April 24, 2014
Automated Financial Reporting for CDFIs Launched
by Robert Kropp
The CDFI Assessment and Ratings System developed by CARS allows community development financial
institutions to share quarterly performance data with their investors.
In 2004, the Opportunity Finance
Network (OFN), a national network of community development financial institutions (CDFIs),
launched the CDFI Assessment and Ratings System (CARS) to improve investor confidence by promoting
industry-wide performance standards for CDFIs. In 2012, CARS Inc. became an independent
organization, stating in a press release at the time that its new products and services will make
“it the only independent organization that offers in-depth insight into CDFI impact and financial
Last week, CARS announced the launch of a call reporting system through which CDFIs will share quarterly
performance data with their investors.
“Previously, investors lacked the quarterly,
standardized financial and impact data they need to understand individual CDFI and industry
performance,” CARS stated.
That increased transparency was necessary for the continued
growth of the CDFI industry was underscored by a US
SIF report published in 2012, which noted a number of barriers impeding that growth: “the
relatively low awareness of community investment options, a shortage of products, low returns or
the perception of low returns, the perception of high risk, the manual processing and reporting
required for non-standard investment vehicles, limited liquidity and the fact that community
investing products generate low or no income for advisors,” the report stated. “Additionally,
interviews revealed an increasing concern about regulatory constraints.”
report continued, “awareness of and demand for community investment in depository institutions is
as high as it has ever been.”
The call reporting system developed by CARS will “will
streamline investors' portfolio management, while alleviating the need for CDFIs to report
financial performance in a variety of formats to many investors,” CARS stated. “Now CDFIs can
report into one centralized database, similar to the call report system used by regulated
depository institutions. It will also give new investor entrants, such as investment advisors,
access to the type of Wall Street-quality data to which they are accustomed.”
announced that two influential foundations—the Calvert Foundation and the Annie E. Casey
Foundation—are already using the system to monitor their CDFI investments.
Foundation is a firm believer in the value of this tool for sharing CDFI impact and performance
data with current and potential investors," said Catherine Godschalk, VP of Investments at Calvert
Development of the call reporting system was aided by more than $1.5 million
in grant funding by the Citi Foundation.