New Rating Tool Could Open CDFIs

Erika Morphy is co-editor of Debt and Equity Journal, from which this article is excerpted.

Philadelphia-Executives in the community development financial institution (CDFIs) community are optimistic a rating tool the Opportunity Finance Network has been honing for three years could open the doors to new investment. The locally based OFN is a $4 billion national network of 167 financial institutions that helps to finance community development opportunities.

“The idea is to make it easier for investors to invest in CDFIs by giving them information about whether the CDFI meets its risk and other criteria,” says Kathy Stearns, executive vice president of the CDFI Assessment and Ratings System or CARS. “To date, there has been no way for such investors to get a third party analysis and rating of CDFIs.”