By Tamra Thetford, VP of Impact Evaluation
CNote engages with CDFI Loan Funds in impact diligence as part of CNote’s fixed income investment underwriting process. The impact diligence process allows CNote to learn about loan funds’ impact measurement and management practices. The following highlights the work the Cooperative Fund of the Northeast (CFNE) has done to measure and improve their technical assistance services.
The community finance industry is built around making capital accessible and affordable for people and communities that have historically been denied safe and affordable capital access. Community finance is focused first and foremost on capital, however an often overlooked companion is the provision of non-financial “technical assistance” to underserved borrowers. Technical assistance (TA) is a broad category that can include everything from:
- a loan officer providing help to a potential borrower to complete a loan application,
- to financial counseling to help someone understand the steps they need to take to improve their credit to be able to qualify for a loan,
- to training for entrepreneurs on successful business marketing strategies.
Because the forms of technical assistance that mission-driven lenders provide vary so dramatically, the industry has not developed many standard impact measures for TA beyond indicators such as the number of people receiving technical assistance services and the number of hours of TA provided. These metrics tell an organization what they did but not what effect the work had, what changed, or how effective the TA was.
How do mission-driven lenders identify metrics that help them understand if they are creating the change they expect? The first step is starting with the goal, or the intended impact, not the metrics.
Imagine you are making a New Year’s resolution to improve your fitness. Should you track the number of bicep curls you did, the number of days you went to the gym in a month, or the decrease in your resting heart rate from when you started? It’s impossible to select the right metrics without being clear about your fitness goals. Mission-driven lenders need to go through the same process in order to identify metrics that provide useful data to help them assess whether or not they are having the impact they expect.
Cooperative Fund of the Northeast (CFNE), used this type of a process when they created their “TA Change Model.” CFNE invests in cooperatives, community oriented nonprofits, and worked-owned businesses in New England and New York. In addition to financing they provide individual and group-oriented technical assistance to potential borrowers. CFNE is committed to providing Black, Indigenous, and People of Color (BIPOC) communities equitable opportunities to form, fund, and operate successful cooperatives and is working to increase the representation and success of BIPOC co-ops.
With these long term goals in mind, CFNE hypothesized the outcomes, or the things they wanted to change with their different types of technical assistance. For instance, for one-on-one assistance provided to BIPOC co-ops, CFNE hypothesized that BIPOC co-op applications would be strengthened, the underwriting process would be less burdensome to applicants, and this would lead to more successful applications from BIPOC coops. As Carolyn Edsall-Vetter, CFNE’s Program Manager says, “We initiated our TA program as part of CFNE’s commitment to racial justice. We developed the TA Change Model to help us keep racial equity at the center by creating a concrete picture of what success would look like, and a map of activities and outcomes that would get us there. Typical economic development metrics like jobs created and hours of service provided don’t measure sustainable, long-term change. And in fact, while we must collect this sort of data, centering such short-term, quantitative measures can undermine our support of clients’ attempts to build successful, sustainable cooperatives. So, using an impact model helps us to see both the trees and the broader forest.”
Focusing on just this one piece of CFNE’s TA Change Model could reveal relevant metrics at each stage of the model:
| Activity | Short-Term Outcome | Medium-Term Outcome | Long-Term Outcome | Intended Impact |
| Direct 1:1 TA to BIPOC co-ops | Strengthened applicationsLess burdensome underwriting process | Increase in successful applications from BIPOC co-ops | Increase in BIPOC co-op representation in the portfolio | BIPOC communities have equitable opportunities to form, fund, and operate successful cooperatives |
| # of hours of TA provided per BIPOC co-op | Reduced # of follow-up requests for more information during underwriting process | Change in # of applications from BIPOC co-ops | Change in % of BIPOC co-ops in portfolio (by # and $) |
CFNE’s TA Change Model is a type of impact model (also referred to as a logic model or theory of change) which is an important tool for articulating the impact of community financial institutions. Not only does the process of creating the model help institutions get specific about what they’re trying to change and what problems they’re trying to solve in the communities they serve, it helps institutions identify metrics that help them understand if they are meeting their impact goals or not.
Impact models are most commonly known to map out intended impact at an institutional level, but they can be used, as CFNE’s example shows, to articulate why particular products and services are being provided. These specific impact models also have the benefit of typically being designed for internal purposes rather than external sharing. Product-specific impact models can help teams hypothesize impact they expect to come from a particular product or service, surface agreement and disagreement across teams, and identify improvements that need to be made to reach expected outcomes. Importantly, they can help organizations learn and improve their own work over time.
Reviewing the results of a recent evaluation CFNE conducted, they noted that while the program had increased BIPOC representation in the portfolio, current levels of TA were not sufficient to overcome the challenges inherent in starting a new business. Carolyn explains, “This helped us to realize that expanding our culturally competent TA capacity was only one piece of the puzzle of overcoming racialized barriers to ownership. If we wanted members of racialized communities to reap all of the long-term benefits of operating successful cooperatives we would need to expand access to more stable and profitable businesses through strategies like co-op conversions and ownership through acquisition.” With this realization, CFNE has shifted some Learning Team resources to build out the Northeast Transition Initiative, a collaboration which seeks to build and support a conversion pipeline of businesses with significant BIPOC workforces.
Tamra Thetford is Vice President of Impact Evaluation at CNote, a women-led technology platform that provides corporations, institutions, and individuals a simple, effective way to invest in under-resourced communities at scale. A community finance industry veteran with more than 25 years of experience, Thetford comes to CNote after leading impact data collection and analysis work at Justine Petersen Housing and Reinvestment Corporation and the Aspen Institute.
