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Michelle Erdenesanaa headshot

The Investment Tech Helping Financial Institutions on the Front Lines of Economic Justice

CNote is an investment technology platform connecting investors with community development financial institutions (CDFIs) that provide services to underserved communities. 
A plant sprouting from a pile of coins.

(Image: micheile henderson/Unsplash) 

“You are on the front lines of economic justice every day. How do we drive more opportunity to you?” That's the question Catherine Berman and Yuliya Tarasava asked community finance professionals after decades of experience working in mainstream finance.

In 2016, they founded CNote, an investment technology platform that seamlessly connects community development financial institutions (CDFIs) with investors. CDFIs are private, often hyper-local and mission-driven institutions that provide financial services to underserved communities. 

In the third quarter of 2023, the top 10 percent of earners held almost 67 percent of total wealth in the United States. As the U.S. income inequality gap widens, communities of color, women, and minority groups continue to face systemic barriers to credit, affordable housing, and business ownership and growth. CDFIs — which include banks, credit unions, loan funds (most of which are nonprofit), and venture capital funds — exist to support local economies and combat these disparities with creative solutions.

Impact-driven banks and credit unions represent almost $700 billion in assets in the U.S. By lending primarily to underserved communities, they enable homeownership, small business ownership, green financing, natural disaster lending, and access to affordable banking services.

The 1994 Riegle Community Development and Regulatory Improvement Act established the Community Development Financial Institutions Fund, defining requirements for CDFI status and leveraging federal resources to increase the organizations’ access to capital. Instead of relying on singular sources, community-focused lenders combine private, philanthropic and public funding. By diversifying funds, these institutions can mitigate losses on the funders’ side while leveraging more capital toward community investments. 

But to do so, CDFIs have to get on investors’ radars. Community finance professionals consistently highlight the need for greater visibility and access to capital, Berman told TriplePundit. Streamlining the investment process is a large factor. 

“If I'm a value-aligned foundation, I don't want to spend hours opening up accounts that are administratively hard for me to manage,” Berman said. “If I'm a corporation, I don't want to call up 10 different organizations and gather impact reports to see if any of them are relevant to my investment.”

CNote’s model focuses on simplifying three areas: access, administration and reporting. First, the platform evaluates and selects top-performing CDFIs, low-income-designated credit unions, and minority deposit institutions. The impact evaluation team and automated reporting allow these financial organizations to take on new sources of capital without the heavy burden of reporting that usually comes with working with a diverse set of investors. 

There are various investment options for both individual and institutional investors. CNote’s early adopters were often individuals seeking to support their values through not only purchasing decisions, but also where they store their money, Berman said. 

Last summer, Baltimore-based investment management firm T. Rowe Price announced a $50 million investment in the platform, joining the likes of Apple, Paypal, Mastercard, and Netflix in partnering with CNote to leverage corporate balance sheets for impact. 

Investors have the option for customized deployments, driving capital to specific causes or geographic regions. CNote sees a broad array of impact interests, including racial justice, regional investment, gender issues and climate-friendly banking, Berman said.

The impact stories that CNote shares are countless, from small business owners receiving critical funding, to community land trusts expanding affordable housing, to nonprofits surviving volatile federal funding. At the core of each story are CDFIs and mission-driven deposit platforms enabling opportunities that traditional financial institutions often don’t. Investing capital in these organizations, Berman said, means “supporting a future of finance that is representative and diverse.”

Michelle Erdenesanaa headshot

Michelle is a freelance writer with experience in international nonprofit work, arts and culture writing, and creative copywriting. She is particularly devoted to stories that highlight cultural expansion and our interdependence.

Read more stories by Michelle Erdenesanaa