Community development financial institution

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A Community Development Financial Institution, or CDFI, is a unique entity established to provide credit, financial services, and other services to underserved markets or populations. Under the general definition of a community development financial institution as set forth by the Community Development Financial Institutions Fund at the U.S. Department of the Treasury, a CDFI has a primary mission of community development, serves a target market, is a financing entity, also provides development services, remains accountable to its community, and is a nongovernment entity.

While there are numerous organizations certified as CDFIs by the CDFI Fund, it is believed that there are thousands of financial institutions serving the needs of low-income people or communities in the U.S., but either have not applied for CDFI status or have otherwise not been able to fulfill all of the requirements for formal CDFI certification.

A CDFI may take one of several different forms: community development bank, community development credit union, community development loan fund (including microloan funds), or community development venture capital company.

One of the best illustrations of a CDFI is provided by the film, It's a Wonderful Life. The Bailey Brothers Building & Loan Association is shown as a vital source of financial services and loans to the working class and immigrants in Bedford Falls, helping them to graduate from being renters of Mr. Potter's slums to homeowners themselves. In the world where George has never been born, the Building & Loan is gone, the town has fallen into disarray, and the only source of financing available (as shown in the Pottersville montage) is a pawn shop. Whether a CDFI or the Bailey Building & Loan, communities depend on access to credit and financial services to survive and flourish.

[edit] Notable CDFIs

The largest and oldest community development financial institution is ShoreBank, headquartered in the South Shore neighborhood of Chicago[1]. Through its holding company ShoreBank Corporation, ShoreBank promotes its community development mission through affiliates across the U.S.

Other CDFIs include:

While the CDFI Fund and its certifications are limited to the U.S., CDFIs exist around the world, such as Grameen Bank in Bangladesh or the recently created Fair Finance Consortium in the UK, a collaboration of 11 CFDIs focused on improving access to alternative forms of finance within disadvantaged areas.

[edit] Resources

There are a number of trade associations and other resources applicable to the CDFI industry. For more information, see: