2014 CD Perspectives Report

Issue link: http://read.stlouisfed.org/i/332204

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Page 9 of 23

Federal Reserve Community Development Perspectives Improving the CRA's implementation and impact A critical component of the community development finance network is the banking system, suppor ted by the CRA. The CRA remains an impor tant motivation for the deployment of community development capital; as such, there is an ongoing oppor tunity to educate bankers and other community stakeholders on the effective implementation of the legislation. In 2013, nearly every Reser ve Bank hosted training sessions for bank CRA officers, brought CRA officers together to explore new challenges and learn about new programs or projects in their markets, and/or trained the nonprofit recipients of CRA- motivated bank capital on the appropriate use of these funds. Responding to an emerging need to connect banks directly with loan or investment oppor tunities, a major Reser ve Bank innovation was the launch of "speed dating" or "resource exchange" events where bankers were introduced to nonprofits or redevelopment projects (read more on page 11). Looking forward There are a number of critical questions and challenges related to this work moving forward: What is the status of efforts to "modernize" the CRA? Some progress has been made in the effort to modernize the CRA. Final revisions to the Interagency Questions and Answers Regarding Community Reinvestment provide clarification on the CRA consideration given to community development activities outside of a bank's immediate geographic market. However, some stakeholders would prefer a broader reevaluation of how the CRA is implemented in light of sweeping technological and industry changes since the CRA's passage. CD staff will continue to reach out to stakeholders to gain their perspectives on improving the implementation of the CRA. An example of the Fed's convening efforts on these issues is the 2014 National Interagency Community Reinvestment Conference, which brought together more than 1,000 bankers and nonprofit leaders to learn about the CRA and explore CRA-related issues. What are some innovative ways of bringing new sources of capital into the field? Social impact bonds and other "pay for success" finance mechanisms, along with crowdfunding, are new to many communities. Their utilization in various community and economic development initiatives has gained momentum in recent years due to their potential to support a wide range of projects, though there is still much to learn about these tools. Fed CD staff will continue to examine and share information about new financial innovations through conferences, webinars, publications, and additional research. How can CDFIs and other community development organizations reach a scale sufficient to address a broader range of community challenges? Although the community development field has benefited from individual successes and the emergence of high-capacity organizations, too many neighborhoods still lack capacity and the opportunity for residents to thrive. The community development field needs new ideas, approaches, partners, and resources if it is to grow to scale, develop strategic alliances across disciplines, and drive action. CD staff will continue to research and share information on comprehensive efforts that align multiple partners around common goals and increase the scale of revitalization activities. 10

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