What Is a CDFI?A community development financial institution (CDFI) is a specialized entity that provides financial products and services in markets not fully served by traditional financial institutions. Products and services provided by CDFIs include mortgage financing for low-income and first-time homebuyers and not-for-profit developers; flexible underwriting and risk capital for needed community facilities; and technical assistance, commercial loans, and investments to small start-up or expanding businesses in low-income areas. CDFIs include regulated institutions such as banks, thrifts, bank holding companies, and credit unions, and non-regulated institutions such as loan funds and venture capital funds.
CDFI certification is conferred by the CDFI Fund, a division of the U.S. Department of the Treasury. The CDFI Fund was created for the purpose of promoting economic revitalization and community development through investment in and assistance to CDFIs. The program was established by the Riegle Community Development and Regulatory Improvement Act of 1994, as a bipartisan initiative.
Private foundations, corporations, and religious organizations also support CDFIs by providing operating funds and loan capital.
CDFI Types, Products, and Services
There are several types of financial institutions in the CDFI industry, and they fall into two main categories: depository and non-depository. Depository CDFIs include community development banks and community development credit unions. Non-depository CDFIs include community development loan funds and community development venture capital funds. The table below lists the different types of CDFIs and the lending products and services they typically offer.
CDFIs by the Numbers
As of September 30, 2016, the CDFI Fund reports that there are 1,049 CDFIs operating in the United States, 74 of which are serving primarily Native American individuals and communities. The 1,049 entities include:
- 548 community development loan funds;
- 15 venture capital funds;
- 288 community development credit unions;
- 124 community development banks or thrifts, and
- 74 bank holding companies.