Opportunity finance
Encyclopedia
Opportunity finance refers to socially responsible investing
by an institution in an organization or group of individuals.
(CDFIs) founded in 1995, defines the term as "a category of financing that helps people and communities just outside the margins of conventional, mainstream finance join the economic mainstream—and helps the economic mainstream enter emerging opportunity markets." It is closely related to microfinance
, but tends to occur on a larger scale and be more explicitly concerned with social benefit.
The concept of opportunity finance has gained increased traction in recent years, both from political movements and economic necessity. The current economic climate in the United States has raised the demand for creative financing
even for established businesses, as traditional bank loans for nonprofits and small businesses became harder to come by after the market crashed in the autumn of 2008.
Although the concept of opportunity finance is applicable worldwide, the entrepreneurial connotations of the term make it most commonly applied to initiatives within the United States. The Opportunity Finance Network, itself a U.S. organization, connects the concept to individualism and "the bedrock of U.S. policy."
(CDFIs) are nongovernmental financing entities (such as banks and loan funds) with the primary mission of community development, serving a target market, providing development services, and remaining accountable to their communities.. CDFIs may be the most well-known practitioners of opportunity finance in the United States, because they comprise a group of government-accredited institutions. Some awards for opportunity finance are available to CDFIs only.
While there are numerous organizations certified as CDFIs by the CDFI Fund, it is believed that there are thousands of financial institutions serving the needs of low-income people or communities in the U.S., but either have not applied for CDFI status or have otherwise not been able to fulfill all of the requirements for formal CDFI certification. All of these organizations can be said to be engaged in opportunity finance, despite their lack of U.S. governmental recognition.
* Shortlisted for the 2009 Financial Times Sustainable Banking Awards
Socially responsible investing
Socially responsible investing , also known as sustainable, socially conscious, or ethical investing, describes an investment strategy which seeks to consider both financial return and social good....
by an institution in an organization or group of individuals.
Usage of the term
The Opportunity Finance Network, a Philadelphia-based national umbrella group of 180 community development financial institutionCommunity development financial institution
Community development financial institutions are financial institutions which provide credit and financial services to underserved markets and populations, primarily in the USA but also in the UK...
(CDFIs) founded in 1995, defines the term as "a category of financing that helps people and communities just outside the margins of conventional, mainstream finance join the economic mainstream—and helps the economic mainstream enter emerging opportunity markets." It is closely related to microfinance
Microfinance
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
, but tends to occur on a larger scale and be more explicitly concerned with social benefit.
The concept of opportunity finance has gained increased traction in recent years, both from political movements and economic necessity. The current economic climate in the United States has raised the demand for creative financing
Creative financing
Creative financing is a term used widely amongst real estate investors to refer to non-traditional means of real estate financing, or financing techniques not commonly used. The goal of creative financing is generally to purchase, or finance a property, with the buyer/investor using as little of...
even for established businesses, as traditional bank loans for nonprofits and small businesses became harder to come by after the market crashed in the autumn of 2008.
Although the concept of opportunity finance is applicable worldwide, the entrepreneurial connotations of the term make it most commonly applied to initiatives within the United States. The Opportunity Finance Network, itself a U.S. organization, connects the concept to individualism and "the bedrock of U.S. policy."
Opportunity finance and CDFIs
Community Development Financial InstitutionsCommunity development financial institution
Community development financial institutions are financial institutions which provide credit and financial services to underserved markets and populations, primarily in the USA but also in the UK...
(CDFIs) are nongovernmental financing entities (such as banks and loan funds) with the primary mission of community development, serving a target market, providing development services, and remaining accountable to their communities.. CDFIs may be the most well-known practitioners of opportunity finance in the United States, because they comprise a group of government-accredited institutions. Some awards for opportunity finance are available to CDFIs only.
While there are numerous organizations certified as CDFIs by the CDFI Fund, it is believed that there are thousands of financial institutions serving the needs of low-income people or communities in the U.S., but either have not applied for CDFI status or have otherwise not been able to fulfill all of the requirements for formal CDFI certification. All of these organizations can be said to be engaged in opportunity finance, despite their lack of U.S. governmental recognition.
United States
- Accion USAAccion USAACCION USA is an American microfinance organization headquartered in New York, NY.- About :ACCION USA offers microloans and other financial services to low- and moderate-income entrepreneurs in the United States who are unable to access bank credit for their small businesses...
- Community loan funds, such as:
- Chicago Community Loan FundChicago Community Loan FundChicago Community Loan Fund is a certified Community development financial institution , providing low-cost, flexible financing to community development organizations engaged in affordable housing, social service and economic development initiatives benefiting low and moderate-income families and...
- Low Income Investment Fund
- Media Development Loan FundMedia Development Loan FundMedia Development Loan Fund is a New York-registered 501 non-profit corporation and investment fund that provides low-cost financing to independent news media in countries with a history of media oppression...
- Chicago Community Loan Fund
- E+Co *
- Opportunity Finance Network
- Grassroots Business FundGrassroots Business FundThe Grassroots Business Fund is a non-profit based in Washington, DC. It has field offices in Ghana, Kenya, and India. Their mission is to build and support high-impact enterprises that provide sustainable economic opportunities to thousands of people at the base of the economic pyramid...
- Root Capital *
- Micro Invest in Real Estate *
Worldwide
- Africa Now
- Heifer InternationalHeifer InternationalHeifer International is a global nonprofit with the goal of ending poverty and hunger in a sustainable fashion. Established in 1944, Heifer International gives out gifts of livestock, seeds and trees and extensive training to those in need...
- Opportunity International *
See also
- Community development financial institutionCommunity development financial institutionCommunity development financial institutions are financial institutions which provide credit and financial services to underserved markets and populations, primarily in the USA but also in the UK...
- Socially responsible investingSocially responsible investingSocially responsible investing , also known as sustainable, socially conscious, or ethical investing, describes an investment strategy which seeks to consider both financial return and social good....
- Ethical bankingEthical bankingAn ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. Ethical banks are part of a larger societal movement toward more social and environmental responsibility in the financial...
- MicrofinanceMicrofinanceMicrofinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....