Mission-Driven Bank Fund

A T - A - G L A N C E
 

 

 

 

WHAT IS THE MISSION - DRIVEN BANK FUND? 

Provides investors with an opportunity to support 

mission-driven banks that support low- and 

moderate-income, minority, and rural communities. 

PROVIDE 

affordable financial products economic and community 

and services 

STIMULATE BUILD 

opportunity and prosperity 

development 

Support for these institutions helps them build size, scale, and capacity—enabling them to have a 

greater impact in the communities they serve. 

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WHAT MISSION - DRIVEN BANKS DO

• About 280 banks with branches in 29 states 

serve communities that are often the first to 

experience the effects of economic 

downturns and among the last to recover.

• FDIC research shows Minority Depository 

Institutions (MDIs) commit a large portion of 

their portfolios to minority and lower income 

communities compared to non-MDIs.

• FDIC-insured Community Development 

Financial Institutions (CDFIs) deliver at least 

60% of their total lending, services, and other 

activities in low-income communities, many 

of them in rural areas.

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HOW THE MISSION - DRIVEN BANK FUND WORKS

PRIVATE 

INVESTORS 

$ Corporations 

Financial

Institutions 

Philanthropic

Organizations 

Capital 

Investments 

$

$ Technical 

Support 

MISSION-DRIVEN 

BANK FUND 

$ 

$120

Million 

Committed 

and Growing

MISSION-DRIVEN 

BANKS 

Small Business 

Loans 

Home 

Mortgages 

Community 

Development 

Loans 

COMMUNITIES 

Minority 

Low-Income 

Rural 

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FUND STAKEHOLDERS

Fund design seeks to balance the needs and preferences of the various stakeholders, 

while prioritizing impact within the communities the MDIs/CDFIs serve. 

MDI/CDFI Banks 

• Patience and permanence of capital

• Investment flexibility (investment type, size, structure)

• Minimize operational burden of investment diligence, reporting

requirements 

• Business and social impact

Investors 

• Timing and expectation for return of capital (capital preservation)

• Return on capital

• Access to liquidity

• Impact measurement/use of proceeds requirements

• Business, marketing, and social impact

Fund Manager 

• Minimize operational complexity/costs

• Meet fund performance targets (impact measurement, returns)

• Planning for and execution of fund exit

• Business, marketing, and social impact

MDI/CDFI 

BANKS 

Support for Bank Community 

Health & Growth Impact 

FUND 

FUND 

MANAGER INVESTORS 

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HOW THE FUND WORKS FOR MISSION - DRIVEN BANKS AND THEIR COMMUNITIES

Mission-driven banks make pitches to the fund for potential investments in a variety of asset 

classes that will help them build size, scale, and capacity to grow their impact in communities. 

• Equity in form of common or perpetual preferred shares (provides up to 10X multiplier for

new lending in the community)

• Loan participations

• Loss share agreements

• Certificates of deposits

• Term debt

• Investments proposed by mission-driven banks

• Strategic advisory services

The pitch process empowers FDIC-insured MDIs and CDFIs to seek support for their unique 

needs and to demonstrate how the investments will support minority, low- or moderateincome, or rural communities. 

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HOW THE FUND MANAGER SUPPORTS THE FUND

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ADVISORY COUNCIL:

• Supports mission focus

• Shares community perspectives

• FDIC is a non-voting member

FUND MANAGER:

• Underwrites pitches and provides consulting services

• Manages fund performance targets

• Plans for and executes fund exit

• Selected by anchor investors through a competitive process

emphasizing mission perspective and informed by input from

mission-driven banks

• Assists with sourcing investments

• Seeks to engage with third parties as additional avenues for

investment ideas

• Facilitates stakeholder and community involvement through

partnerships and advisory groups
 

 

 

 

MILESTONES AND NEXT STEPS

COMPLETED 

• Secured $120 million (and growing) in 

private investor commitments to date

• Designed fund structure with input from

70 CEOs of mission-driven banks, trade

groups, bank potential investors,

investment consultants, and

philanthropic organizations

• Drafted terms and conditions

UPCOMING 

Q3 2021 

• Announce anchor investors of fund

• Anchor investors solicit fund manager

Q4 2021 

• Onboard fund manager

• Finalize terms and conditions

• Form Advisory Council

• Secure first round of funding

• Advise mission-driven banks about pitch process

Q1 2022 

• Accept first round of pitches from mission-driven banks

For more information, contact MissionDrivenFund@fdic.gov 

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H O W TH E FU N D W O R K S F O R IN V E S T O R S

 

 

 

01 

Target Size 

The Mission-Driven Bank Fund will be a 

Delaware limited partnership and have a 

target size of $500 million - $1 billion of 

capital commitments, with the first closing 

upon receipt of at least $[100] million in 

capital commitments and engagement of 

a specific Fund Manager. The minimum LP 

commitment will be [$10 million] unless 

adjusted by the GP. 

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Investment Period 

The GP will generally not be permitted to 

make any capital calls for the purpose of 

making investments after the termination of 

the period commencing on the First Closing 

Date and ending on the date that is 

[four][five] years from the First Closing Date. 

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Fund Terms 

The term of the Fund will be [ten] years from 

the Final Closing Date unless extended by the 

General Partner (GP) of the Fund (typically 

the Fund Manager) with the consent of either 

the LP Advisory Committee or a majority-ininterest of the Limited Partners (LPs), for up 

to two additional one-year periods. 

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Distributions 

Distributions from the Fund may be made at 

any time as determined by the GP in its sole 

discretion, except in certain limited 

circumstances. The GP will be entitled to 

withhold from any distribution amounts that 

may otherwise be retained for reinvestment. 

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Mission Alignment 

The Fund Manager will establish and 

engage an Advisory Council to ensure the 

Fund’s investments are consistent with its 

mission focus, and provide broad 

stakeholder input into the oversight of the 

investments and the impact on the 

communities served by mission-driven 

banks. The FDIC will have an observer role 

on the Advisory Council. 

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Investment Limitations 

The Fund will only make investments if 

they are consistent with the Fund’s 

mission-driven purpose. The legal 

documentation includes stringent 

restrictions on changing the purpose of the 

Fund. Key thematic investment priorities 

are expected to be in equity and loanbased investments. 

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Fund Purpose 

Fund formation documentation mandates that 

the purpose of the Fund is to (i) make 

investments in FDIC-insured MDIs and CDFIs, 

(ii) provide complementary strategic advisory

services, in the form of financial or technical

support, to such entities (potential strategic

advisory services include financial and

business strategy, operations, and technology),

and (iii) promote and encourage the creation of

new MDIs and CDFIs.

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Reporting & Impact 

The Fund will provide audited financial 

statements each fiscal year as well as 

unaudited quarterly reports that include a 

summary of investments made and the thencurrent valuation of the capital accounts. 

The annual statements will be accompanied by 

an analysis describing the social impact of the 

Fund’s investments, including metrics on 

performance and impact to communities 

served. 

Note: Management fees will be determined during the Fund Manager selection process. 

*This is a summary of proposed terms for the Fund based on the most recent dialogue with key stakeholders. While the FDIC has established the framework for the Fund, it will not manage the Fund, contribute capital to the Fund, or be involved in the Fund’s 

investment decisions. The FDIC will have an observer role on the Advisory Council.

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CONFIDENTIALITY AND SECURITIES DISCLAIMER 

THIS DOCUMENT HAS BEEN PREPARED TO PROVIDE RECIPIENTS WITH THE OPPORTUNITY TO HELP IN THE DESIGN AND 

STRUCTURING OF THE FUND TENTATIVELY NAMED THE MISSION-DRIVEN BANK FUND, LP (THE “FUND”) AND MAY NOT BE USED 

OR REPRODUCED, IN WHOLE OR IN PART, FOR ANY OTHER PURPOSE. 

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO, OR THE SOLICITATION OF AN OFFER FROM, ANY PERSON TO 

SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES OR OTHER INVESTMENT PRODUCTS. 

THE INFORMATION CONTAINED HEREIN IS CONFIDENTIAL. RECIPIENT WILL NOT, AND IT WILL CAUSE ITS DIRECTORS, 

PARTNERS, OFFICERS, MEMBERS, EMPLOYEES, ATTORNEYS, AGENTS AND REPRESENTATIVES TO NOT, DIVULGE ANY SUCH 

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