The Community Development Financial Institutions Assessment and Rating System (CARS™) is an independently administered analysis and rating of non-depository Community Investment Institutions (CIIs) that has been recently developed by the Opportunity Finance Network to aid investors in their investment decision process.
Many prospective community investors want to invest in CIIs but do not have the necessary industry knowledge, underwriting expertise, or staff capacity to underwrite or monitor CII loans. CARS™ aids investors in their decision making by providing comprehensive and uniform analysis about CIIs via individual purchase or subscription.
The system looks at impact performance as well as financial strength and performance, and issues a combined rating between AAA+1 (the highest available) and B 5 (the lowest possible). The letter designation is for impact performance (on a scale of AAA, AA, A, B) and the “+” signifies whether the CII plays a leadership role in policy. The number is the financial strength and performance rating and is an assessment based on creditworthiness using a CAMEL analysis.
As investors incorporate the CARS™ rating and analyses into due diligence reviews, it will become a recognized benchmark in the community investment field. Approximately 20 CIIs will be rated by the beginning of 2006, and the availability of the ratings is kept current in the Due Diligence section of the CII profiles in the Community Investment Database.
For more information, visit Opportunity Finance Network’s CARS™ page.