Beyond Dollars: CDFIs Need Human Capital to Effectively Deploy GGRF

By Melania DaSilva Deaver, Principal

Created by President Biden’s Inflation Reduction Act, the Greenhouse Gas Reduction Fund (GGRF) is a $27B investment mobilizing financing and private capital to slash greenhouse gas emissions, revitalize marginalized communities and foster energy independence.

However, the GGRF alone cannot do it. To effectively deploy those funds, Community Development Financial Institutions (CDFIs) across the country will need to fill a range of critical, executive level positions.

View from the inside

I recently had the opportunity to sit down with Duanne Andrade, Executive Director of the Solar and Energy Loan Fund (SELF), a Florida-based, non-profit community lending organization that rebuilds and empowers underserved communities by providing access to affordable and innovative financing for sustainable home improvement projects. Their primary focus is on energy efficiency, renewable energy, and climate resilience, including roofs, doors, windows, hurricane shutters, solar panels and more.

“We are the only one hundred percent, climate focused, and low-and-moderate income focused green bank," says Andrade. “We have consistently, over the last eleven years, served 74% low-to-moderate income (LMI) clients."

Sharpen your pencils

To achieve its major objectives — decarbonizing, mobilizing private capital and transforming markets — GGRF is deploying its $27B in funds via three grant competitions, each with its own focus and budget.

Solar for All encompasses $7B and will flow through sixty sites — one in each state plus ten tribal territories. With a maximum grant of $400M, this fund is for residential purposes only to help low-income communities solarize.

Andrade says it was well-thought out, providing a path for low-income individuals that doesn’t burden them, while utilizing states to administer the funds and depending on community lenders to do green lending.

"For the first time ever," says Andrade, “if we get those funds, we will be able to provide deep grant and subsidies to low-income households that just cannot afford to solarize with debt.”

Next, the $6B Clean Communities Investment Accelerator (CCIA) is focused on helping community lenders like SELF build capacity. While green banks come in all sizes, the small-to-mid-size green banks must build capacity to participate in deploying these funds.

"We were eleven people a year-and-a-half ago. Now, we're at 29 and in preparing for GGRF, we're going to get to 35. In our case, it’s labor intensive, because we do small consumer loans, but we need to be in compliance with these dollars,” says Andrade.

Finally, the National Clean Investment Fund (NCIS) will choose three national applicants to get a share of $14B, and those national coalitions have coalition partners, a.k.a. sub-awardees who may have additional sub-awardees or transaction partners. As a result, the whole industry has kind of lined up underneath these prime applicants with names like Coalition for Green Capital and Climate Justice Fund.

"We are the arms and legs and boots of the prime applicants," says Andrade. "And in return, we assume a lot of responsibilities. But we also hopefully get to grow our balance sheets and our sustainability to do more work and better work."

Building capacity

Acquiring the right executive-level talent is key for all organizations to deploy GGRF funding effectively. CDFIs will need multidisciplinary teams adept in finance, policy, engineering, and community engagement. Grant compliance and reporting also takes center stage because while the “funds are easy to deploy,” says Andrade, “strings are attached.”

Additional key positions include financial officers with experience in federal grant management and who speak nonprofit; strategic development officers capable of creating and implementing innovative programs; and community engagement officers adept at reaching diverse populations.

Key industry experience also matters. For instance, with the rising demand in commercial solar comes a need for program managers and developers, particularly climate related development.

That said, green banks are walking a fine line from a hiring perspective. “It's a scramble for all of us right now, and then there's the risk," admits Andrade. “We hire and if we don't get the funds that we expect, and then we have to unhire.”

Memorize this

One new term you'll hear from the Environmental Protection Agency (EPA) this year? LIDAC. That stands for Low Income Disadvantaged Communities.

Another was termed by United Way: Asset Limited, Income Constrained, Employed (ALICE). It represents the growing number of individuals and families who work but cannot meet their basic needs, including food, childcare, housing, health care and transportation.

As Andrade explains it, these are the “M” in LMI.

Mission & Vision

Regardless of how your CDFI prepares to access and deploy GGRF funds, stay true to your organization’s mission and be ready to take advantage of additional opportunities. “There are other impact investors out there who are looking at that intersection of climate and health," shares Andrade.

Staffing key C-level positions, building an in-house finance department, and investing in a good accounting system will get you started. “Get your accounting, get your system," says Andrade.

The EPA anticipates opening grants under the GGRF program in early summer 2024. As the world grapples with environmental changes, initiatives like the GGRF offer solutions and pathways. Our firm is proud to lead the charge in assembling top-tier teams at CDFIs to deploy capital while slashing greenhouse gas emissions, revitalizing marginalized communities, and fostering energy independence.

Together, we can build a greener, more resilient world for generations to come.