Shared Services

Basics

As the phrase implies, shared services outsource administrative processes used by multiple CDFIs. The CDFI industry can choose from an array of shared services models. One organization with excess capacity can provide services to others for a fee. Several organizations can form a cooperative to deliver back-office support to members. An intermediary can provide the shared services to CDFIs. No matter the setup, CDFIs that share services can stay independent, reduce costs, and make a greater impact.

Benefits

Shared services enable CDFIs to conduct their community-oriented functions while benefiting from collaboration and efficiencies. CDFIs involved in small business and microenterprise lending may benefit the most from shared services. These organizations typically manage high volumes of small loans that add to costs and operational strain. By outsourcing back‑office functions through shared services, small business and microenterprise CDFIs reduce administrative burdens. This allows them to remain tightly focused on the community’s financing and service needs.

Background

Shared services help CDFIs meet the increasing demand for lending and technical assistance. Historically, CDFIs have operated as mission-focused, vertically integrated organizations. They manage lending; compliance; technical assistance; and administrative functions in human resources, accounting, and information technology. This structure can be duplicative and inefficient, particularly for small and emerging CDFIs with limited budgets, infrastructure, and staff.

Evidence of Success

Although shared services are established in the for‑profit sector and are increasingly common among nonprofits, only a few CDFIs have embraced this model. One prominent example is the CAMEO Shared Services Center pilot that launched in 2022 to support emerging and midsize microenterprise CDFIs in California. CDFIs contract for services with CAMEO based on their needs.

Early evidence from the CAMEO pilot showed that participating CDFIs saved money, gained specialized expertise, improved strategic planning, and shared knowledge. Participating CEOs reported that shared services supported more sustainable growth planning and helped organizations identify operational strengths and gaps. Most importantly, the pilot showed that CDFIs using shared services for administrative functions saved anywhere from 20% to 50% in costs. The organizations freed up resources to expand purchasing power, institutional knowledge, and operational resilience.

Potential Challenges

CDFIs that move to shared services must invest upfront in transferring processes, training staff, and coordinating activities. They need to manage vendor relationships, ensure data security, and adapt standardized services to their unique regulatory and operational contexts. One complication is that CDFIs vary widely in size, geography, regulatory environment, and business model. Some administrative functions (i.e., information technology, procurement, communications, and data analysis) are more scalable across geographies than others (i.e., human resources). Leaders can address these challenges by engaging intermediaries or trade organizations to coordinate partners and develop CDFI‑specific shared services platforms, which are now limited.

Bottom Line

Shared services are used widely in the for‑profit sector and by some in the nonprofit community. Within the CDFI industry, shared services have limited geographic reach and sectoral focus. The CDFI industry can lead in the expansion of shared services by identifying which functions can be easily scaled and developing more CDFI-focused shared service providers. With targeted investment and coordination, shared services are a viable way to improve efficiency and sustainability of all CDFIs.

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