What is a CDFI?
Community Development Financial Institutions (CDFIs) are private financial organizations certified by the US Department of Treasury. They include community development banks, credit unions, loan funds, and venture capital funds.
Many communities across the country are underserved by traditional lending institutions, which is where CDFIs come in. They make a social and economic impact in disinvested local communities by providing affordable financial products and services, such as mortgage financing for first-time homebuyers, commercial loans, and small business lending.
CDFIs often have a focus on social responsibility and inclusion rather than pure profit. They are incredibly diverse in terms of the geographies, communities, and entities served and are located in all 50 states, the District of Columbia, Puerto Rico, and Guam. CDFIs may focus on a specific region, representing urban and rural areas. Some may focus on individual borrowers, small businesses, or institutions like nonprofit organizations and schools. CDFIs may focus on providing financial services to a specific type of business or community, such as Native tribal entities, women of color business owners, or worker-owned cooperatives.
Can individuals invest in CDFIs?
Yes! CDFIs can be a great way to incorporate environmental, social, and governance factors into your investing. They also offer an option for more locally focused impact.
If you’re interested in learning more about CDFIs, be sure to check out:
The US Department of Treasury’s CDFI fund website
This helpful primer from CNote on the benefits of CDFIs and how to invest in them.\
CNote’s inspiring stories from people and organizations that have benefited from CDFIs, like this one
Social Venture Circle’s list of CDFI loan funds that accept investments from individuals