nonprofits] are viable borrowers.” He points out that, from a mission perspective, this is a success for the intermediaries. They nurtured this particular class of borrowers with special loan products, reduced borrowing rates, and flexible lending terms, and now many CDCs can borrow directly using conventional finance.
The bad news is they can now borrow directly using conventional finance. What’s an intermediary to do? “One of the greatest things I ever did was to start applying a ‘value added’ lens to all our work,” says Deb De Santis.
It used to be that CSH and its colleagues did the deals that others didn’t want to do. Now they are doing the deals that other folks simply can’t do.
Need a partner with a deeper balance sheet to support that LIHTC deal? An intermediary will find one and help you structure the relationship. Need some soft predevelopment capital or a credit enhancement on a new project because you don’t have deep pockets? Intermediaries aggregate cash (including mission-related capital) with a wide range of risk tolerances and flexible uses, taking risk on their own balance sheet to offset yours. Got a complicated, high profile project that’s entangled with some reputational risk or a testy community of stakeholders? Alongside new strategies for engaging other sectors, intermediaries have been building insights and alliances that can help you trim some thorns.
And this ain’t small potatoes. The National Equity Fund just had its two biggest years running. Enterprise has built more than 150 funds, including being one of the partners in the foreclosure abatement-focused Mortgage Resolution Fund, that address different facets of the sector. Its Multifamily Mortgage Finance group recently merged with Bellwether Real Estate Capital, a multifamily and commercial mortgage originator.
Stay tuned – your Man About Town is publishing all six parts of this series over the week.
- Part I – So, What Exactly Is and Intermediary Anyway?
- Part II – Think Locally, Act Globally
- Part III – The Inefficiency of Scale
- Part IV – The Capital Behind the Capital
Next up: Part VI – Stuck in the Middle With You