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The basics:

• NJCC closes deals for Bronx Hip Hop Museum, Brooklyn athletic field
• Federal CDFI funding faces cuts under Trump administration
• NJCC pivots to private equity, real estate to sustain operations

Under the leadership of President and CEO Bernel Hall, New Jersey Community Capital continues its evolution as it operates in an environment with no shortage of challenges, especially at the federal level.

NJCC is a New Brunswick-based, leading national community development financial institution dedicated to advancing opportunity through strategic investments and knowledge-based programs.

The organization announced two recent deals for notable projects across the river in New York. In May, NJCC said it closed an $8.5 million New Market Tax Credit loan to The Hip Hop Museum in the Bronx. The first global museum dedicated to documenting, educating, preserving and celebrating Hip Hop history and culture is scheduled to open next summer.

NJCC noted that the NMTC allocation is a significant achievement for the organization. It marks the expansion of its mission beyond New Jersey, as well as its skill at executing innovative projects in overlooked communities.

“We strive to support projects that will make a substantial impact on their communities and residents, as well as spur the most broad and lasting economic development possible,” said Hall in a May 7 news release. “Right now, this is especially critical in the Bronx, where New York City’s annual Poverty Tracker recently reported substantially higher disadvantage rates than every other borough.”

“Because of the diverse, evolving and intellectually important nature of Hip Hop, and the genre’s rich offerings that touch so many cultural benchmarks, this is a formative project that will have deep-rooted staying power,” Hall added. “It will inspire curiosity, creativity, innovation, and empowerment locally and globally for generations to come.”

On the field

That deal came on the heels of one in late March – when NJCC announced a $1.9 million loan to Apex Development Group LLC. The funds will finance a much-needed athletic field in Brooklyn for Success Academy Charter Schools-NYC.

“As a community development financial institution, we’re always looking for projects that support our mission to maximize economic development and educational opportunities in overlooked areas and create sustainable returns for investors,” said Hall in a March 27 statement. “This is especially relevant today given our nation’s need for high-quality school and recreation systems in urban areas.”

Up to the challenge

NJBIZ recently caught up with Hall to discuss the latest happenings at NJCC – including how it is adjusting to the major changes being brought by the Trump administration.

“It’s challenging,” Hall told NJBIZ. “Because uncertainty and volatility in any level of life – whether it be the stock market; whether it be everyday life; whether it be industry – it’s tough to manage around that. It does present a lot of opportunities for us to pivot into other things as we continue to retain our mission and principles.

“But how we go about that is vastly different in light of some of the things coming out of Washington, specific to our industry. We did receive a letter very early on from the administration in January – stating that they would be cutting federal funding to any organizations that supported DEI practices. Every CDFI, not just New Jersey Community Capital.”

Hall said that in March, NJCC received a second letter. “Basically stating that the CDFI Fund – which is where all of the CDFIs get their grants and federal funding in various forms – would be dismantled; and that funding would cease sans statutory funding that had already been allocated in the FY 2025 budget,” Hall explained. “So, if it had not already been allocated and legally binding between the federal government and the CDFI industries – which consists of 1,432 or so CDFIs nationally – then the funding would cease.

“And the fund itself, I think, is being absorbed into the Treasury and the actual set-aside organization is being dismantled. So, next year, it would appear that there would not be a CDFI Fund that would support the CDFI network.”

Pushing back

Hall noted that there are many alliances among CDFIs and their partners/affiliates who are pushing back against the March 14 executive order.

“We obviously are part of that. But the good news is we had begun to pivot our strategy in 2023 – when we approved our new strategic plan,” said Hall. “It’s something that we anticipated, which is why we wanted to do a little more for-profit stuff as we continue to do more impact-related work. But it speeds up some of the milestones that we had for ourselves – as a result of knowing our funding source is going to be diminished.”

Hall said that the cuts were on par with what he expected. He pointed to previous comments made by President Donald Trump in his first term, which ultimately led to no action at that time. But the remarks foreshadowed for Hall what he expected this second Trump term.

“It was a sign to me, even coming into this job, that the strategy of getting low-to-no-cost funding from the federal government to provide lower-cost financing to underserved businesses and real estate developers doing affordable housing or urban retail, small business development – was not going to be a sustainable strategy,” said Hall.

“And so, even at that point, we being really uniquely positioned as a CDFI, a real estate company, as well as a private equity company – focused on that really small, middle-market to micro-developing, small business; we had the ability to say – we’re actually going to look for more profits from the private equity pieces and real estate parts of our business to subsidize ourselves versus completely looking out for grants from the federal government to do the lower cost lending that every CDFI does.”

He stressed, though, that without having another private source of funding – it is going to be an extremely challenging time in the CDFI industry.

“Which sans a reversal of the current actions will result in the consolidation of the CDFI industry as we know it,” said Hall.

Grant funding is vital

When asked about the impact of the cuts on the individuals and businesses that CDFIs serve, Hall said NJCC and other CDFIs can’t give what they don’t have. “Most of those 1,432 CDFIs are not self-sufficient without that grant funding,” said Hall. He noted that for many CDFIs, these cuts could knock them out of business; while NJCC, because of its size and other profit outlets, will certainly be stung by the cuts – it is not solely reliant on federal funding for its budget. “I think that 1,400 number is going to go under, probably 800. I know that that is not a popular statement to make – and I hope that that doesn’t happen. I just want to put that on the record with the fact that my hope is – through all of the advocacy work that is going on, we are obviously participating in – that doesn’t happen.

“But math is math,” said Hall, noting that pulling that funding makes it difficult for many CDFIs to sustain. “And then the actual impact is there’ll be less money going into these lower income ZIP codes in the form of small business investment as well as mixed and affordable housing development.”

We strive to support projects that will make a substantial impact on their communities and residents, as well as spur the most broad and lasting economic development possible.
– Bernel Hall, NJCC president and CEO

Hall also pointed out that a lot of bank branches are closing in many of these same areas. He says the trend has been underway for some time but is one that has been picking up significantly.

“So, the CDFI industry is shrinking. There are less local banks. In these communities, you are going to see a lot of access to capital problems reappear,” said Hall. “Not that they were ever fully solved – but we had been making a lot of strides.”

The ‘good news’

Previously, NJCC introduced a vision and growth strategy – a five-year plan – when the environment was much different. So what happened with that plan and where do things stand now?

“I had based that plan on this happening at some point in the future,” Hall explained. “So, the good news is – we’ve started doing a real estate private equity strategy. And we’re doing the same thing with our small business investment company. We’re making private equity investments.”

“Where we used to be impact and then finance – now, it’s a little more finance, and then impact,” Hall continued. “Because we have to sustain ourselves in a world where the federal government isn’t totally at the same level of commitment where it had been in the past.”

Another area where NJCC is moving full speed ahead is a credit committee rating process.

“We have engaged a top-tier Wall Street bank to take us through it. We plan to have a rating by the middle of the summer. And that’s going to open us up to getting bond financing from the capital markets the same way any corporation would,” Hall explained. “Which is very different from the nonprofit model – that, again, depended on federal and state funding in perpetuity. So, we’re sort of already turning the corner.

“Now, these deals and these credit ratings and these bond issuances have not happened – they are in process,” he stressed. “The expectation – I was talking about 2028 with you. Now, we’re talking about like ’26.”

Hall said that the overall impact has been, “We’ve got to speed up.”