Community Development Financial Institutions (CDFIs) are organizations that aim to uplift underserved communities with access to capital and business development resources. Residents and businesses in these communities often struggle to access valuable financial services. CDFIs receive funding through the U.S. Department of the Treasury’s CDFI Fund or other sources to distribute to these residents and businesses. There are currently more than 1,400 CDFIs in the U.S., and each one has a significant impact in boosting local economies.
CDFIs are classified into four types:
Community Development Banks
These organizations help revitalize underserved communities by providing targeted loans and investments.
Community Development Credit Unions
These organizations assist with managing savings, building and protecting assets, and accessing affordable credit and financial services in low-income and minority communities.
Community Development Loan Funds
CDLFs offer financial services and growth support to businesses and individuals in low-income communities. Loan funds are classified into four categories: microenterprise, small business, housing, and community service organizations. A CDLF’s category depends on the type of client it serves, although many institutions serve more than one.
Community Development Venture Capital Funds
These funds offer equity capital and equity-like capital to small and medium-sized businesses in underserved communities.
Through financial assistance and educational support, CDFIs help establish businesses, create jobs, make homeownership accessible, and revitalize communities.