Community Development: A Survey of CDFI Organizations' Use of Performance
Measurement (Letter Report, 08/25/98, GAO/RCED-98-255).

Pursuant to a congressional request, GAO provided information on the
general use of performance measurement by community development
financial institutions (CDFI), focusing on the: (1) characteristics of
the 623 CDFI organizations that responded to GAO's survey; and (2)
extent to which they reported using performance measurement to assess
their progress toward their goals.

GAO noted that: (1) of the CDFIs that responded to GAO's survey, about
70 percent have been in existence for more than 6 years, and about 74
percent have less than $5 million in assets in their loan and/or
investment portfolios; (2) approximately 88 percent of the respondents
indicated that they provide lending services for such areas as community
development, housing, and/or small businesses, while about 20 percent
reported providing equity capital for businesses; (3) the respondents
also reported that they target their services to specific populations,
such as low-income and moderate-income persons, members of minority
groups, and women; (4) the characteristics reported by CDFIs that had
been certified by the Fund differed to some extent from those reported
by noncertified CDFIs; (5) the CDFIs also reported using several key
elements of performance measurement, including goals, measures, business
or strategic plans, and program evaluations; (6) six general community
or economic development goals were identified as primary by over half of
the respondents; (7) helping to revitalize a targeted community was the
most commonly selected community development goal; it was the only such
goal selected by a majority of the respondents as primary for their
organization; (8) in addition, at least three specific goals were
identified by over half of the respondents for each type of service they
provide; (9) the most frequently reported goals for each of the
financial services provided were providing affordable services,
providing affordable loans and retaining or expanding existing
businesses; (10) more important, respondents reported measuring both
activities and accomplishments to assess their progress toward their
specific goals; (11) for instance, four activity measures were
identified as most important for assessing progress by at least 56
percent of the respondents providing lending services, and four
accomplishment measures were identified as most important by at least 53
percent of these respondents; (12) these activity measures included the
number and dollar amount of their loans and the number of borrowers;
(13) the number of borrowers performing successfully on existing loans
was the most frequently reported measure of lending accomplishments;
(14) additionally, the respondents reported maintaining a variety of
operational statistics to help assess their progress; and (15) almost 90
percent reported having either a business or a strategic plan, and about
56 percent reported that an evaluation had been conducted, either
internally or externally, to measure the success or impact of their

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-98-255
     TITLE:  Community Development: A Survey of CDFI Organizations' Use 
             of Performance Measurement
      DATE:  08/25/98
   SUBJECT:  Community development
             Strategic planning
             Lending institutions
             Economically depressed areas
             Funds management
             Economic development
             Program evaluation
             Surveys
IDENTIFIER:  Community Development Financial Institutions Fund
             Bank Enterprise Award Program
             
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Cover
================================================================ COVER


Report to Congressional Requesters

August 1998

COMMUNITY DEVELOPMENT - A SURVEY
OF CDFI ORGANIZATIONS' USE OF
PERFORMANCE MEASUREMENT

GAO/RCED-98-255

Survey of CDFI Organizations

(385748


Abbreviations
=============================================================== ABBREV

  CDFI - community development financial institutions
  BEA - Bank Enterprise Award

Letter
=============================================================== LETTER


B-280785

letter date goes here


Congressional Committees

Access to credit and investment capital is essential for creating and
retaining jobs, developing affordable housing, revitalizing
neighborhoods, and promoting the development and growth of small
businesses.  In economically distressed communities, where access to
credit and investment capital through conventional sources is often
limited, private for-profit and nonprofit community development
financial institutions (CDFI), such as nonprofit loan funds and
community development credit unions, provide lending and investment
services.  Recognizing the proven ability of CDFIs to identify and
respond to communities' financial needs, the Congress, in 1994,
created the CDFI Fund\1

to support investment in and assistance to CDFIs.  The Fund's overall
mission is to promote economic revitalization and community
development, primarily through two programs, the CDFI and Bank
Enterprise Award (BEA) programs:  The CDFI program provides financing
and technical assistance to CDFIs, while the BEA program rewards
banks and thrifts for providing similar services to CDFIs and
economically distressed communities. 

Responding to a mandate in the 1994 authorizing legislation, we
evaluated the performance of the Fund by focusing on the Fund's
development of performance measurement during the first round of
awards, made in 1996, in the CDFI and BEA programs.  The results of
this evaluation appear in our report Community Development:  CDFI
Fund Can Improve Its Systems to Measure, Monitor, and Evaluate
Awardees' Performance (GAO/RCED-98-225, July 15, 1998) and in
testimony before the Congress.\2

To describe the general use of performance measurement by CDFI
organizations, we surveyed 925 such organizations that were members
of a national CDFI trade organization, had applied to the CDFI Fund
for an award, or had been certified by the Fund as a CDFI.\3 This
report presents the results of our survey, describing the
characteristics of the 623 CDFI organizations that responded to the
survey and discussing the extent to which they reported using
performance measurement to assess their progress toward their goals. 


--------------------
\1 Title I, subtitle A, of the Riegle Community Development and
Regulatory Improvement Act of 1994 (P.L.  103-325, Sept.  23, 1994). 

\2 Community Development:  Early Results of the Community Development
Financial Institutions Fund's Programs (GAO/T-RCED-98-198, May 13,
1998; GAO/T-RCED-98-229, June 17, 1998). 

\3 The Fund's certification signifies that a CDFI is eligible to
participate in the CDFI program, but it does not constitute an
opinion on the CDFI's financial viability or indicate that the CDFI
will receive an award from the Fund.  Noncertified CDFIs include
organizations that, at the time of our survey, had not sought or were
in the process of seeking certification from the Fund. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Of the CDFIs that responded to our survey, about 70 percent have been
in existence for more than 6 years, and about 74 percent have less
than $5 million in assets in their loan and/or investment portfolios. 
Approximately 88 percent of the respondents indicated that they
provide lending services for such areas as community development,
housing, and/or small businesses, while about 20 percent reported
providing equity capital for businesses.  The respondents also
reported that they target their services to specific populations,
such as low-income and moderate-income persons, members of minority
groups, and women.  The characteristics reported by CDFIs that had
been certified by the Fund differed to some extent from those
reported by noncertified CDFIs.  For example, the certified CDFIs
tended to be older and to have larger loan portfolios than the
noncertified CDFIs. 

The CDFIs also reported using several key elements of performance
measurement, including goals, measures, business or strategic plans,
and program evaluations.  Six general community or economic
development goals were identified as primary by over half of the
respondents.\4 Helping to revitalize a targeted community was the
most commonly selected community development goal; furthermore, it
was the only such goal selected by a majority of the respondents as
primary for their organization.  In addition, at least three specific
goals were identified by over half of the respondents for each type
of service\5 they provide.  The most frequently reported goals for
each of the financial services provided were providing affordable
services (nonlending), providing affordable loans (lending) and
retaining or expanding existing businesses (capital investment). 
More important, respondents reported measuring both activities (such
as the number of loans made) and accomplishments (such as the net
number of jobs created or retained) to assess their progress toward
their specific goals.  For instance, four activity measures were
identified as most important for assessing progress by at least 56
percent of the respondents providing lending services, and four
accomplishment measures were identified as most important by at least
53 percent of these respondents.  These activity measures included
the number and dollar amount of their loans and the number of
borrowers.  The number of borrowers performing successfully on
existing loans was the most frequently reported measure of lending
accomplishments.  Additionally, the respondents reported maintaining
a variety of operational statistics to help assess their progress. 
Almost 90 percent reported having either a business or a strategic
plan, and about 56 percent reported that an evaluation had been
conducted, either internally or externally, to measure the success or
impact of their services. 

Appendix I provides further analyses of the performance goals and
measures reported by the CDFIs.  A more detailed discussion of our
methodology appears in appendix II.  Our survey instrument and the
aggregated responses to it can be found in appendix III. 


--------------------
\4 For each survey question pertaining to goals and measures,
respondents were instructed to select all of the choices that applied
to their organization.  Therefore, these six goals may not have been
selected by the same set of CDFIs.  This is the case wherever the
percentage of responses concerning goals and measures is presented. 

\5 Our survey asked the CDFIs for information about their goals and
measures for four types of services--nonlending, lending, capital
investment, and technical assistance and training. 


   BACKGROUND
------------------------------------------------------------ Letter :2

CDFIs are private profit-making and nonprofit financial institutions
that provide financial services to distressed geographic areas and
populations that are underserved by conventional lenders and
investors.  The following are common types of CDFI organizations:\6

Community Development Bank:  A community development organization
centered around a bank or savings and loan that combines the
structure and expertise of a profit-making financial institution with
a commitment to a distressed place or population. 

Community Development Credit Union:  A financial cooperative owned
and operated by lower-income persons.  It provides financial services
to its members, including savings and checking accounts and loans for
homes, cars, or other personal needs. 

Nonprofit Community Development Loan Fund:  A financial intermediary
that raises capital from individuals and institutional investors,
churches, businesses, and foundations, at below-market rates, and
relends these funds primarily to community-based organizations and
businesses and nonprofit developers in low-income urban or rural
communities. 

Microenterprise Loan Fund:  An entity that receives funding from a
private or nonprofit foundation, government agency, or private bank
and generally provides technical assistance and loans, ranging from
as little as $500 to $10,000, to start up or expand self-help
business opportunities for low-income individuals. 

Community Development Venture Capital Fund:  An entity that provides
managerial support, along with equity and debt with equity features,
to businesses (typically manufacturing based) located in low-income
communities. 

Although two types of CDFIs--community development banks and credit
unions--are regulated and insured by the Federal Deposit Insurance
Corporation and the National Credit Union Share Insurance Fund,
respectively, the remaining types of CDFIs are generally unregulated. 

The CDFI Fund, located within the Department of the Treasury,
administers the CDFI and BEA programs, which provide financial and
technical assistance to CDFIs either directly or through conventional
banks and thrifts.\7 The Fund provides this assistance to enhance the
CDFIs' ability to make loans and investments and to provide services
for economically distressed communities, targeted populations, or
both.  Before receiving any financial assistance through the CDFI
program, a CDFI must be certified by the Fund.  The Fund certifies a
CDFI after determining, among other things, that it has a primary
mission of promoting community development, its predominant business
activity is lending or investing in development, and it serves (an)
economically distressed investment area(s) or targeted population(s). 
While the program's regulations allow an uncertified CDFI to apply
and be selected for an award, the CDFI will not receive financial
assistance until it has been certified.  The Fund requires CDFIs to
be recertified every 2 years.  As of March 1998, the Fund had
certified 205 CDFIs.  The total number of CDFIs nationwide that could
be certified by the Fund is unknown.  Of the 623 CDFIs that responded
to our survey, 144, or about 23 percent, reported being certified by
the Fund. 

Performance measurement is a management tool that is used in both the
private and the public sectors to track the progress of an
organization toward its objectives.  The federal government's
standards for performance measurement were established in the
Government Performance and Results Act of 1993, referred to as the
Results Act.  The act's provisions apply to federal executive
agencies, including the Department of the Treasury, of which the CDFI
Fund is a part.  The act and the Office of Management and Budget's
implementing guidance describe the key elements of performance
measurement, which include strategic plans, performance goals and
measures, and program evaluations.  Strategic plans are a tool for
organizations to use in setting their priorities and allocating their
resources in accordance with these priorities.  Performance goals are
targeted levels of performance against which actual achievement can
be compared.  Performance measures are particular values or
characteristics used to measure activities or accomplishments.  While
recognizing that both activity and accomplishment measures are useful
for evaluating performance, the Results Act and its implementing
guidance encourage the use of accomplishment measures. 
Accomplishment measures monitor the effects associated with agencies'
activities, while activity measures simply track agencies' actions. 
Lastly, program evaluations are used to assess the manner and extent
to which organizations achieve their intended objectives.  The
integrated use of these elements, along with others, enables an
organization to assess its progress toward its objectives. 


--------------------
\6 Other types of community-based organizations that may be
considered CDFIs include community development corporations,
community action agencies, neighborhood housing service
organizations, housing loan funds, and small business loan funds. 

\7 The CDFI Fund received appropriations totaling $225 million from
fiscal year 1995 through fiscal year 1998. 


   CDFI FIELD CONSISTS OF DIVERSE
   ORGANIZATIONS
------------------------------------------------------------ Letter :3

The CDFI field, as described in the responses to our survey, consists
of a diverse group of CDFI organizations, dominated by loan funds
(see fig.  1).  Furthermore, about one-third of the respondents
described their organization as a multifaceted entity, performing
more than one type of CDFI financial function.  For example, a
responding organization may have characterized itself as both a
community development corporation and a community development loan
fund. 

   Figure 1:  Types of CDFI
   Organizations:  Characteristics
   of Respondents

   (See figure in printed
   edition.)

Source:  GAO's analysis of survey data. 

Note 1:  Because respondents could select more than one
classification, the percentages total more than 100 percent. 

Note 2:  "Loan funds" includes the categories "community development
loan funds," "housing loan funds," and "small business loan funds."
"Other" includes the category "national intermediaries" and other
types of CDFIs such as community action agencies and faith-based
organizations.  "Banks" includes the categories "community
development bank or bank holding company" and "other banks."

In addition, the field consists of fairly mature organizations with
relatively small loan and/or investment portfolios.  Many of these
CDFIs predate the CDFI Fund; approximately 70 percent of the
respondents indicated that they had been in existence for over 6
years.  In addition, about 74 percent of the respondents indicated
that their loan and/or investment portfolios contained less than $5
million in assets.  Specifically, almost half (47.6 percent) of the
respondents reported total assets in their loan and/or investment
portfolios of less than $1 million, while only about 7 percent of the
respondents reported portfolios of over $20 million (see fig.  2). 

   Figure 2:  Total Assets in
   CDFIs' Loan/Investment
   Portfolios

   (See figure in printed
   edition.)

Source:  GAO's analysis of survey data. 

The primary services reportedly provided by respondents were lending
to individuals (56 percent) and businesses (50 percent), followed by
providing technical assistance to businesses (46 percent) and
training (40 percent).  According to the respondents, the populations
most frequently targeted to receive services were low-income persons
(84 percent), moderate-income persons (60 percent), minorities (57
percent), and women (49 percent). 

About 23 percent of the respondents had been certified by the CDFI
Fund at the time of our survey.  Within each CDFI category, the
certified respondents, when compared with the noncertified
respondents, were more likely to identify themselves as community
development credit unions, community development banks, and/or loan
funds.  The certified CDFIs also tended to be slightly older and to
have larger loan or investment portfolios than the noncertified
CDFIs.  For example, 17 percent of the certified CDFIs reported
having assets in their loan/investment portfolio of over $20 million,
whereas only 4 percent of the noncertified CDFIs reported assets of
such magnitude.  In contrast, only 2 percent of the certified CDFIs
reported assets of less than $100,000, whereas 23 percent of the
noncertified CDFIs reported assets in this range.  Certified CDFIs
also reported providing proportionately more financial services than
their noncertified counterparts.  For instance, certified CDFIs were
more likely than noncertified CDFIs to provide lending services (97
percent compared with 87 percent) and nonlending services to
depositors, shareholders, or members (40 percent compared with 27
percent). 


   CDFIS REPORTED WIDE USE OF
   PERFORMANCE MEASUREMENT
------------------------------------------------------------ Letter :4

The CDFIs reported using many elements of performance
measurement--goals, measures, strategic or business plans, and
program evaluations.  Six general community or economic development
goals were identified by at least 52 percent of the respondents.  The
most frequently reported goals were helping to revitalize a targeted
community and helping to create new jobs.  In addition, at least
three specific goals were identified by a majority of the applicable
respondents for each of the four types of services\8 provided.  For
example, 88 percent of the respondents indicated that they provide
lending services; four primary lending goals were identified by 59
percent or more of these respondents.  These goals included (1)
providing affordable loans, (2) increasing existing access to credit
services, (3) providing a service that was previously unavailable,
and (4) increasing borrowers' financial capacity.  Roughly
three-fifths of the respondents said they provide technical
assistance, training, and/or customer counseling services.  Seven
performance goals--such as improving customers' financial management
or reducing the risk of loans or other investments--were identified
by a majority of these respondents.  While smaller percentages of
respondents reported providing nonlending services (28 percent) and
capital investment services (20 percent), three specific goals for
each of these services--such as providing affordable services and
helping to create new businesses--were identified by a majority of
these respondents. 

Respondents reported that they use performance measures to assess how
well they are meeting their primary goals.  They indicated that they
use measures both for their general community or economic development
goals and for their specific goals for the nonlending, lending,
capital investment, and/or technical assistance services they
provide.  For example, to achieve their economic development goals,
almost 60 percent of the respondents reported measuring the number of
businesses created, retained or expanded, and 52 percent reported
measuring the net number of jobs created or retained.  Similarly, to
assess their progress toward service-specific goals, respondents
frequently indicated that they used both activity and accomplishment
measures.  For instance, four measures were reported as used to track
general lending activities by at least 56 percent of the respondents
providing lending services.  Two such measures include the number,
and total dollar amount, of the loans committed, made, or originated. 
Approximately 95 percent of the respondents providing lending
services reported using at least one accomplishment measure to assess
their performance.  The accomplishment measure reported most
frequently by these respondents was the number of borrowers
performing successfully on existing loans.  Survey respondents also
reported using more quantifiable accomplishment measures.  For
instance, 91 percent of the CDFIs providing lending services
identified at least one quantifiable lending accomplishment measure,
and nearly 60 percent identified three or more such measures.  The
most frequently cited quantifiable lending accomplishment measures
were the number of borrowers who performed successfully on existing
loans, any change in default rates, and any change in delinquency
rates. 

In addition to using performance goals and measures, six operational
measures were also identified by a majority of the CDFIs responding
to our survey to assess how well they were meeting their primary
goals.  These measures include their ability to meet operating
expenses, the amount of their equity or capitalization, the
delinquency and default rates for loans in their portfolio, the size
of their loan and/or investment portfolio, and the training and
expertise of their staff.  Just under half of the respondents
reported tracking the size of their assets.  Half of the respondents
said that they track the net costs of their total program, and at
least 43 percent reported tracking the net costs of their lending and
technical assistance, training, and/or customer counseling services. 

Almost 90 percent of the CDFIs responding to our survey indicated
that they have a strategic or a business plan to guide and assess
their performance, and 42 percent indicated that they update these
plans annually.  About 60 percent reported setting numeric goals for
at least a majority of their activities and accomplishments.  In
addition, at least three groups--the respondent's board of directors;
a foundation or private funding source; and federal, state, and/or
local government agencies--were identified individually by at least
50 percent of the respondents as recipients of reports of their most
important accomplishments. 

Over half (56 percent) of the respondents reported that an evaluation
of the success or impact of their services had been conducted. 
According to over 60 percent of these respondents, the evaluation was
conducted by researchers outside the CDFI organization, and according
to over 20 percent, the researchers were paid by an entity that was
independent of the CDFI or its funders.  For more detailed
information on respondents' performance goals and measures, see
appendix I. 


--------------------
\8 See footnote 5. 


---------------------------------------------------------- Letter :4.1

We performed our work from July 1997 through August 1998 in
accordance with generally accepted government auditing standards. 
The CDFI Fund had an opportunity to review and provide comments on
the survey before it was initially mailed to the CDFIs.  In addition,
the Fund has been informed of the results of our survey and has found
the information useful.  Copies of this report will be provided to
the appropriate congressional committees and to the Secretary of the
Treasury.  Copies are available to others upon request. 

If you or your staff have any questions, please contact me at
202-512-7631.  Major contributors to this report are listed in
appendix IV. 

Judy England-Joseph
Director, Housing and Community
 Development Issues


List of Committees

The Honorable Alfonse D'Amato
Chairman
The Honorable Paul Sarbanes
Ranking Minority Member
Committee on Banking, Housing, and
 Urban Affairs
United States Senate

The Honorable Christopher S.  Bond
Chairman
The Honorable Barbara A.  Mikulski
Ranking Minority Member
Subcommittee on VA, HUD, and
 Independent Agencies
Committee on Appropriations
United States Senate

The Honorable Spencer Bachus
Chairman
The Honorable Bernard Sanders
Ranking Minority Member
Subcommittee on General
 Oversight and Investigations
Committee on Banking and Financial Services
House of Representatives

The Honorable Jerry Lewis
Chairman
The Honorable Louis Stokes
Ranking Minority Member
Subcommittee on VA, HUD, and
 Independent Agencies
Committee on Appropriations
House of Representatives


USE OF PERFORMANCE MEASUREMENT
REPORTED BY SURVEY RESPONDENTS
=========================================================== Appendix I

The majority of the community development financial institutions
(CDFI) responding to our survey reported using performance goals and
measures to assess their progress toward (1) general community and
economic development objectives and (2) objectives for the types of
services they provide.  For each survey question pertaining to goals
and measures, respondents were instructed to select all of the
choices that applied to their organization.  See appendix III for our
survey instrument and results. 


   COMMUNITY AND ECONOMIC
   DEVELOPMENT GOALS AND MEASURES
--------------------------------------------------------- Appendix I:1

Our survey listed 8 community development goals and 11 economic
development goals and asked respondents to select those that were
primary for their organization.  Approximately 90 percent of the
respondents indicated that they had community development goals,
while about 88 percent indicated that they had economic development
goals.  These respondents also reported using various measures to
assess their progress toward both types of goals. 


      COMMUNITY DEVELOPMENT GOALS
      AND MEASURES
------------------------------------------------------- Appendix I:1.1

Helping to revitalize a targeted community was the most commonly
selected community development goal; furthermore, it was the only
such goal selected by a majority of the respondents as primary for
their organization (see fig.  I.1). 

   Figure I.1:  Reported Use of
   Community Development Goals

   (See figure in printed
   edition.)

Source:  GAO's analysis of survey data. 

Respondents reported using activity and accomplishment measures to
assess how well they were meeting their primary community development
goals.  The most frequently cited activity measures were the number
of families assisted (41 percent), the number of affordable housing
units assisted (33 percent), and the number or total dollar amount of
grants or loans for housing projects (32 percent).  The most
frequently cited accomplishment measures were individuals' success
stories (44 percent); housing success stories (33 percent); and
stories of changes in the community, such as improvements in safety
or in the community's appearance (28 percent). 


      ECONOMIC DEVELOPMENT GOALS
      AND MEASURES
------------------------------------------------------- Appendix I:1.2

Five of the 11 economic development goals outlined in our survey were
selected by a majority of the respondents as primary for their
organization.  The most frequently selected goals were helping to
create new jobs and helping to create new businesses or to retain or
expand existing businesses (see fig.  I.2). 

   Figure I.2:  Reported Use of
   Economic Development Goals

   (See figure in printed
   edition.)

Source:  GAO's analysis of survey data. 

Paralleling their use of multiple economic development goals,
respondents reported using multiple economic development
accomplishment measures, including the number of businesses created,
retained or expanded (60 percent); the net number of jobs created or
retained (52 percent); and business success stories (49 percent). 


   SPECIFIC GOALS AND MEASURES FOR
   TYPES OF SERVICES PROVIDED
--------------------------------------------------------- Appendix I:2

Respondents reported using specific goals and measures to assess
their progress in providing services in four areas identified by our
survey:  (1) lending services; (2) technical assistance, training,
and customer counseling; (3) nonlending services for deposit
customers or members; and (4) capital investment services. 


      LENDING SERVICES
------------------------------------------------------- Appendix I:2.1

Lending was the service area selected most frequently by the CDFIs
responding to our survey.  Almost 88 percent of the respondents
reported providing some type of lending service.  These respondents
reported using multiple goals and measures to assess their progress
in providing these services.  A majority said they use goals such as
providing affordable loans (73 percent), increasing existing access
to credit services (65 percent), providing a service that was
previously unavailable (61 percent), and increasing or expanding
borrowers' capacity or financial resources (59 percent).  Figure I.3
illustrates the respondents' reported use of lending goals. 

   Figure I.3:  Reported Use of
   Lending Goals

   (See figure in printed
   edition.)

Source:  GAO's analysis of survey data. 

Several activities and accomplishments were individually reported as
used to measure progress toward respondents' lending goals.  The
activities include the number of loans (83 percent), the dollar
amount of the loans (69 percent), the number of borrowers (61
percent), and the number or dollar amount of the outstanding loans
(56 percent).  The accomplishment measures reportedly used include
the number of borrowers who perform successfully on existing loans
(68 percent), stories of individual borrowers' success (67 percent),
reductions in delinquency rates (54 percent), and net increases in
lending (54 percent). 


      TECHNICAL ASSISTANCE,
      TRAINING, AND CUSTOMER
      COUNSELING SERVICES
------------------------------------------------------- Appendix I:2.2

At least 60 percent of the respondents reported that their
organization provides technical assistance, training, and/or customer
counseling services either directly or indirectly through an
affiliate or a subsidiary.  Seven of 10 goals were selected as
primary for their organization by a majority of the respondents.  For
example, improving customers' financial management was identified by
three-quarters of the respondents as a primary goal.  Figure I.4
shows the frequency with which the respondents reported using the 10
goals listed for this service category. 

   Figure I.4:  Reported Use of
   Goals for Technical Assistance,
   Training, and Customer
   Counseling Services

   (See figure in printed
   edition.)

Source:  GAO's analysis of survey data. 

Multiple activity and/or accomplishment measures were identified by a
majority of respondents in the technical assistance, training, and
customer counseling category.  For example, they reported measuring
(1) their training activities by keeping track of the number of
participants in training programs (77 percent) and (2) their customer
counseling activities by keeping track of the number of persons
receiving these services (71 percent).  Reported measures of
accomplishment included success rates for individuals receiving
services (59 percent), decreases in loan delinquency or default rates
(53 percent), and customer satisfaction (51 percent). 


      NONLENDING SERVICES FOR
      DEPOSIT CUSTOMERS OR MEMBERS
------------------------------------------------------- Appendix I:2.3

About 30 percent of the respondents reported providing nonlending
services to depositors, shareholders, or members.  These respondents
identified the goals depicted in figure I.5 as primary for their
organization. 

   Figure I.5:  Reported Use of
   Nonlending Goals

   (See figure in printed
   edition.)

\a Because of space limitations, we substituted "attract deposits for
reinvestment" for "attract deposits for investment in community
development."

Source:  GAO's analysis of survey data. 

To track their progress toward these primary goals, the respondents
reported using both activity and accomplishment measures.  The most
frequently cited activity measures were the number of depositors or
members (59 percent), the number of new depositors or members (48
percent), and the amount of savings or shares (46 percent).  The most
frequently cited accomplishment measures were increases in the number
of depositors or members (62 percent), increases in depositors' or
members' savings (47 percent), and depositors' or members' success
stories (42 percent). 


      CAPITAL INVESTMENT SERVICES
------------------------------------------------------- Appendix I:2.4

The smallest percentage of respondents--slightly under 20
percent--reported providing capital investment services, including
equity and quasi-equity investments in other organizations.  Figure
I.6 shows the frequency with which these respondents identified
specific capital investment goals as primary for their organization. 
Three of these goals--retaining or expanding existing businesses,
helping to create new businesses, and increasing existing access to
investment capital--were identified by a majority of the respondents. 

   Figure I.6 Reported Use of
   Capital Investment Goals

   (See figure in printed
   edition.)

\a Because of space limitations, we substituted "improve business
management" for "improve quality of customers' business management
and planning."

Source:  GAO's analysis of survey data. 

Only one activity measure--the number or dollar amount of investments
in businesses--was identified by a majority of respondents (63
percent) as most important for assessing progress toward their
primary capital investment goals.  Two other activity measures--the
number of first-time investments (25 percent) and the number or
dollar amount of follow-on investments (22 percent)--were identified
much less frequently.  Conversely, the respondents reported relying
much more extensively on accomplishment measures, including the
number of businesses they helped to retain or expand (71 percent);
the number of businesses they helped to create (67 percent); the
number of businesses still in operation since the first loan or after
a certain date (44 percent); and an increase in business assets,
salary and wage expenses, revenues, and/or profits (43 percent). 


SCOPE, METHODOLOGY, AND
LIMITATIONS OF GAO'S SURVEY
========================================================== Appendix II

We conducted a national survey of community development financial
institutions (CDFI), including those organizations that are certified
by the Fund and those organizations that provide lending, capital
investment, or other credit and banking services to underserved areas
or populations.  Our objective was to describe CDFI organizations and
their use of performance measurement and monitoring systems. 

To identify CDFIs nationwide, we obtained from the CDFI Fund in
October 1997 its most recent list of certified CDFIs, dated June
1997, as well as lists of applicants for awards in the first (1996)
and second (1997) funding rounds.  In addition, we obtained
membership lists from the following national community development
professional organizations:  the CDFI Coalition, the National
Association of Community Development Credit Unions, the National
Community Capital Association, and the Community Development Venture
Capital Alliance.  We also obtained lists from the Neighborhood
Reinvestment Corporation\1 and the Aspen Institute\2 that identified
neighborhood housing services and microenterprise development
organizations with loan funds.  We did not attempt to determine
whether noncertified respondents meet the Fund's criteria for
certification.  We identified 925 organizations by merging the
previously identified lists and eliminating any duplicates. 

To encourage responses, we sent follow-up letters and a second
questionnaire to those organizations that did not return a
questionnaire from the first mailing.  We eliminated any respondents
indicating that (1) they provided only technical assistance or
training, (2) they did not provide any financial services, or (3) the
survey was not applicable to their organization.  When we had
eliminated these respondents, 623 institutions remained in our final
pool, for a 67-percent response rate.  These institutions included 87
percent of the 1996 CDFI program awardees and 77 percent of the 187
CDFIs certified by the Fund as of June 1997.  The institutions also
represented about 70 percent of the 205 CDFIs certified as of March
1998. 

Our survey of the CDFI field provided us with an overview of
community development financial institutions--who they are; whom they
serve; what mix of products and services they provide; and to what
extent they plan, measure and evaluate their goals, activities, and
accomplishments.  We used this survey to obtain information for our
companion report on the CDFI field's use of performance measurement
and monitoring systems so that we could compare the Fund's systems
with those of the field as a whole.  Specifically, we used the survey
to obtain information from respondents on the

  -- general characteristics of their organization, including its
     mission, size, and age; the types of services and products it
     provides, and the types of distressed markets (i.e.,
     populations, areas, types of businesses) it targets through its
     activities and programs;

  -- types of goals, activities, and accomplishments that their
     organization tracks and measures, including its overall
     community and economic development objectives and its specific
     functions, such as nonlending (i.e., credit and banking),
     lending, capital investment, and technical assistance and
     training services;

  -- types of financial and nonfinancial information that their
     organization collects and uses to measure its health internally
     and the extent to which their organization relies on strategic
     planning and outside evaluation; and

  -- level of burden or satisfaction their organization experienced
     in applying for a 1996 CDFI program award and, if selected, in
     going through the selection process. 

The results of our survey cannot be generalized to the CDFIs that
were not identified in, or did not respond to, our survey.  We do not
believe that our list includes all such organizations in the CDFI
field nationwide.  We also recognize that other community development
organizations could probably be certified by the Fund as CDFIs but
are currently unknown to either the Fund or one of the national CDFI
associations.  Again, our survey was not designed to yield the
information needed to determine whether noncertified respondents
would be eligible for certification.  For instance, the survey did
not ask whether providing lending or capital investment services was
a dominant activity, nor did it seek information on the nature of the
respondent's ownership--information that the Fund would require for
certification.  Some CDFIs that do not currently meet the Fund's
criteria for certification might be able to modify their operations
or ownership to become eligible for certification. 



(See figure in printed edition.)Appendix III

--------------------
\1 The Neighborhood Reinvestment Corporation, a congressionally
chartered, public nonprofit corporation established in 1978 (P.L. 
95-557), develops and supports NeighborWorks organizations, which are
autonomous, locally funded nonprofit corporations that seek to
revitalize lower-income communities and provide affordable housing. 

\2 The Association for Enterprise Opportunity, a national trade
association for microenterprise development organizations, referred
us to the Aspen Institute for assistance in identifying
microenterprise development organizations with lending activity.  The
Aspen Institute, which maintains a directory of over 300
microenterprise development programs, identified those indicating
that they provide lending services. 


GAO'S SURVEY OF COMMUNITY
DEVELOPMENT FINANCIAL INSTITUTIONS
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

RESOURCES, COMMUNITY AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Leslie Black-Plumeau
Carolyn Boyce
Diane Brooks
Patricia Farrell Donahue
Elizabeth R.  Eisenstadt
Dennis Fricke
Kimberly Hutchens
Bill MacBlane
Hattie Poole
Marilyn Rubin
James Vitarello
John Vocino


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