Establishing Mutually Beneficial Bank-CDFI Referral Relationships: A Q&A with First Bank of Highland Park Senior Vice President Courtney Olson March 15, 2022

Headshot of First Bank of Highland Park Senior Vice President and Managing Director of Business Banking Courtney OlsonCommunity Development Financial Institutions (CDFIs) exist to bridge gaps in the financial system, providing access to capital and other services in communities that have historically been underserved by commercial banks. At times, this means that banks and CDFIs are offering overlapping products and services in the same geographic area. While this might at first blush sound like a competitive dynamic, it instead creates natural, mutually beneficial opportunities for partnership.

In fact, in the more than 30 years that IFF has helped nonprofits in the Midwest plan for, finance, and build new facilities that enhance their work and strengthen their communities, we’ve partnered with a multitude of banks to facilitate projects. Along the way, we’ve learned that most lenders at commercial institutions have at least one loan application on their desk they’d love to approve but can’t.

Whether it’s for a new grocery store in a food desert, a highly successful nonprofit looking to build a permanent facility that will anchor additional investments in the neighborhood, or some other project that benefits the community, the details simply don’t work for a bank. That’s often where IFF can step in, offering flexible products designed specifically to support the needs of nonprofits.

In a Nutshell

What: An interview with First Bank of Highland Park Senior Vice President Courtney Olson about the value of establishing a referral relationship with CDFIs to better serve nonprofit clients.
Chicago, IL

To get a banker’s perspective on the benefits of establishing a referral relationship with a CDFI, we recently interviewed Courtney Olson, Senior Vice President and Managing Director of Business Banking at First Bank of Highland Park. Olson has specialized in serving nonprofit clients during her career in banking, and in 2018 joined IFF’s Loan Task Force to further merge her passions for financial services and nonprofits.

IFF: To set the stage, can you tell us about your background and the nature of your role at First Bank of Highland Park?

Olson: I have been in banking for almost 25 years. I started off as a teller and personal banker at a small community bank, and I climbed the proverbial ladder during my 17 years there. About five years ago I joined First Bank of Highland Park, and, as the Senior Vice President of Business Banking, I handle everything for small- to medium-sized businesses that comes through our retail locations and generate my own business with nonprofits.

I love working with nonprofits and am passionate about the work that they do, and the stars really aligned for me in my current role. First Bank is family-owned and extremely philanthropic, and that’s allowed me to grow the nonprofit portfolio and run with my passion for helping them. At one point early on in my career, I considered transitioning into a career working at nonprofits, but ultimately decided to scratch that itch for nonprofit work by leveraging my expertise in banking.

IFF: How did you get connected with IFF, and what led you to join the Loan Task Force?

Olson: When I learned about IFF and the mission to support nonprofits, I knew it was an organization I needed to work with. One of my board members made an introduction, and we ended up setting up a meeting to discuss the Investor Consortium – which was a good fit for us. Banks are always looking for ways to get their Community Reinvestment Act (CRA) credit, so that was one motivation for getting involved with IFF through the consortium, but IFF’s mission also aligns closely with our focus on philanthropy and communities.

Beyond the consortium, I wanted a resource to refer nonprofits to in situations where I couldn’t lend to them directly. That led to conversations about what IFF’s underwriting process entails so that I could make sure any nonprofit I was referring was a good fit for IFF. The relationship evolved over time and eventually led me to the Loan Task Force. Serving on the committee is a natural fit for me since I’m also lending to nonprofits and know what to look for in underwriting a loan.

If IFF is going to handle a loan that the bank can’t make anyway, the nonprofit gets the capital they need and the bank still gets to keep the deposit and treasury management relationship. Everybody does what they do best, and that’s a win-win.

IFF: What are the benefits of having a referral relationship established with IFF?

Olson: I like to wear the hat of an advisor and not just a lender when I’m working with clients. And that means directing them to the resources they need, regardless of whether I can provide them. Having the referral relationship with IFF is beneficial because when I can’t lend to a nonprofit, I don’t have to say “sorry, we’re declining your loan because of X, Y, Z…have a nice day and move along.”

Instead, I’m able to direct them to IFF, and I know they’ll be in good hands. And because the nonprofit can’t open a deposit account with IFF like they could with another bank, I can also maintain my relationship with them on the deposit side too. We may not be able to lend to the nonprofit today, but, if they’re eventually in a position that meets our underwriting guidelines, I’m still there to help them.

IFF: When you’re working with a nonprofit client at the bank, how do you determine whether referring them to IFF or another CDFI that focuses on lending to nonprofits is the best path forward?

Bankers need collateral to make a loan, even though it’s the cash flow that pays us back. So, when the nonprofit’s collateral is upside down, that’s when I’m looking to make a referral to IFF. As long as the nonprofit has sufficient cash flow, that’s a much easier loan for IFF to make than it is for a bank.

IFF: Are there any downsides to referring a nonprofit client outside of the bank for a loan?

Olson: I don’t know why a lender at a bank would hesitate to refer a nonprofit client to IFF, because it makes sense for everyone involved. As a lender, having that go-to reliable source to refer a nonprofit to when I can’t lend to them helps deepen the relationship, like I said. If IFF is going to handle a loan that the bank can’t make anyway, the nonprofit gets the capital they need and the bank still gets to keep the deposit and treasury management relationship. Everybody does what they do best, and that’s a win-win.

IFF: Beyond establishing a referral relationship, are there other avenues for banks to partner with IFF or another similar CDFI that you’d recommend?

Olson: I mentioned joining the Investor Consortium before, and that’s been great for us. IFF has made it very easy for investors because of the level of transparency with the financials and what’s going on with the organization. That gives me huge comfort as a consortium investor, as a member of the Loan Task Force, and as someone who is a referral source for IFF. We’re getting CRA credit as an investor and it diversifies our risk within the portfolio since the money is supporting a pool of projects, instead of just one.

To learn more about IFF’s approach to lending to nonprofits, visit our Capital Solutions page.

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