Community Development Finance in Memphis

Research Report

Community Development Finance in Memphis

Abstract

In this report, we explore the ecosystem for attracting, guiding, and financing community development projects in Memphis, Tennessee. We quantify capital access across a range of investment types to identify potential geographic disparities, and we report findings from interviews with practitioners and stakeholders to understand the underlying causes of these investment patterns.

Our study reveals that capital flows in Memphis are deeply segregated—much like the city itself. This is especially evident in neighborhood-level trends along the lines of race and poverty. Inequity is apparent across investment type, though some are more disparate than others. Loans from the mission sector (such as those from community development financial institutions) are more prevalent in communities of color and high-poverty neighborhoods. However, these sources are small relative to mainstream market capital flows and, as such, are not sufficient to overcome investment disparities.

Through interviews, we learned that the community development finance ecosystem in Memphis is growing. But interviewees also described it as “complacent”—only a few local actors have the willingness and, critically, the capacity to drive complex and impactful community development projects. Despite the gaps, interviewees were optimistic about the involvement of outside community development financial institutions, growth in small-business activity before the COVID-19 pandemic, increased philanthropic engagement, the leveraging of tax credits and the pursuit of regional solutions by local governments, and strategic activity by business improvement districts.

Cross-Center Initiative

Cross-Center Initiative: 
To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.