Banks and CDCs – Philanthropic Partnerships Make for Interesting Bedfellows.

May 31, 2011

The connections between the banking sector and the nonprofit community development industry are long and deep. At the National Alliance of Community Economic Development Associations annual meeting last week, a number of bankers were visible among the participants, including three who spoke about those connections:  Natalie Abatemarco, Citi Bank; Ken Wade, Bank of America, and Dennis Lagueux, TD Bank.

For state nonprofit associations and the national organization, these banks are important partners. All three have supported NACEDA financially, helping keep the organization alive and functioning in a difficult economic environment. There was no contentious debate to be had at last week’s meeting, but instead a joint exploration of avenues of partnership and problem-solving.

Three issues dominated the discussion:  bank (and CDC) challenges with the future of the Community Reinvestment Act (CRA), the lurking challenge of the mortgage foreclosure crisis, and bank financial support for CDC associations, that is, the bank community development infrastructure.

What is right and wrong with CRA? 

That was the question posed by Sam Yoon, NACEDA’s executive director.  TD Bank’s Lagueux gave a full-throated defense of CRA from a banker’s perspective, saying, “it didn’t cause [the financial sector] meltdown, everything is right about it, it should move forward and be expanded.”  As a tool within the bank, Lagueux added, “CRA is needed more at this time than any, because it helps us pilot through deals that have a lot of pieces to it, it gets us through the door.”  Community reinvestment-focused bankers such as these panelists explain that they often have to sell CDC financing deals to others within their institutions because they don’t look like the easier, simpler, vanilla lending opportunities that a bank might prefer.  They can explain to their banking peers that these complex CDC deals, with layers of private financing and public subsidies, can and should receive the bank’s financial support.