As Board Chair, I’d like to take a moment to share an update on Craft3’s CEO search and the organization’s bright future. As many of you know, in March of 2024 Craft3’s CEO Adam Zimmerman left the organization. The Board appointed Craft3’s President, Bruce Brooks, as interim CEO. We are immensely grateful to Adam for his service and to Bruce for his willingness to step into this role.
The Board has begun the process to select a permanent CEO. We are approaching this vital decision with care and forethought. Our next CEO will be tasked with leading a large and complex organization, meeting the ambitious goals of our current Strategic Plan, and ensuring that Craft3 continues to evolve and thrive.
Since 2016, Craft3 has grown from 54 to more than 90 employees, revenue has increased by nearly 100 percent, and net assets have increased by nearly 80 percent. Regardless of whether we grow quickly or more slowly, Craft3 is committed to building robust internal systems and a strong and inclusive organizational culture. Towards that end, early in 2024, Craft3 established a new Leadership Committee composed of senior management to coordinate decision making, product development, and strategy across the organization. They also recently kicked off important efforts focused on identifying, updating, and strengthening organizational culture.
As I look at Craft3, I see a winning formula: a mission and strategy that are more urgent than ever before; highly skilled, passionate and diverse staff; an engaged and deeply committed Board; and a creative and capable management team.
Sincerely,
Paul Benoit Chair, Board of Directors
2023 was the first year of Craft3’s new strategic plan, “Capital, Relationships, and Voice: Investing in Communities and Change.” When we developed and launched this plan, I was excited by the vision it offers for the future of the Pacific Northwest. I remain energized and enthusiastic about that vision.
More to the point, though, this needs to be about the work and the results. So, I am even more excited about implementing the strategies we are using to drive towards that future. It’s early and we continue to learn, but we are committed to using capital, relationships, and voice to target our investments and create meaningful outcomes for people and communities across Oregon and Washington.
I invite you to read about some of Craft3’s successes and results from 2023. You will also find visual summaries of our lending that show how we are expanding access to capital and focusing on our target investment areas.
Thank you for joining us on this journey — regardless of whether you’re a customer, an investor, a business partner, a referral source, or an engaged citizen. We know we want to create a Pacific Northwest that is thriving, just, and empowered. While that future is far from certain, we are fighting for it with your help!
Sincerely,
Bruce Brooks President and Interim CEO
In 2023, Craft3 originated 1,114 loans totaling $76.2 million. This is a 41 percent increase by number and 34 percent increase in dollars over 2022.
Craft3 focuses on expanding access to capital. Too many entrepreneurs, organizations, and homeowners find themselves unable to access the credit they need to launch a promising business, realize an excellent idea, or make an essential septic or energy upgrade.
In 2023, Craft3 made $23.1 million in loans to homeowners. Those dollars went to:
In 2023, Craft3 made $53.2 million in commercial loans. Those loans funded 37 start-ups and 114 entrepreneurs of color and woman-, immigrant-, and veteran-owned businesses. Those dollars went to:
Craft3 invests in four key areas with the goal of creating wealth in the communities we serve. In 2023, we made 141 commercial loans. Our commercial lending flowed into our strategic investment areas as shown below. 12 of those loans fell into more than one investment area.
In 2023 we launched a new five-year strategic plan, “Capital, Relationships, and Voice: Investing in Communities and Change.” With this plan, we’re working towards a Pacific Northwest that is thriving, just, and empowered.
While we believe a better, more inclusive future is possible, it is far from inevitable. Getting there will take decades and require commitment, resources, and extensive partnership.
Our work is guided by our theory of change, a logic model that visualizes how our core strategies and target investment areas can create better outcomes for all. In the diagram below, you can see how capital, relationships, and voice are directed into target investment areas: housing, small business assets and growth, essential community services, and community climate adaptation. Through place-based work we can create outcomes and impacts at community, state, and regional scales.
As a result of our capital strategy, we predict we will see two key outcomes both of which are intended to result in wealth creation:
- asset building and preservation
- and building community stability and resilience
As a result of our relationships strategy, we predict we will see the outcome of effective relationship networks empowering communities; and as a result of our voice strategy, we predict we will see the outcome of marginalized voices elevated. The outcomes of our relationships and voice strategies together are intended to lead to shifting power.
Below you will find more about each of our core strategies — Capital, Relationships and Voice — as well as stories and results.
Equitable access to capital is essential to creating the future we all deserve – a future in which people are empowered to determine the shape of their lives, and communities, economies, and ecosystems can thrive.
Capital can be magical. Having it unlocks possibilities, accelerates projects and realizes potential.
Below we highlight some of the transformative powers of capital. Debt financing, far from being dull and dry, can play a vital role in creating a better future.
Collectively, we will need to do a lot of building and retrofitting to provide sufficient housing, to deliver essential community services, and to adapt to a changing future. Craft3 provides Construction Loans, and Owner-Occupied Commercial Real Estate Loans, as well as financing for housing.
A working capital loan helped The Station Coffee build out and open their second location in the Columbia City neighborhood in south Seattle. This BIPOC, husband- and wife-owned venture created 11 jobs and retained 5 jobs. The shop was founded in 2010 and the flagship location in Beacon Hill is known as a community hub; the second location promises to become the same.
When Family Redwood Cooperative sought to purchase a mobile home park, they needed financing until they could secure permanent financing through Oregon Housing and Community Services (OHCS). Craft3 participated with Network for Oregon Affordable Housing (NOAH), a Portland-based CDFI, to provide financing. Family Redwood Cooperative will preserve 110 units of affordable housing in rural Oregon.
An owner-occupied commercial real estate (OOCRE) loan helped this early learning center purchase and renovate a second building and expand. The center is currently licensed for 34 children, 95% of which are low-income, and government subsidized. The new center will serve approximately 36-40 children, at least 90% low-income or subsidized.
Existing assets must be maintained or they will fail and cease to function. One way Craft3 is investing in maintenance is through Clean Water Loans.
Clean Water Loans
Septic repairs are often urgent, unexpected, and costly. Since 2003, Craft3 has offered affordable and accessible septic financing to help homeowners in need make essential repairs. This ensures that they can stay in their homes and also keeps local waters clean. Our loans can cover the entire cost of eligible design, permitting and installation. Inverting the usual bank model, we offer lower interest rates for qualified lower-income borrowers.
Craft3 began offering Clean Water Loans in Washington state and has built a strong partnership with the Washington State Department of Ecology. Since then, the program has expanded to Oregon. We have made over 3,000 Clean Water Loans across Washington and Oregon, totaling more than $75 million.
In 2023, Craft3 in partnership with the Oregon Department of Environmental Quality offered grants to lower-income homeowners. Grants of up to $30,000 per project, sometimes in conjunction with affordable loans let more customers in challenging situations make essential repairs. Many customers who received grants were pleasantly surprised and exceedingly grateful.
Going the distance to help customers
Clean Water Loan customers often come to Craft3 in crisis. They may have been denied financing elsewhere or believe there is no way they will be able to afford a costly and urgent repair. Their local health jurisdiction or their contractor may have suggested they contact Craft3, and the homeowner may perceive this as a last resort.
Older homeowners, in general, are more likely not to have internet and to be less comfortable navigating digital applications. Craft3 lenders understand this, and they are patient and willing to walk customers through the process.
One older homeowner was panicked when she reached out to us. Her husband, who usually dealt with their finances, was in the hospital. She did not have internet access, but her contractor and the Craft3 lender worked diligently to make sure she understood the process and was able to sign her loan documents in a timely manner.
Changing what is possible
For low-income households, a septic replacement at up to $30,000 may simply be out of reach. This was the case for a mother in her 90s and a daughter in her 60s who had an annual income that placed them below the poverty line. A Clean Water Grant made possible by funding from the Oregon Department of Environmental Quality covered the entire cost of their project. The homeowners were astounded and grateful.
Across Oregon and Washington, 2023 Clean Water Loans resulted in 47.5 million gallons of wastewater treated.
Capital is a great accelerator. It can turn ideas into reality, launch businesses, and let projects move forward. Because financing lets you act before you have all the money you will need, it can function like a sort of time machine.
Federal Way Birth Center (FWBC) is a newly licensed and operating birth center that provides culturally relevant midwifery services to families seeking out-of-hospital births. FWBC is the first birth center in the state of Washington to be owned and operated by a Black midwife. It is well documented that maternal and infant deaths are elevated in low-income BIPOC communities but this center redresses that gap in services. Craft3 provided a construction to permanent financing to support the acquisition and improvements to the birth center. The financing is Shari’a-compliant and uses a structure that does not charge interest, but is instead based on shared ownership and risk.
The unprecedented increase in state and federal funding for land conservation and climate adaptation, along with the urgency of the climate crisis, means there is greater need than ever for conservation bridge financing. Craft3 provides flexible and accessible capital paired with expert advice to support property acquisitions ahead of long-term funding.
Glen Tana is an iconic 1,060-acre property that includes two miles of the Little Spokane River. The property contains a vital habitat supporting salmon reintroduction efforts led by the Spokane Tribe of Indians. It also offers excellent public river access while safeguarding an important watershed.
Craft3 financing, along with financing from Washington Trust Bank and Washington State Department of Commerce, enabled Inland NW Land Conservancy to purchase the land. Long-term, the Washington State Parks and the Spokane Tribe of Indians will own and collaboratively manage the property.
Since 2011, Craft3’s Conservation Bridge Fund has enabled 25 organizations to conserve over 20,000 acres in Oregon and Washington, accelerating watershed restoration, providing valuable ecosystem services and community benefits. This would not have been possible without the generous ongoing support of the Meyer Memorial Trust.
Energy efficiency improvements offer many benefits: comfort, return on investment, and ongoing savings. The upfront costs, however, prevent many homeowners from making energy improvements.
Craft3 Home Energy Loans enable homeowners to finance all eligible efficiency measures. Equitable underwriting criteria enable borrowers without perfect credit or full collateral to qualify. We can find ways to say yes when others have said no.
In 2023, we made 606 Home Energy Loans totaling $8.6 million. These projects are powering a faster and more equitable transition to clean energy and comfortable, climate-adapted homes.
Helping homeowners
For many customers, Home Energy Loans make a big difference in quality of life and peace of mind. That was certainly the case for Tina.
A Craft3 Home Energy Loan let Tina purchase a new AC and know that her dogs would be comfortable while she was at work — all for an affordable monthly payment.
Relationships play a central role in Craft3’s work. Staff cultivate connections with banks, local and state government officials, nonprofits, Tribes, and private funders that result in referrals to Craft3’s lending services. These partners also help us understand the issues affecting residents of Oregon and Washington.
We look to create and deepen relationships that help us advance the values expressed in our strategic plan and mission both through our own work and in concert with our partners. Just as importantly, we look for opportunities to amplify the work of others, especially where we recognize that their contributions, based on their experience and voice, will have greater impact than ours. While our relationship work varies, we always strive to show up, follow up, and be consistent.
Making Connections in Rural Communities
In 2023, Craft3 worked closely with the US Department of Agriculture and attended a rural investment summit they convened in Skamania, Washington. As part of this effort, we developed relationships with economic development organizations, rural energy assistance groups, and others. These relationships and connections have enabled us to learn about meaningful community economic development projects, including:
- Food banks in central Washington that are looking for financing to help them grow and expand their reach to provide nutrition assistance to low-income residents and mitigate the effects of food deserts
- An economic development agency in the Wallowas seeking to develop workforce affordable housing
- A community organization seeking guidance to structure a financing request and present that request to their debt-adverse Board of Directors
We enter these conversations because they are valuable in and of themselves, regardless of what, if anything, will result from them. We seek to help our partners understand the risks and rewards of debt financing. If they decide debt financing is an answer to achieving their objectives, we consider how to best structure that financing to fit their needs and timeline.
Steven Phan, Craft3, Business Lender. “When I am building relationships, I am not concerned with end results. I am focused on understanding what each side can provide and bringing value and mutual benefit. From that starting place, worthy projects and transformative loans will come.”
Laying the Foundation for the Region's Climate Future
Community Development Financial Institutions and other mission-driven lenders across the United States spent the early part of 2023 awaiting information from the Environmental Protection Agency (EPA) about the Greenhouse Gas Reduction Fund (GGRF), a $27 billion national program created through the federal Inflation Reduction Act. Craft3 was excited for this funding, but also concerned that decisions would be made regarding program design that would make it hard for community organizations in Oregon and Washington to participate in this work.
In concert with Energy Trust of Oregon and Oregon Business for Climate, Craft3 engaged with organizations and state officials across Oregon and Washington about climate-related financing needs and opportunities and with national organizations that have applied to serve as national intermediaries.
Through in-person and virtual meetings, webinars, and other efforts to share information, this group has learned with community organizations what homeowners, renters, contractors, nonprofits, small business owners, Tribes, and rural and urban communities need from the GGRF. This group has, in turn, worked to educate national GGRF intermediaries about Pacific Northwest energy markets and its climate-related finance ecosystem to maximize the likelihood that Oregon and Washington will be well served by GGRF and the programs national applicants are contemplating.
Home energy lending in Yakima
In 2023, Craft3 made 193 Home Energy Loans totaling $2.95 million to Yakima County homeowners. This was more than double 2022’s 95 Home Energy Loans to Yakima County residents, totaling $1.43 million.
This marked increase is the result of a successful, long-term relationship building effort. Craft3 has partnered closely with Pacific Power’s Wattsmart program. Wattsmart aims to encourage energy efficiency and provides rebates and technical assistance, prioritizing highly-impacted communities.
Wattsmart-hosted events have helped us connect and build relationships with contractors, like 509 Ductless, who refer customers in need of financing to Craft3. Helping more customers complete home energy projects is a goal shared by contractors and Craft3. Both sides benefit as do customers!
Another way Craft3 has built successful relationships in Yakima is through bilingual Spanish-speaking lenders and more recently, Spanish marketing materials. These have helped build trust and credibility within Spanish-speaking communities.
Craft3 envisions using Voice as a strategy in two ways. First, we look for opportunities to leverage our status as a well-established, regional CDFI to advocate on behalf of CDFIs in Oregon and Washington on the local, state, and federal level. Second, we look for opportunities to amplify the voices of partner organizations, including by allying with them in ways that put their expertise and lived experience, not ours, front and center.
Raising the voices and concerns of smaller CDFIs
In 2020, Craft3 helped propose a bill in the Washington State Legislature that would provide a new source of public funding to Community Development Financial Institutions (CDFIs) for the purpose of investing in underserved communities. In 2022, after a disciplined, coordinated effort that included establishing the Washington Community Investment Coalition (WCIC), that bill became law. This will provide up to $40 million in funding over five years.
In 2023, the WCIC met to discuss the Washington Department of Commerce’s Request for Information (RFI) regarding the design of the grant application for the Equitable Access to Credit Program. Coalition members reviewed the Department’s request, sharing their organization’s perspectives for how the Department could design a program that reduces barriers to participation, allows for quick deployment of funds, and helps establish a strong foundation for an enduring program. Craft3 submitted a response to the Department’s RFI that amplified concerns raised by smaller CDFIs regarding potential barriers to their participation and offered suggestions for program design choices based on Craft3’s experience as a larger, more established CDFI. The Coalition additionally submitted a response to advocate for large and small members.
Learning from the Muslim community
The Shari’a prohibition against charging or paying interest means that Islamic community organizations and businesses are often unable to access capital without compromising their faith.
Craft3 was a founding member of the Muslim Community Finance Coalition (MCFC) convened in 2018 by the Seattle Public Library with the goal of better understanding needs and potential solutions for Shari’a-compliant financing. This coalition brought together local Community Development Financial Institutions (Business Impact NW and Craft3), and credit unions, as well as community members, including Muslims who work for the City of Seattle and King County.
Listening to and learning from the Coalition helped Craft3 realize that the best way to connect and build trust with the Islamic community is through imams and other religious leaders. In designing our Shari’a-compliant financing offerings, we worked closely with Mufti Ibrahim Essa, a well-known and recognized Shari’a Scholar in the fields of Islamic Banking and Takaful.
Our partnership with the Islamic Center of Puget Sound (ICOPS) has grown and blossomed alongside our work with the MCFC and our efforts to develop Shari’a-compliant financing. That financing has enabled ICOPS to purchase several buildings and grow.
Investors and Grantors
Wealth Management Firms
2023 Financial Results
*The Consolidated Statement of Financial Position and Consolidated Statement of Activities presented were audited by RSM US, LLP. If you’d like to see our full balance sheet and income statement results, you can view Craft3’s consolidated 2023 Audited Financial Statements.
Thanks!
Our work would not be possible without our customers, partners, investors, and collaborators. Thank you for trusting us, teaching us, supporting us, and joining us as we work towards a thriving, just, and empowered Pacific Northwest.