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Changing Capital Markets and Their Implications for Community Development Finance

This paper summarizes research from the Community Development Innovation and Infrastructure Initiative (CDIII),1 an 18-month project on the future of community development and community development finance.2 CDIII asked two questions: where does the community development field need to be in order to have impact in the new economic and financial world, and how do we move the industry into this new position? CDIII research included interviews, site visits, and discussion meetings on various topics. All told, the authors received input from over 300 people.

The fundamental conclusion of this research is that economic restructuring, the emergence of telecommunications and information technology, and other national and global trends have dramatically changed the environments in which community development takes place. Capital gaps have changed, capital itself is becoming less "localized," and the financial services industry has evolved entirely new ways to transact business and service customers. These changes have significant implications for Community Development Financial Institutions (CDFIs). The CDFI industry will need to re-engineer, reposition and re-tool itself in order to be viable in the 21st century. In particular, the CDFI industry must critically examine its structure and invest significantly in its supportive infrastructure if it is to be an effective conduit for the flow of capital to low-income communities.

Alan Okagaki, Consultant

Kirsten Moy, Director, Economic Opportunities Program

Full Story: http://www.brookings.edu/articles/2001/07metropolitanpolicy_moy.aspx

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