Community Development Financial Institutions, or CDFIs, are specialized financial institutions providing financial products and services to underserved communities, low-income individuals, and businesses. CDFIs are mission-driven organizations aiming to promote economic development and community revitalization in areas with limited access to traditional banking services.
CDFIs were first recognized by the US Congress in 1994 to address the lack of access to affordable financial services in low-income and underserved areas. Since then, the number of CDFIs has grown significantly, with over 1,000 certified CDFIs operating in all 50 states and the District of Columbia.
CDFIs can provide a range of financial services, such as small business loans, affordable housing loans, consumer loans, financial education, and technical assistance. CDFIs often work closely with community-based organizations and local governments to identify the needs of their communities and develop targeted programs to address those needs.
CDFIs are certified by the CDFI Fund, a program within the US Department of the Treasury, and are subject to certain regulatory requirements. To become certified, CDFIs must meet certain criteria, such as having a primary mission of serving an underserved market, having a commitment to financial and social performance, and being accountable to their communities.
In addition to providing financial services to underserved communities, CDFIs have also been recognized for their ability to spur economic growth and create jobs. According to a report by the CDFI Fund, CDFIs have financed over 1 million affordable housing units, created, or retained over 1.5 million jobs, and provided over $171 billion in financing to underserved communities since their inception.
CDFIs are important in promoting economic development and community revitalization in underserved areas. By providing access to affordable financial services and targeted programs, CDFIs help to create opportunities for individuals and businesses that traditional financial institutions might otherwise overlook.