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Partnerships between Community Development Financial Institutions and Workforce Development Organizations

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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.

Suggested Citation

  • Sarah Miller & Nisha Sutaria & Katherine Townsend, 2022. "Partnerships between Community Development Financial Institutions and Workforce Development Organizations," FRB Atlanta Community and Economic Development Discussion Paper 2022-01, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedacd:99442
    DOI: 10.29338/dp2022-01
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    File URL: https://www.atlantafed.org/-/media/documents/community-development/publications/discussion-papers/2022/01-partnerships-between-community-development-financial-institutions.pdf
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    Keywords

    community development financial institutions; CDFI; workforce development; workforce funding; workforce training; education; loans; financial innovation; workforce finance; community colleges;
    All these keywords.

    JEL classification:

    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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