I was honored to facilitate a collaborative discussion on place-based prosperity at Confluence Overview Effect’s recent Planetary Solutions Summit. The discussion included about 30 leaders from across the institutional spectrum, anchored by leaders in impact and community investment as discussion catalysts. Our mandate: to map the terrain, connect the ecosystem of participants, and consider on-ramps for capital.
As context, billions are being deployed in community investment – mission-driven capital that supports underserved borrowers – while wealth gaps in the U.S. keep widening. How is capital shifting inequalities and supporting dynamic, equitable, and resilient local economies?
These are some key themes and reflections that emerged from our discussion:
Defining place-based investing. Some practitioners focus on assets or projects with outsized community impact, often aimed at affordable housing development or lending to small businesses. Others target specific local and community economies, such as part of a city or a region within a state. Most start with what the community needs, not what capital dictates.
How capital flows. One common stream runs through complex, often inefficient capital stacks that blend public, private, and philanthropic money, the equivalent of blended finance in international development. Another gravitates toward instruments that are recognizable in capital markets, like muni bonds or real estate funds, with the latter more accessible by investors.
What's working now. Bonds and notes raised by larger CDFIs suggest a path toward lower-cost capital-markets funding. SBIC funds and CDFI venture affiliates offer promising models for deploying debt and equity. Cooperatives can attract stable financing and extend beyond housing into worker buyouts, agriculture, and education.
Gaps and friction points
Mispriced risk: A lack of information, trust, and the capacity to deploy capital at institutional scale remain challenging for most community investment initiatives. Because policy often drives deployment to organizations like CDFIs, capital flows are vulnerable to political shifts.
Growth constraints: Demand for CDFI products and services was robust in 2025 according to the Federal Reserve CDFI Survey, yet growth is constrained by thin margins. CDFIs want to make investments in technology and operational efficiency to serve more clients while keeping capital accessible.
Scarcity of catalytic capital: Equity and equity-like capital are scarce. Debt remains the dominant form of finance because equity-like returns are difficult to achieve. Instruments like preferred equity and guarantees remain underutilized.
Open Questions. Uncertainty about the CDFI Fund and broader federal support ran through the discussion. Multiple participants argued commercial capital markets structurally exclude and undervalue low-income groups with a cost of capital that reflects extractive behavior that deprioritizes workers and nature.
Matching capital to need. While the place-based investing ecosystem has proven successes, replicating and scaling on-ramps for commercial and mission-driven capital is essential. Even if existing instruments, like notes and venture funds, work well for some, other segments need more innovative structures, such as revenue-based finance, forgivable loans, and preferred equity. The call to action for philanthropy and catalytic capital is to deploy via PRIs, guarantees, and first-loss positions. For commercial investors, risks are lower than commercial rates suggest. For all of us: storytelling, networks, and technology can help build the ecosystem and bridges to capital that these organizations and communities deserve.
Our rich, engaging, and collaborative discussion left all participants with plenty to ponder and address. I look forward to continuing to explore these themes and solutions with the Confluence community.