How the NCRC’s Community Development Fund Fosters Innovation

Diversity increases innovation: The NCRC Community Development Fund has just been named to Fast Company’s Annual List of the World’s Most Innovative Companies for 2022, placing ninth in the “Small and Mighty” category. Portada talked to Marissa Calderon, Executive Director, NCRC Community Development Fund, Inc. and Chief of Community Finance & Mobility, National Community Reinvestment Coalition, to understand the key elements that foster innovation in her organization. 

The NCRC Community Development Fund (NCRC CDF) is a U.S. Treasury certified Community Development Financial Institution (CDFI) that works to increase access to homeownership and support small businesses for underserved populations. Marissa Calderon and her team manage an approximately US$ 60 million lending portfolio with the the objective of providing affordable credit for homeownership and small business loans to underserved populations. A sizable segment of the Hispanic population is underserved. Ironically, while Latinos are the most prolific entrepreneurial cohort in America, generating over 80% of net new business, they often don’t have access to capital.

Diversity Increases Innovation

The NCRC CDF’s success is reflective of the diversity of its team members. According to Calderon, “the cultural competency of the team at the Community Development Fund is reflective of our borrowers. Both our team and our borrowers have gone through similar experiences.  If we are not reflective of our borrowers, we don’t succeed. In fact, we tell our borrowers: We see you because we are you.”

The pandemic impact has been acutely felt by Black-, Latino- and Woman-owned businesses, and NCRC’s CDF rose to the challenge, flexing its muscle to support and deploy US $17 million in grants, PPP loans, low-interest rate capital, and small business investments at a time when these entrepreneurs needed it most.

Calderon mentions that strong connections with organizations in housing development and business funding help the NCRC CDF achieve its mission. These organizations include the  Stanford Latino Entrepreneurship Initiative and the  Latino Business Action Network.
Calderon mentions that NCRC CDF

borrowers are the greatest source of referrals from a business perspective as 60% of referrals come from borrowers. On the funding side, the lending portfolio is funded through a variety of different sources including commercial banks, federal government and philanthropic sources. According to Calderon, to “tell the story” of how the NCRC CDF expands access to affordable homeownership and helps Black-, Brown-, and woman-owned businesses thrive is crucial in order to get new funding commitments: “87% of our loans went to black and Latino entrepreneurs. 48% of loans went to women. Major banks ask us how we are able to do that.”

Diversity is not only a moral objective and a business imperative; Diversity also increases innovation. Diversity within organizations is increasingly seen as a competitive success factor. A growing body of evidence indicates that heterogeneous firms perform better than their homogenous counterparts. Research by Deloitte shows that organizations with inclusive cultures are six times more innovative and agile, eight times as likely to achieve better business results, and twice as likely to meet or exceed financial targets than organizations with less diversity in the workplace.

Leveraging Technology with a Human Component

Calderon emphasizes that she and her team members are very intentional on how they spend their time. “Part of what helps us accomplish our purpose is to be tech enabled. We intentionally leverage technology with a human component.” As examples of how they leverage technology she cites the automation process to collect data through online loan applications with the human component being represented by a loan officer. “That is how we were able to deploy during PPP”, she says.

Calderon and her team Identify points of friction with borrowers in the process of serving them. For instance, a borrower may not own a home computer, so the NCRC CDF needs to make sure that the processes are mobile first and there is no requirement to print any documents.

It is important to Calderon to foster a culture of creativity and innovation in her team. “They are all youthful and digital natives. Also, just because we have done something for a long time does not mean it is the only thing to do,” she concludes.