The cdfa has welcomed a new government report that calls for continued public sector support for the UK’s community development finance institutions (CDFIs).
The Evaluation of Community Development Finance Institutions, carried out by the GHK research consultancy, finds that the UK’s CDFIs play a significant role in helping businesses and social enterprises around the country to access finance that would otherwise not be available to them. It calculates that for every £1 invested by the Government, CDFIs have created a further £3.57 at local community level. They have also safeguarded £5 for every £1 invested.
Bernie Morgan, Chief Executive of the cdfa, said: “This report is a ringing endorsement of the vital services CDFIs provide to those who have been frozen out by high street banks. It gives solid evidence that the Government needs to continue, and indeed strengthen, the support it gives to the CDFI sector. We look forward to following up the report’s recommendations in partnership with BIS, our members and other stakeholders.”
The report evaluates the activities of enterprise-lending CDFIs but not personal lending. The cdfa had extensive input into the evaluation, which based its calculations on figures from our Inside Out survey of members.
The report gives five key recommendations:
• Continue public sector support to CDFIs;
• Develop substantial intervention rationales and associated evaluation frameworks for the different (enterprise) policy objectives delivered by CDFI activity;
• Undertake a review of the range of current delivery mechanisms targeted at the CDFI sector (CITR, EFG, Solutions for Business, regulatory change, etc) to fully gauge their relative contribution in supporting the sector to achieve the Government’s policy objectives;
• The sector, led by the cdfa, should continue to support the development of social impact methodologies in partnership with national social value initiatives and to evidence the full value of its activities;
• Promote further initiatives to create a fit for purpose CDFI referral system (whether within the new Solutions for Business service offer, and/or related initiatives for a universal referral system with banks).
To read the full report, go to www.bis.gov.uk/assets/biscore/enterprise/docs/10-814-evaluation-community-development-finance-institutions
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