What are CDFIs and Why Do They Matter?

A Community Development Financial Institution (CDFI) is a mission-driven financial organization that provides affordable lending and financial services to underserved communities and populations. Certified by the U.S. Department of the Treasury’s CDFI Fund, these institutions focus on expanding access to capital for individuals and businesses that may face barriers with traditional lenders.

CDFIs balance financial sustainability with community impact. Their goal is not only to provide financing, but also to strengthen local economies and increase financial inclusion.

Types of CDFIs

CDFIs can take several forms, including:

• Community Development Banks that provide traditional banking services in underserved areas
• Community Development Credit Unions that prioritize low- and moderate-income members
• Community Development Loan Funds that finance small businesses, nonprofits, and community projects
• Community Development Venture Capital Funds that invest in businesses located in disadvantaged communities

Why CDFIs Matter

CDFIs play an important role in expanding economic opportunity. By offering responsible financing and flexible underwriting, they help support small businesses, affordable housing projects, community facilities, and individuals who may not qualify for traditional loans.

The impact is significant. In 2023 alone, CDFIs provided nearly $40 billion in new financing across the United States, helping fund businesses, housing, and community development in areas that often lack access to traditional capital.

Through this mission-driven approach, CDFIs help direct capital where it can make the greatest impact—strengthening communities and promoting long-term economic growth.