The Federal Reserve Bank of Boston recently hosted a webinar focused on the concept of capital absorption, a process that helps direct financial resources to community projects where they are most needed. The event highlighted the importance of having reliable systems in place to ensure that investments reach local initiatives such as child care centers, housing developments, and downtown renovations.

Charlene “Charly” van Dijk from the Miami branch of the Atlanta Fed used an irrigation system analogy to explain capital absorption. She described it as a way to guarantee that funding flows efficiently to priority projects, rather than relying on unpredictable sources.

Marc Dohan from NewVue Communities in Fitchburg, Massachusetts, spoke at the event about his organization’s experience leading the “ReImagine North of Main” project. Supported by a grant from the Boston Fed’s Working Cities Challenge initiative, this long-term effort aims to revitalize Fitchburg’s downtown area by focusing on arts and culture. The project includes refurbishing the Fitchburg Theatre, renovating city hall, and building artist-preference housing at a former school.

Dohan emphasized that success depended on collaboration among various partners and sectors: “You don't know when that bucket of money is going to show up, or if it's ever going to show up,” he said. “But you need to be ready for it when it does.” He also noted that presenting a unified vision was crucial for attracting public funding: “Seeming like you have your act together really makes a difference for, particularly, public funders,” Dohan said. “They want to know that something's going to happen.”

Carmen Panacopoulos of the Boston Fed discussed what financial institutions look for when considering investments in community projects. “For me, capital follows collaboration,” she said. “Financial institutions really want to invest where they see aligned leadership, shared priorities, and readiness.” She advised leaders seeking funding to build strong relationships with organizations and be clear about how partners can contribute: “Really foster (relationships with) the existing organizations,” Panacopoulos said. “Be specific about how the institution can help.” She added: “They're a strategic partner, too.” Transparency and inclusiveness were also cited as important factors in securing lasting engagement from funders: “The more transparent and inclusive you are … the more likely financial institutions will engage deeply and stick around.”

A report produced by the Federal Reserve Bank of Boston on capital absorption remains available for those interested in learning more about these strategies.

Journalists seeking additional information or wishing to connect with Boston Fed experts are encouraged to contact Colleen Dawicki at Colleen.Dawicki@bos.frb.org.