As we have grown from a one-person startup to a more mature 10-person company, High Impact’s growth has been made possible by our commitment to the concept of “everyone has a seat at the table.” At High Impact, “everyone has a seat at the table” is one of our four core values because we know that we will be stronger as a company if we hear everyone’s voice and insights. Embracing this principle fosters a culture of inclusivity, where diverse perspectives converge, creating a vibrant ecosystem of ideas and innovation. In such an environment, every team member, regardless of title or tenure, feels empowered to contribute, propelling the company towards ingenious solutions and fostering a sense (and a truth) of collective agency in the company's evolution.
For a company operating within an industry that cherishes bottom-up approaches as we do, this value becomes even more pivotal. It ensures that insights and viewpoints from every level are not only heard but are actively sought after and integrated into the decision-making process. Just as CDFIs and other impact lenders understand that solutions are most effective when they are arrived at collectively, we know that we will have our greatest impact by inviting contributions from all corners. This value not only enhances problem-solving capabilities but also cultivates a culture worth working in—it is a lot more interesting to dedicate your professional time to a company that wants to hear what you say, and often acts on what you say, than one that believes that all the wisdom lies with management. “Everyone has a seat at the table” has served us very well in our first 10 years, and I have no doubt the ethos will be with us as a company forever.
When managing a portfolio, easily attainable information often draws attention away from more relevant and critical data. Too often, the tendency is to fixate on accessible details, such as guarantor financials, while overlooking the deeper, potentially harder to quantify indicators of primary repayment risk. Since many loan agreements require the guarantor to submit quarterly financials, spreading them and writing a quick update on changes in financial condition feels productive. And yet, the guarantor is the secondary, or in some cases even the tertiary, source of repayment—so clearly this approach is falling short of the ideal for proactive portfolio management. It is analogous to the continuing efforts on the impact measurement side of CDFIs to find ways to go beyond housing units produced, jobs retained, and other quantifiable indicators to get to true, lasting community impact.
For this reason, we advocate for a paradigm shift—a deliberate emphasis on scrutinizing the primary source of repayment over the easier to analyze secondary or tertiary sources of repayment. Our approach prioritizes a holistic assessment, rooted in monitoring risks identified during the initial underwriting and identifying new risks that emerge during the loan term. While it demands a more thoughtful approach, this methodology yields indispensable insights crucial for proactive portfolio management. By steering focus towards the most urgent and relevant risk factors, our methodology equips lenders with the information they need to truly manage their portfolio proactively.
This deeper, more nuanced approach to portfolio management capitalizes on the insights gained during the underwriting process and maintains a pulse on evolving conditions to keep a clear view on actual credit risks. Yes, we still do spread guarantor financials and monitor for changes in financial condition, but we put the spotlight on more immediate indicators of risk. This allows our clients to adapt strategies, proactively consider restructuring needs, mitigate threats, and ultimately safeguard the health and stability of their portfolios while also positioning their borrowers for success. By embracing the challenge of diving deeper into underwriting insights and continuously monitoring for emergent risks, community development lenders position themselves not just to react but to anticipate, ensuring a resilient portfolio and the best chance for success for borrowers and lenders alike.
This year at High Impact, our team is sharing words of inspiration with each other. At the end of 2023 we gave each staff member a frame with the same inspirational saying in it--and each month this year, a different staff member will select a new phrase to be shipped out and put in these frames for the new month. It's a simple way to connect us all from our headquarters in Albany to the home offices of our remote staff across the country.
The first phrase is this: Hopelessness never got anything done. It struck me as having two important applications to our work. First, the work we do is hard--and I’m not talking about the day-to-day work of underwriting or portfolio managing, I’m talking about the work of creating more just and equitable neighborhoods where everyone can thrive. In fact, at times it can be discouraging to think about how long the impact lending industry has been around, and how many problems persist today. But you know what? Despairing won’t do us any good. There’s no doubt that doing the next loan is a good thing. Taking the next step makes some progress. While I can’t guarantee that we’ll solve our country’s problems, I can guarantee that giving into hopelessness and doing nothing certainly won’t. So we keep pushing..
The other application for us is from the perspective of our neighbors that we are trying to help. If you grow up in an environment that exposes you daily to structural racism, failing schools, a lack of accessible job opportunities, and unaffordable housing, resorting to hopelessness is one logical response. And in that state, it becomes very hard to find those few opportunities that might exist, or believe in yourself, or, in short, get anything done to improve your situation. We want to build the affordable housing, create the excellent schools, and provide for job opportunities that can undo that--give hope where there is none. That’s critical work and can have such an impact on someone’s life. So once again--we keep pushing. We look forward to continuing to do what we can with you, our clients and partners, in 2024, all while also thinking about how to do more and do differently to make a bigger difference than we have already.