Citi Foundation & Momentus Capital: Amplifying Social Impact By Seeding a Community Development Investment Bank

In September 2022, the Citi Foundation selected Momentus Capital as one of the grant recipients of its $50 million Community Finance Innovation Fund to bolster the work of organizations supporting underserved communities across the U.S.

The Citi Foundation saw promise in a number of new initiatives and programs that Momentus had in progress, including a planned Investment Bank focused on developing social impact as an investable asset class for institutional investors. That concept became known as Momentus Securities and has since launched and is already serving as a key bridge between investors and community development lenders.

With that milestone, we sat down with Kristen Scheyder, Senior Program Officer at the Citi Foundation, to discuss the Citi Foundation’s impact strategy, why they choose to support Momentus Capital, and some of the challenges and opportunities she sees for our sector over the next few years.

Kristen Scheyder leads the Citi Foundation’s U.S. community finance and financial inclusion grantmaking strategy, where she helps non-profits implement systems-change strategies to spur inclusive economic opportunity while also focusing on organizational capacity building to help grant partners drive better outcomes for their clients.

The Citi Foundation’s Community Finance Innovation Fund aims to support the next level of growth for CDFIs across the U.S. Can you tell us more about why the Citi Foundation launched this initiative and the types of solutions it supports?

Kristen Scheyder: During the COVID-19 pandemic, the community finance field demonstrated its ability to deliver crucial support for low-income communities and accelerate innovation – each at unprecedented rates. Recognizing this, we wanted to build on the momentum by supporting organizations that could help bolster the community finance ecosystem through investments in technology and operational efficiency, human capital, research and thought leadership and financial and risk sharing models. Ultimately, we selected and funded 12 trailblazing ideas to advance the community finance field and to create transformative positive impact for low-income communities.

You can learn more about the impact some of these organizations are having through this blog on the Citi Foundation website.

What was it about Momentus Capital that interested the Citi Foundation?

Kristen Scheyder: Momentus Capital requested support to help establish a socially-focused investment bank to help institutional investors make investments in underserved communities. We know that institutional investors have traditionally found it difficult to invest in community finance opportunities because CDFI and Community Development Corporation (CDC) financing can be perceived as too small in scale or specialized in nature, so we were especially interested in Momentus’ work to help bridge the gap between institutional investors and those community lenders that successfully deliver capital to low-income and underserved communities. In a time where institutional investors have a growing interest in social investment opportunities, we saw (and continue to see) incredible potential in Momentus Capital’s innovative approach.

Momentus Securities has since launched and started engaging investors and community development banks. What are some of the key highlights that excite you about the work they’ve done?

Kristen Scheyder: Even as a new organization, Momentus Securities has quickly made important strides, reaching a couple of early milestones. One includes approval by the U.S. Small Business Administration (SBA) for them to become an SBA Pool Assembler in the 7(a) Loan Guarantee Program. This approval allows Momentus Securities to assemble eligible loans into Guaranteed Loan Pool Certificates (or SBA Pools) and offer them to investors as a social impact investment vehicle. This is an important tool to introduce new investors to the community finance space.

We were also excited to see that Financial Services Review recognized Momentus Securities as a top 10 broker-dealer for making a significant impact in the marketplace. This recognition shows the value that the team is bringing to the sector.

What do you see as the biggest challenges and opportunities for advancing greater financial inclusion in the next 5-10 years and what role do you see Citi Foundation playing in this space?

Kristen Scheyder: We are currently supporting a new initiative with the Financial Health Network (FHN) that is examining this very question and helping identify opportunities for the field. FHN is looking at the external factors that will shape individuals’ financial health in the U.S. over the next generation, including technology and artificial intelligence, climate change, the future of work and demographic shifts – all areas to watch as they intersect with community development finance. At the Citi Foundation, we remain committed to supporting the evolution of the community finance sector, especially as it seeks to address these interlinked challenges and opportunities to advance greater financial inclusion and health across the U.S. and globally.