Dear Friends,
Craft3 is often busiest, our services most acutely needed, and our impact clearest when the broader economy struggles. That was certainly true in 2020 as COVID-19 battered communities and necessary, albeit painful, steps to contain the virus slowed the economy. Many found themselves suddenly out of work and many successful businesses failed or struggled profoundly.
Amidst social, economic, and health crises, Craft3 continued to be of service — delivering capital to underserved communities, businesses and individuals in need who would otherwise be unable to access financing. In 2020 we made more loans than we have in any prior year, proactively offered loan adjustments to our existing customers to help them ride out the storm, and still emerged with a protected balance sheet. We also received a $10 million unrestricted grant from MacKenzie Scott that left me profoundly grateful and excited.
Over the course of 2020, we worked hard and nimbly to meet new and urgent community needs. In close collaboration with numerous government and financial partners we put together a Small Business Resilience Fund that delivered $12.7 million in emergency economic relief to 1,481 small businesses between April and December of 2020.
As I look ahead to 2021 and beyond, I am hopeful. With all American adults now eligible to receive the COVID-19 vaccine, economic recovery and the reopening of society feel closer than ever. At the same time, I am not eager to return to a pre-pandemic normal that was keeping many individuals and communities from participating in the American dream of progress and opportunity.
The crises of 2020 accelerated some of our work by spotlighting profound racial inequities and the prevalence of enduring racism. We have realized we need to do more to be an antiracist organization and to correct for economic policies and practices that have prevented non-whites from building enduring wealth. In part due to the gift from MacKenzie Scott, we started our 5-year strategic planning process a year ahead of schedule. As always, we are excited to be diving into this essential work of refining and rearticulating our priorities, our mission and our tactics. I look forward to sharing this plan with you in 2022.
Thank you for taking the time to read about what we have accomplished! Below you will find facts, figures and stories that describe our pandemic year. My wish for all of us in 2021 is increased health, community, and opportunity.
Sincerely,
Adam Zimmerman, President & CEO
Impact
Craft3 uses capital as a tool for social good by investing in businesses, individuals and communities — especially those unable to access traditional financing. Our mission is to strengthen economic, ecological and family resilience across Washington and Oregon.
Craft3 focuses on delivering responsible capital to the many people and places in our region not experiencing economic progress and often struggling to access basic goods and services. By measuring key metrics tied to our mission, we are able to evaluate our impact year-over-year.
2020 Loan Production
Small Business Resilience Fund
Much of our 2020 commercial lending focused on helping business weather economic impacts related to COVID-19. With uncertainty and fear so prevalent, many entrepreneurs abandoned or delayed plans to launch or expand. Our commercial team shifted its focus as well.
We created a Small Business Resilience Fund in partnership with local governments across Washington and Oregon, and a diverse group of corporate and philanthropic entities. Craft3 provided $12.7 million in emergency economic relief through two programs.
Business Resilience Grants
In partnership with public agencies including Prosper Portland, the City of Kent and others, we distributed $10.1 million in grants to 1,400 small businesses, the majority of which were Black, Indigenous and People of Color (BIPOC) owned.
The Craft3 grant not only helped me pay rent and utilities while shut down, but also gave me a huge morale boost when things felt so uncertain and hopeless. It helped refill my mental tank to continue figuring out how to be resilient and creative in these trying times. - Business Owner
Business Resilience Loans
In partnership with public agencies in Washington County, Clallam County, Portland, Tigard, Spokane, and Walla Walla, we provided COVID-19 relief loans to 81 small businesses, totaling $2.7 million.
As an owner, you feel the weight of responsibility when you know your business supports the livelihoods of your staff. The Business Resilience Loan let me sleep at night, knowing we had support to keep our doors open and a smaller staff employed during the uncertainty of COVID-19. - BUSINESS OWNER
Transformative Community Projects
Craft3 is always working to extend what is possible when it comes to using capital as a tool for community development. Done right, community development can create economic opportunity, provide environmental benefits, and help usher in a more prosperous and equitable future.
One important way we have delivered hard-to-find capital to communities in need is by using New Markets Tax Credits (NMTCs). NMTCs are an important tool in Craft3’s community financing toolbox. Established in 2000, NMTCs incentivize investment in low-income communities. Investors provide capital to community development entities (CDEs) in exchange for significant federal tax credits: 5 percent of the investment for each of the first three years and 6 percent for the remaining four years for a total of 39 percent. Craft3 is a CDE and we use NMTCs to finance larger, more complex projects that offer significant and multiple community benefits. If you’d like more information, please read the article in the Stanford Social Innovation Review.
In 2020 we completed three NMTC projects, which you can read about below. If you would like to receive regular stories about transformative community projects we’ve helped finance, you can sign up by clicking the button below.
Ko-Kwel Wellness Center
Integrated Tribal healthcare
This 22,000 square foot facility in Coos Bay, Oregon will provide holistic health care to a community facing public health challenges and lacking adequate access to health care. Don Ivy, Chief of the Coquille Indian Tribe describes the Ko-Kwel Wellness Center as a “home for healing.” You can read more about the Center on our blog.
Rockwood Market Hall
A vibrant hub for a lower-income neighborhood
Part of the Rockwood Town Center development in Gresham, Oregon, the Rockwood Market Hall will create a fresh food marketplace with micro-restaurants, grocery stores, and food stalls. It will also be a bustling and vibrant public space — an unfortunately scarce resource in most lower-income neighborhoods.
Odessa Brown Children’s Clinic
An innovative community center
The second location of the Odessa Brown Children’s Clinic (OBCC), part of Seattle Children’s Hospital, will be an inclusive community health center and anchor a community that will include a charter high school, job training, childcare, community meeting spaces, and mixed-income housing for rent or ownership.
Lending to Homeowners
Craft3 helps homeowners by financing home energy improvements, septic system replacement, accessory dwelling unit (ADU) construction and manufactured home replacement. These programs strengthen individual and family resilience; make homes more comfortable and efficient; and help homeowners build equity.
In 2020, Craft3 closed $7.28 million in clean water (septic) loans and $3.73 million in home energy loans. We closed some of our first ADU loans. With the potential to create in-fill housing, reduce displacement, and build wealth and neighborhood resilience, we expect this program to grow in 2021. We also added a bilingual Spanish-speaking lender to help support our Spanish-speaking customers.
Craft3 was able to give us a loan when we’d exhausted other options. It means a lot to us. We’re focused on building a little nest egg and we worked hard to make this project happen. – Sean & Marisol, ADU owners
An Unexpected Gift
Craft3 was honored to receive a $10 million unrestricted grant in 2020 from philanthropist and novelist MacKenzie Scott. Scott’s support of Craft3 and the other CDFIs she funded is a real vote of confidence, especially during this time of economic crisis. Her philanthropy acknowledges the important role CDFIs are playing in ushering in more inclusive and equitable financing for all.
The MacKenzie Scott gift is an extraordinary opportunity for Craft3 and an important down payment on our racial equity work. The pandemic, the economic recession and ongoing racially motivated violence have made our economic inequities clearer than ever. Shortly after the George Floyd killing, we committed to doubling our lending to people of color and tripling our lending to black-owned businesses.
Given America’s centuries long history of racism, the transition to an equitable economy and society will not happen overnight. It is clear, however, that racism is a sickness and an existential threat that hurts us all. Economic inequity is one result of racism and it shows up in many ways, including a profound racial wealth gap and barriers that often prevent entrepreneurs of color from accessing capital.
To reduce these barriers to accessing capital we’re making wholesale changes to our Small Dollar Business Loans (up to $250,000) with the goal of increasing our lending to entrepreneurs of color. We’re looking to:
- redress inequities in risk assessment
- change our underwriting process to account for how the racial wealth gap limits the ability of entrepreneurs of color to fund business ventures and qualify for financing
- and tailor our outreach strategies based on market research.
2020 Funders
Institutional Investors and Grantors
Wealth Management Firms of Investors
Capitalization by Funder Type
2020 Financial Results
Consolidated Statement of Activities*
Consolidated Statement of Financial Position*
*The Consolidated Statement of Financial Position and Consolidated Statement of Activities presented were audited by Moss Adams, LLP. These have been derived from the complete financial statements and are available online at www.craft3.org/results.