Key Benefits of a Mission Aligned Nonprofit Affiliate

1. Expand Access to Capital – A nonprofit affiliate can attract philanthropic funding, government grants, and program-related investments (PRIs) that are not available to for-profit banks.
2. Enhance Mission-Driven Impact – A nonprofit can provide financial literacy programs, technical assistance, and other community-focused initiatives that align with your CDFI’s mission.
3. Increase Lending Capacity – nonprofits can offer expanded lending opportunities which banks may be unable to because of strict lending parameters and regulatory requirements.
4. Mitigate Risk - Nonprofit affiliates can offer subordinate financing, allowing your bank to increase lending opportunities while managing risk.
5. Diversify Revenue Streams – Generate new funding sources beyond traditional banking, helping to sustain and grow community impact initiatives.
6. Strengthen Community Partnerships – A nonprofit entity can facilitate deeper collaboration with local governments, foundations, and other mission-aligned organizations.
7. Enhance CRA Performance – Activities conducted through a nonprofit affiliate can contribute to Community Reinvestment Act (CRA) compliance and improve assessment ratings.
8. Access Tax-Exempt Benefits – As a 501(c)(3), the nonprofit can receive tax-deductible donations and reduce operating costs through tax-exempt status.
9. Develop Innovative Financial Products & Services – A nonprofit affiliate can pilot new financial products that serve underserved markets without the same regulatory constraints as a bank.
10. Maximize ECIP Divestiture Benefits – Leverage the flexibility of a nonprofit to fully utilize the new ECIP divestiture rule.
11. Create a Sustainable Legacy – Establishing a nonprofit alongside your CDFI bank ensures long-term community impact, regardless of changes in banking regulations or leadership.
12. Attract High-Caliber Employees – Nonprofits can attract mission-orientated individuals, accessing an untapped labor market, who may transition to your CDFI bank once exposed to mission-driven lending.