Building Technology for Cross-Sector Collaboration
The partnership between Opportunity Fund, the lending arm of Accion Opportunity Fund, and LendingClub combines the mission focus of a Community Development Financial Institution (CDFI) with the online lending expertise of a fintech, creating a new model for transparent, responsible lending services that meet the needs of today’s small business owner.
We have joined with LendingClub and Craft in a first-of-its-kind partnership between a Community Development Financial Institution (CDFI) and a fintech lender. Through this partnership, Opportunity Fund and LendingClub are expanding access to affordable capital for small businesses in the United States. In a market where many “alternative” online lenders are attracting customers with fast turnaround times and deceptive pricing, many small businesses are getting caught in high-cost financing contracts or finding themselves without affordable options for capital to help their businesses grow. The partnership between Opportunity Fund and LendingClub combines the mission focus of a CDFI with the online lending expertise of a fintech, creating a new model for transparent, responsible lending services that meet the needs of today’s small business owner. The additional participation of Craft as our CDFI partner creates broader potential for growth and scale for this innovative model.
As part of this initiative, and with generous support from JPMorgan Chase, the partners are committed to evaluating the model and sharing learnings with our community of stakeholders. This report assesses the evolution of this innovative CDFI-fintech partnership by discussing its rationale, history, and performance between June 2015 and May 2017. Our goal is to provide CDFIs, funders, policy makers, and other interested parties a closer look at how one mission-based lender designed, launched, and expanded a cross-sector partnership. While this is not a how-to manual, we seek to share relevant lessons for how CDFIs can create successful fintech partnerships. Some of the key takeaways revealed through our assessment include the following:
- PARTNERSHIPS ARE ORGANIC Relationships, resources, and alignment form the foundation to a successful partnership.
- LEARNING IS HARD, BUT ESSENTIAL It takes time, flexibility, and patience to build strong systems and collaboration.
- ALL IN TO WIN Partners must be fully committed to the project at all levels of the organization.
- EVALUATING A MOVING TARGET Dynamic partnerships require a nimble, nuanced approach to goal setting and evaluation.
These themes are explored in greater detail throughout the report. This initial report does not evaluate the longer-term impacts of the initiative on the business owners served through the partnership. A future report will share insights from small business owners who received funding through this cross-sector collaboration. This report is written primarily from the perspective of Opportunity Fund, although it includes alternate perspectives from our partners when relevant.