1. October 16, 2012 Governor’s Housing Conference What's a CDFI and How Are They Helping Communities Access Capital Tracy Kartye The Annie E. Casey Foundation

2. Annie E. Casey Foundation Established in 1948 by founder of UPS Mission is to build better futures for vulnerable children and their families Geographic and programmatic initiatives  Center for Community and Economic Opportunity  Family centered community change  Center for Effective Family Services and Systems  Juvenile Detention Alternatives, Inc. 2 2

3. Investment Approach and Philosophy Complement grantmaking and provide additional philanthropic tool  Double bottom line – financial and social return  Financing gap $125 million endowment allocation  Different risk profile from many foundations  Place based and thematic investments Flexible terms but invest through financial intermediaries Leverage/co-investment requirement  Influence other investors and share risk Systems to track financial and social return 3 3

4. Social Investment Definitions PRIs only category with legal IRS definition  Primarily to achieve program goals  Terms must be below market on a risk-adjusted basis  Does not support lobbying  Must be investigated, documented and monitored 4 4 Endowment Investments Grants Program Related Investments Financial Returns Programmatic Returns

5. Benefits of Financial Intermediaries Increased program impact  Leverage co-investment and revolve for multiple projects  Provide technical assistance to local nonprofits Reduced Risk  Diversification in multiple projects  Eliminate direct project risk Lasting infrastructure Efficient operations for foundations and end users  Single transaction vs. multiple one-off  Reduces transaction costs  Shortens underwriting period 5 5

6. Overall Results Investment Summary $102MM invested $45MM in guarantees 7 foundation program areas 14 CDFIs 4.9% one-year financial return $690MM in direct co-investment $150MM leveraged via guarantees Significant indirect public and private leverage at project level 6 6 Selected Social Impact Cumulative since Investment % Target Achieved Jobs created7,631178% Small businesses financed 16354% Affordable housing units 2,38946% Child care slots329188% Car loans3,53310%

7. Example: East Baltimore Invested $100MM to support East Baltimore revitalization  Loans  Loan guarantees Co-investment / leverage  New Markets Tax Credits  Federal, state and local government  Banks, foundations, Johns Hopkins Highlight: The Reinvestment Fund  $5MM, 10-year 2% loan  Finance development projects in or adjacent to EBDI footprint 7

8. Baltimore CDFI Capacity Opportunity Finance Network  National network of CDFIs Conduct Baltimore and Atlanta scans  Assess financing needs and gaps  Assess lending sectors and capacity of Baltimore CDFIs  Identify CDFIs in surrounding states and regions that might expand to meet identified financing needs in Baltimore 8

9. OFN Stakeholder Interview Findings Philanthropic leaders  Better understanding of partnership potential  Examples of effective collaboration Potential CDFI borrowers  Viewed CDFIs as transactional dollars source not as community development partners CDFIs interested in  Developing partnerships  Working with others to source and fund deals  Offering joint programming 9

10. Common Interview Themes Need for TA especially among small / micro businesses Human capital development critical to economic development Financing needs:  Fresh foods  Green / energy efficiency  Small / medium business lending  Charter schools Key institutional players drive economic demand for neighborhood “amenity” businesses 10

11. CDFI Landscape Findings More CDFIs than expected, but little known CDFIs with capital constraints could be valuable resource / loan servicer partners CDFIs increasingly interested in expanding operations  Regional CDFIs expanding to Baltimore  Regulated CDFIs adding community-based lending / TA New tools could be beneficial to collaboration NMTC presents partnership opportunities 11