Media Backgrounder
OVERVIEW
CARS™, the CDFI Assessment and Ratings System, brings clarity and depth to investment decision-making. CARS™ is the only ratings system to provide a comprehensive, third-party assessment of both impact performance and financial strength and performance. CARS™ is for experienced CDFI investors as well as those that are new to community investing. CARS™ helps investors confidently assess CDFIs that match their social objectives and risk parameters.
WHAT IS CARS™?
CARS™ is a both a ratings system and an in-depth analytic tool for investors. It is the only CDFI ratings service that assesses a CDFI’s:
- Impact Performance—how well a CDFI is achieving its social mission, and
- Financial Strength and Performance—overall creditworthiness based on a CAMEL analysis (Capitalization, Asset Quality, Management, Earnings, and Liquidity).
A CARS™ assessment includes past performance, current financial position, and risk factors in the future. Ratings are based on five years of historical performance and cover a projected three-year period.
CARS™ analyses are conducted by experienced professionals who are expert in underwriting CDFIs. Each analysis is based on an on-site examination including:
- A comprehensive assessment of financial and programmatic information
- In-depth review of loan files and risk management systems
- Interviews with management and board members
WHO ARE CARS™ SUBSCRIBERS?
CARS™ ratings and reports are used by:
- National and regional banks
- Foundations that make program-related investments to CDFIs
- Religious investors
- Socially responsible investors
- Investment advisors
CARS™ subscribers include leading CDFI investors such as Bank of America, JPMorgan Chase, the Ford Foundation, the MacArthur Foundation, The Calvert Foundation, Trillium Asset Management, and many others.
WHAT IS INCLUDED IN A CARS™ SUBSCRIPTION?
Each CARS™ subscription provides three years of in-depth reporting on investor-selected CDFIs including:
- Ratings Report: A comprehensive, 50-60 page in-depth analysis with narrative discussion to support each rating and dozens of informative tables and graphs that make it easy for investors to find critical data
- Annual Reviews: An annual review report, which is issued for each of the two years following the rating, provides updated financial information and narrative that highlight significant changes in the CDFI’s impact and financial performance
Subscribers can conveniently access their reports and annual updates anytime via a personalized, password-protected website.
WHAT CDFIS ARE CARS™ RATED?
CARS™ rates loan funds (nonbank CDFIs) that invest in communities and create opportunities for low-income and low-wealth people. CARS™ has rated leading CDFI loan funds from across the U.S. ranging from small, regional organizations with a singular focus to large, complex national institutions. CARS™ rated CDFIs provide financing and mission-driven services that support:
- Affordable housing
- Small and environmentally sustainable businesses
- Microenterprises
- Community facilities
- Cooperatives
CARS™ subscribers request that specific CDFIs become rated, or CDFIs may independently elect to become CARS™ rated. Ratings of a specific CDFI can be scheduled upon request. For a list of CDFIs that are CARS™ rated or scheduled for an upcoming rating, visit www.CARSratingsystem.net/ratings/ratedCDFIs.asp.
About CARS™
CARS™, the CDFI Assessment and Ratings System, is an independent project of Opportunity Finance Network. Launched in 2004 to promote performance as a primary criterion determining the flow of capital through CDFIs and to promote standardization of information and industry-wide performance standards, CARS™ is the only ratings system of its kind. Ratings include an assessment of impact performance and financial strength and performance. Ratings are based on five years of historical performance and cover a projected three-year period with annual updates in subsequent years. CARS™ publishes a list of CDFIs who are scheduled for an upcoming rating, and also provides an on-demand CDFI rating service for investors. More information about CARS™ is available at www.CARSratingsystem.net/ratings/ratedCDFIs.asp.
ABOUT OPPORTUNITY FINANCE NETWORK
Opportunity Finance Network (OFN), the leading national network of more than 160 private financial institutions, creates growth that is good for communities, investors, individuals, and the economy. Members of OFN are community development financial institutions (CDFIs) who deliver responsible lending to help low-wealth and low-income communities join the economic mainstream. To date, OFN has financed more than $19.8 billion in underserved markets in all 50 states, yielding more than 190,000 jobs, 550,000 housing units, and 9,500 community facility projects. More information is available at www.opportunityfinance.net.
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