PROVIDENCE – The lack of a Rhode Island-based community-development entity has made it harder for low-income communities to access private capital and leverage federal tax incentives.
This was among the findings in a new report outlining a long-term economic-development plan to grow the state’s economy. The report, authored by New Localism Advisors founder Bruce Katz and commissioned by the R.I. Commerce Corp., listed 17 recommendations, including that Rhode Island should incorporate a CDE or community-development finance institution.
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While Rhode Island does have a local affiliate of the federal Local Initiatives Support Corp., a state-specific CDE or CDFI could play a much broader role in investing in small businesses and entrepreneurs not served by traditional financial institutions, Katz said.
That doesn’t mean traditional financial institutions can’t also benefit, though. Katz emphasized that a local CDFI was complementary to bank activity, letting banks fulfill some of their Community Reinvestment Act obligations by using CDFIs as retail outlets.
To jump-start creation of a local CDFI, the report recommended establishing an implementation team, including community representatives, banks, insurance companies and pension funds, to study how best to adapt models used in other states for Rhode Island.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
