In 2006, IFF – a community development financial institution (CDFI) formerly known as the Illinois Facilities Fund – made a strategic decision to expand its operations from Illinois to five markets in four neighboring states.
This case focuses on the expansion into three places: Milwaukee, St. Louis, and Indianapolis. IFF’s expansion offers a window into a set of key questions about a city’s community investment climate as well as how community investment intermediaries such as CDFIs can enter into and engage local communities. These include:
-How does a CDFI prepare to enter a new market? -What does it take for a CDFI to successfully enter a new market? -What factors make a market ripe for entry by an “outsider” CDFI? -What can leaders in places do to support the success of an entering CDFI?
The case draws on interviews with and material from IFF together with a series of interviews with investors, their investees, community advocates, and the philanthropic and public sectors, in each of the three expansion markets. We identify lessons from the IFF experience that may be useful for CDFIs when considering where and when it makes sense to increase their geographic reach by expanding into new areas. We also share insights about how leaders in a city can support a CDFI’s expansion into their market.
This case study has emerged from a body of research on the capacity of places to effectively draw private investment to public purpose in low-income communities. We call this body of work capital absorption capacity for community investment.