Improving Quality of Life in New Jersey Through Local Investment

About This Investment 

People most directly affected by systemic barriers and inequities are best positioned to identify the solutions and actions needed to drive change. When community development centers local priorities, such as by investing in place-based community development financial institutions (CDFIs), it can help build local capacity to advance equitable opportunities for all residents to achieve their best health and wellbeing. CDFIs are mission-driven financial institutions that bring together diverse private and public sector investors to create economic opportunity in communities.

This $4 million program-related investment from the Robert Wood Johnson Foundation (RWJF) to the Local Initiatives Support Corporation (LISC) will seed the creation of the New Jersey CDFI Capital Growth Fund (CCG), a program aimed at attracting funding from corporations and financial institutions to invest in small, New Jersey–based CDFIs and similar entities that prioritize hyper-local lending to meet community needs. A broader goal is to build the state’s ecosystem of community development lenders; expand the capacity of small, locally focused organizations; and provide more loans to communities with low incomes. 

Why It Was Needed

Health inequity—unfair differences in health and wellbeing correlated with the uneven distribution of social and economic resources—persists in New Jersey. Neighborhoods play significant roles in influencing people’s health and wellbeing such as through factors including the physical condition of a person’s home; economic stability, affordability, and access to good jobs; and access to parks and greenspace, among others.  

As such, investments in developing and maintaining stable neighborhoods can be a catalyst for healthier, more equitable communities. However, Black and Latino people across New Jersey continue to be disproportionately rejected for loans, discouraged from buying homes in certain places, and more likely to live in racially and economically segregated neighborhoods marked by a lack of investments, food deserts, limited access to transit and good jobs, and environmental challenges.   

Small, locally based New Jersey CDFIs can provide access to capital for communities that have been structurally excluded but have limited reach since most are relatively small and highly specialized to a particular sector or location. These organizations are often overlooked by large-scale national and regional funders. Given their smaller portfolio sizes and the intense competition for capital, these CDFIs may have difficulty accessing affordable loans, financial products, or services.

How It Works

The healthiest community development finance ecosystems support multiple types and sizes of CDFIs that can provide a wide range of products, services, and strategies to the local market. CDFIs are versatile in their ability to finance communities that historically have been excluded from investment and are able to draw on multiple sources of capital from private investors and corporations to philanthropy and government.  

LISC-NJ works to address housing, economic development, family income, and parks and infrastructure. With RWJF’s investment, the CCG Fund will build the capacity of local community development lenders that have a strong commitment to the needs of residents. It will also help establish a program for CDFIs and CDFI-like organizations to leverage public and private funding, including the engagement of key investors such as corporations and philanthropic partners entering the impact investment space.  

About the Borrower

Created in 1979 by the Ford Foundation, Local Initiatives Support Corporation (LISC) and its affiliates support community development projects through grants, loans, and equity investments, as well as technical and management assistance. It has offices in nearly 40 cities and works across 2,100 rural counties in 44 states. LISC has invested $24 billion in communities, leveraging $69 billion to support the creation of 436,000 affordable homes and apartments and 74.4 million square feet of retail and community facilities.   

Since 1986, LISC New Jersey has collaborated with community-based organizations in Newark and the surrounding region, invested more than $386 million in Greater Newark, and contributed to the production of more than 2,600 affordable homes and apartments and more than 820,000 square feet of commercial space.   

Examples Of Community Development Lenders:

Greater Newark Enterprises Corp.

Greater Newark Enterprises Corporation (GNEC) is a Newark, N.J.–based nonprofit Community Development Financial Institution (CDFI). GNEC serves entrepreneurs from N.J. communities that are underserved and underbanked through the provision of loans, coaching, and consulting. In 2022 GNEC provided a total of $1.1 million in microloans, distributed among 52 entrepreneurs.

Cumberland County Improvement Authority

The Cumberland County Improvement Authority’s mission is to assist with development, financing, and integration of projects, strategies, and initiatives integral to the economic and environmental sustainability of Cumberland County. It has served as the county’s economic development and redevelopment entity since 2015, offering programs and services ranging from financing to property management.