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Conclusion

Tracing the growth of CDFIs through the charter school market makes plain the value that development finance institutions can play in correcting market inequalities and bringing about social change. Charter schools have made their mark on the education reform landscape. They are not without controversy or immune to legitimate criticism in some cases. But there is nothing more inspiring than seeing a young American at risk of ending up a teenage mother, a ward of the prison system, or just stuck in a low-wage job head off to college. CDFIs have helped make this important innovation happen by responding to the critical need charter schools have for facilities development and financing. As a result, CDFIs have fueled their own growth and have produced important innovations for the community development finance field.

The role of the federal government in providing credit-enhancement funding to organizations such as CDFIs cannot be understated. Without these incentives, and without CDFIs to effectively structure and administer them, the growth of the charter movement would have been slowed. The CECSF provides a model of how best to use social policy to address the deficiencies in a market-based system that leaves some communities financially underserved.

CDFIs are poised to innovate in the charter school market. Collaboration is key to success. If CDFIs are able to make securitization of charter school loans a reality, it will improve their acceptance in the capital markets. It may also pave the way for inclusion of other community development assets in the future – affordable housing, health care, and other community facilities. With access to the broader capital markets, CDFIs will come much closer to accomplishing the core mission of improving the lives of low-income people and communities.

 
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