RCAC Home Page > News and Publications >

RCAC Loan Fund scores high investment rating

February 19, 2009

 

West Sacramento, Calif. — You might check CARFAX.com before you buy a used car. You might look at the NASDAQ or the S&P 500 to judge a company’s stock or index performance. These days, you probably even check to see if a bank is federally insured before you use it for your banking transactions.

Likewise, serious investors and donors who contribute to Community Development Financial Institutions (CDFIs) examine the CDFI Assessment and Rating System (CARS™) before committing to an investment. CARS™ conducts high-quality, efficient, and rigorous analyses of organizations’ Impact Performance and Financial Strength and Performance and tracks the results to guide investment decisions.

Investors’ confidence in Rural Community Assistance Corporation (RCAC) was recently confirmed when the organization received its new CARS™ rating in late January. The rating is based on a comprehensive Opportunity Finance Network (OFN) review of the RCAC Loan Fund and the entire RCAC organization. RCAC was rated AA+2, which is an improvement on its A+2 rating from three years ago. 

The letter grade AA refers to RCAC’s overall impact and how its activities and outputs are in line with its stated mission. RCAC’s AA rating indicates that CARS™ found RCAC has clear mission alignment with strategies, activities and data that guide its programs and planning and RCAC uses its resources effectively to benefit its target populations or communities in line with its mission. 

The plus sign in RCAC’s rating refers to RCAC’s advocacy work. OFN examines whether organizations make change an integral strategy component. According to the CARS™ rating system, CDFIs that, “lead initiatives to change government policy to benefit the community development finance industry or disadvantaged people and communities,” are eligible for the plus rating. RCAC’s rating in this category was based on its many advocacy and public policy activities. CDFIs that don’t measure up receive a no in the Policy Plus category, and their rating does not include a plus.  

The number rating 2 in RCAC’s score is for its financial strength on a scale of 1 to 5, where 1 is the highest score possible. A CDFI that scores a 2 is deemed fundamentally sound. According to CARS, a CDFI that falls into this group, “exhibits solid financial strength, performance, and risk management practices relative to its size, complexity and risk profile. Challenges are well within the board of directors’ and management’s capabilities and willingness to strengthen. The CDFI is stable and is capable of withstanding fluctuations in its operating environment.” RCAC’s 2 rating puts it in a select group of CDFIs. 

“RCAC's strong CARS™ rating shows that we are using our resources wisely in the communities that we serve. By opening up our books to an independent rating organization, we have demonstrated for investors and potential investors that RCAC’s Loan Fund is financially solid and that we use sound lending practices in addition to meeting our mission,” said Michael Carroll, RCAC Loan Fund director.  

OFN has more than 10 years experience evaluating and underwriting CDFIs, providing consulting services to CDFIs and investors, and gathering and analyzing data about the CDFI industry.

Certified as a CDFI in 1996, RCAC operates a $66 million Loan Fund that provides low-interest loans for affordable housing, community facilities, water and wastewater systems and more. The fund each year provides scores of loans to organizations and small communities that often cannot acquire financing through traditional lending institutions.

###

Back