Discussion Paper

Partnerships between Community Development Financial Institutions and Workforce Development Organizations

Abstract: Inability to secure capital to improve worker skills or expand training programs can prevent growth in a local economy. This paper presents the role CDFIs can play to fill a need for financing in the workforce development sector. While the transactions presented in this paper are unique, they highlight the importance of partnerships between the two industries. Shared missions and an overlapping client base between CDFIs and workforce development practitioners creates a natural pairing for collaboration. In addition, CDFIs are uniquely able to serve as test beds for innovation because of their different method of underwriting deals and higher financial risk tolerances compared to traditional financiers. The authors present case studies involving small-dollar personal loans to finance skill development, new market tax credit transactions to expand educational facilities, and business acquisition and working capital loans to support nonprofit workforce developers.

Keywords: community development financial institutions; CDFI; workforce development; workforce funding; workforce training; education; loans; financial innovation; workforce finance; community colleges;

JEL Classification: G29; J24;

https://doi.org/10.29338/dp2022-01

Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta Community and Economic Development Discussion Paper

Publication Date: 2022-07-01

Number: 2022-01