Economic Development

Financial First Responders: Harold Pettigrew on CDFIs, Climate, and Capital with a Heart

May 14, 2024  • The Aspen Partnership for an Inclusive Economy

This article was published in the May Edition of the Aspen Partnership for an Inclusive Economy’s newsletter The Slice. Subscribe here

“My journey began with my family’s belief that you fight for the people in places you love,” said Harold Pettigrew in a recent keynote address to the Opportunity Finance Network at its 2023 annual conference. It’s a fight he’s taking on as president and CEO of the organization of 400-plus Community Development Financial Institutions (CDFIs), each of them fighting to create opportunity in their own communities. 

For Pettigrew, that place he loves is Washington DC, where his grandparents moved to find empowerment in one of the first major American city run by African Americans[HP1] . In this “Dream City,” his grandmother was an educator and activist fighting the scourges of drug use and violence, and his mother worked for the federal government to support her son. But Pettigrew’s father wasn’t around; he’d nearly died after being shot walking near his home, and his trajectory had changed from college-bound to drug-addicted.

As a teen, the young Pettigrew fought public school closures and federal disenfranchisement. As a man, he career led him to Wacif, the Washington Area Community Investment Fund, a CDFI which supported—as he found out years later—the drug treatment facility that had supported his father. (This story is recounted in the speech mentioned above, and if you didn’t click through then, you should watch it now.)

For seven years, Pettigrew led Wacif as the CEO, and left that position only last year to head OFN, where he’s already helped secure $2.3 billion in capital for the organization. 

In this interview, he talks us through the importance of CDFIs, their changing priorities, and his own views of leadership and legacy—especially now that he has a son of his own.

“You fight for your home, and you fight to ensure that everyone has the opportunity to pursue their dreams.”

Q: What is the Opportunity Finance Network, and what’s the most important part of your job as president and CEO?

A: OFN, the nation’s leading organization focused on community development finance, was created nearly 40 years ago as a membership organization to support to the wonderful organizations that are on the ground across the country ensuring that capital is flowing to communities. 

There are roughly 1400 Community Development Financial Institutions—CDFIs—across the country that manage about $250 billion in total assets. Those organizations range from organizations that are a million dollars in size to over a billion dollars, so there’s great diversity within the industry itself. OFN’s membership is a little over 400, representing over $50 billion in on-balance-sheet assets managed, and we represent banks, loan funds, credit unions, venture firms, minority depository institutions, green banks, and the full spectrum of institutions that are represented within our communities, with a significant focus in urban, rural, and Native communities.

First and foremost, my job is maintaining a connection to the membership and understanding their pain points and their challenges. That fuels what OFN does day-in day-out, which is to be the voice for the industry from an advocacy standpoint. Then, it’s capacity building services, so that we can help our members to deepen their impact and to grow institutionally. Third is to raise capital, and to make sure that we’re also a channel for flowing capital into communities.

"Vice President Kamala Harris takes a group photo with program participants at an event for a Greater Washington Inclusive Growth Announcement, Wednesday, March 30, 2022, at Howard University Cramton Auditorium in Washington, D.C. (Official White House Photo by Lawrence Jackson)"

Q: On that point number three, OFN was just awarded $2.3 billion from the EPA’s Greenhouse Gas Reduction Fund. Can you tell us a little bit about that and what it’s going to be used to do?

A: It’s a tremendous opportunity; I’d like to say once in a generation, but I hope this level of investment can be committed into the future because it’s needed for the size of the challenges that we’re dealing with. 

This $2.3 billion award is part of the larger $27 billion allocated by the US Environmental Protection Agency (EPA) through the Greenhouse Gas Reduction Fund. Our award was a part of one of three programs, the first being Solar for All, which was working with jurisdictions and institutions all across the country to ensure that a full spectrum of residential and commercial solar projects, primarily at the state level, are moving forward. The second is NCIF, the National Clean Investment Fund, a $14 billion program which was allocated to three awardees as the long-term investment program under the Greenhouse Gas Reduction Fund. We’re working with partners to play a role in that. The third program, which is the program that we were awarded under, is $6 billion allocated towards the Clean Communities Investment Accelerator, CCIA. This is a program designed to build the community lender infrastructure so that CDFIs are at the center. It’s something that we’ve been doing for the last 40 years—making sure that there’s voice, capacity, and capital in place as an ecosystem of support to community lenders—and so there was complete overlap of the CCIA objectives and OFN. 

Our grant will be deployed primarily as pass-through grants to members, allowing us to serve as a hub to move capital to community lenders all across the country with a cap of $10 million for each member organization. We make a grant to the community lender so that they can make loans in their community; they recollect the loans, with interest, and deploy the capital again, like a revolving fund. We make sure that the use of funds aligns with the framework that the EPA has outlined, and make sure that they’re reporting and that they’re ultimately compliant with the dollars that are being allocated. But the goal here under CCIA is to build their capacity to relend into communities.

Q: How do you describe the importance of CDFIs to the broader audience of Americans? Most of them probably don’t even know what the initials stand for.

A: So it’s important to break down the initials: Community Development… Financial Institutions. CDFIs sit at the center of community development and capital mobilization. For us, what’s important is not simply that we’re deploying capital, but that we’re closing the gap when larger financial institutions may fail in deploying capital into communities where it’s needed most. CDFIs make sure the capital is flowing to the entrepreneur that can’t get a bank loan or a line of credit, to the childcare provider who wants to start or grow a childcare space for kids to play, or a charter school, or you name the facility. There are typically CDFIs across the country that are making sure—whether it’s geographically within a community or demographically within communities of color and Native communities—that capital is flowing to those areas where our capital markets have failed.

And so that’s where CDFIs are, at this intersection of capital and community. It’s important to the country that we’re firmly rooted in those places so when there is crisis—when there is a situation where capital is needed—CDFIs are poised to be financial first responders.

Q: Where are CDFIs going from here? Where do they need to go?

A: The vision for the industry is going to be focused on us going farther faster, investing in our infrastructure in ways so that we can meet the challenges of the future. We know that investments—significant investments—are coming down focused on climate, but we also know that disruption and natural disasters are going to be what our communities will be dealing with. 

So it’s about how we support small businesses and think through bigger and more catalytic ways to ensure the capital is flowing to the housing crisis in our country, to affordability of eldercare and childcare. There are so many challenges, so we don’t have the convenience of just focusing in one area. Our industry will continue to be on deck to make sure that these areas across community needs are being met. 

There’s a lot of innovation that’s taking place in the industry. There’s a desire to make sure that we’re investing in the infrastructure of the industry so that we can respond to the challenges that we can’t quite see yet. We are building greater lines to capital markets so that we can begin bringing in greater pools of capital, so that we can continue to be catalytic getting money where it’s needed most in communities. That’s one end of the spectrum. 

On the other end, it’s just ensuring that opportunities aren’t lost. What if we had—at least from a capital standpoint—the fullest realization of opportunity and potential across our communities, where capital wasn’t a barrier to pursuing a dream or to supporting a household? There’s a lot of great things that could happen within communities. There’s a lot of potential that we could meet as a country. As we look at the future, there’s going to be a significant focus on how we create new pathways for the industry to grow

Q: You’re part of the Aspen Global Leadership Network, whose mission is to awaken purpose and values-driven leadership across the world to address our greatest challenges. How is your work an expression of those values, and what legacy do you want to leave as a leader?

A: That’s a really big question. Legacy for me changed in 2022 when I had my son, my very first child. Legacy means a lot more to me now. I want to make sure that when he asks me, ‘What did you do to make the world better, Dad?’, I’m able to answer that question in a full-throated way, that I did all that I could do to make the world a better place in the small part that I can have influence on—that I tried, and beyond trying, this is what I was able to do by being a part of this industry.

What attracted me to this industry is finding people who are committed, who are passionate about making sure that communities are first, making sure wherever we can that someone can pursue their dreams or support their household. It’s my honor and pleasure to be in this role after so many years in my professional journey, working on the ground and in community here in DC, which is home to me. But now I’m able to bring a lot of those same sentiments and values to help the other folks and leaders across the country, trying to reduce some of the barriers so that they can bring more resources to their communities.

I think that the AGLN, especially coming into it with that mindset and life experience, has been a real place to find community. For me, being in a space where I’m reassured that there are people across the world who are committed to making it better is a fuel to continue. And having that space where you’re a phone call away to some of the most creative and talented and passionate people—all connected through this common bond of just trying to make the world incrementally better within our own ability—it’s been an honor to be a part of that community.