By Ellie Winninghoff

Community development finance institutions, or CDFIs, comprise a virtually invisible $30 billion industry of community banks, credit unions, loan funds and venture capital funds that serve minorities and low-income people. And they also are pioneering the financing of healthy food systems.

Among them are The Reinvestment Fund of Philadelphia and Coastal Enterprises Inc. of Wiscasset, Maine, which let individuals make investments that help finance sustainable agriculture and provide access to healthy food in poor neighborhoods.

As responsible lenders (they usually offer technical assistance along with their loans), CDFIs are a quiet success story. According to the Opportunity Finance Network (OFN), the CDFI trade group, the repayment rate on CDFI loans during the past 30 years is 98.6%. Historically, they focused on affordable housing, childcare, community health facilities and small business lending. Now, with funding from the Treasury Department's CDFI fund, they are in the midst of building industry-wide capacity to support sustainable agriculture and access to healthy and affordable food.

"If you can get a grocery store into a community that doesn't have one, or if you can expand a corner store [to include fruits and vegetables,] or if you can finance a food hub that connects farmers to institutional buyers of agricultural products like hospitals and schools, you can have a big impact on the economic being of people," says Pam Porter, EVP, Strategic Consulting, at the OFN. "It provides jobs and income, and it stabilizes property values. And it addresses a major public health crisis."

The health crisis she is referring to, of course, is the obesity epidemic that's having an economic impact on the country's health care system. Public health officials and economic experts are acknowledging the link between income and obesity. At a conference in Seattle last week, David Erickson, director of the Center for Community Development at the Federal Reserve of San Francisco, showed two maps of Los Angeles--one that displayed obesity rates by neighborhood; the other, income level.

"They are the same map," he said, illustrating the fact that a person's health is directly correlated with where she lives. "Access to health care will not improve a person's health," he said. "The zip code is more important than the genetic code."

Grocery Gap
One reason cited for the correlation between low income and poor health is the lack of presence of supermarkets. According to Patricia Smith, senior policy advisor at The Reinvestment Fund (TRF), an astonishing 23 million Americans live in food deserts characterized as low-income areas where healthy food is not available.

From the food retailer's perspective, though, there are obstacles to setting up shop in low-income areas such as the difficulty of keeping stores open in these neighborhoods, land assembly, environmental remediation, pre-development costs, and access to financing (many food retailers are small businesses).

TRF, with the help of seed financing from the state of Pennsylvania and support from the likes of Bank of America (which invests $1 billion per year in CDFIs, mostly as part of its Community Reinvestment Act obligation), created the Pennsylvania Fresh Food Financing Initiative in 2004.