Our Work with CDFIs
A community development financial institution, or CDFI, is a specialized entity that provides lending, investments, and other financial services in economically distressed communities. The Minneapolis Fed’s Community Development office began partnering with CDFIs and CDFI support networks in the early 2000s. A major component of this work involves conducting educational and networking events where CDFIs and other community development organizations can meet and learn from experts in the field.
One early example of these events is Partnership Tools for Community Development, a three-part series held in Minneapolis in the spring of 2001. The series covered the essentials of the CDFI program, New Markets Tax Credits, the Bank Enterprise Awards, and equity equivalent investments, or EQ2s. Later in the year, we took the Partnership Tools concept on the road to Fargo, N.D.
In 2002 and 2004, we hosted New Markets Tax Credit (NMTC) Program training workshops that gave Ninth District community development organizations the opportunity to learn directly from CDFI Fund representatives, national CDFI coalition leaders, and other key players in the industry. The NMTC Program, which is administered by the U.S. Department of the Treasury’s CDFI Fund, promotes private sector capital investment in underserved areas by providing federal tax credits to individual or corporate taxpayers who make qualified investments in low-income communities.
In Rochester, Minn., in November 2006, we cosponsored Microenterprise Tools & Techniques, a workshop for lenders and service providers on building the organizational, lending, and technical assistance capacity of microenterprise practitioners and organizations. The event drew national speakers and a diverse group of entrepreneurs and community development practitioners from across Minnesota.
In November 2007, we brought together representatives from banks, government entities, financial regulatory agencies, and CDFIs to discuss the most prevalent forms of community development investments and how banks and regulators view those investments in light of the Community Reinvestment Act. Senior representatives from the Minneapolis Fed’s supervision and regulation area were onsite to lend their expertise.
Partnerships are at the core of our work with CDFIs. In April 2008, Community Development, in partnership with local CDFIs and the Minnesota Department of Employment and Economic Development, organized Moving Toward a Sustainable Field, a two-day conference in St. Cloud, Minn., for local and national microenterprise practitioners, technical assistance providers, funders, and policymakers to explore ways to create strong, self-sufficient microenterprise programs and robust, diverse local economies.
In April 2010, Community Development arranged for Federal Reserve Governor Elizabeth Duke to meet and visit with CEOs of CDFIs and banks from the Twin Cities area and outstate Minnesota. Participants provided the Governor with overviews of their organizations and work and then contributed to a larger discussion of efforts to address challenges entrepreneurs face in accessing capital.
Community Development staff and management were active partners in organizing the 2011 Opportunity Finance Network national conference, which was held in Minneapolis. Opportunity Finance Network (formerly known as National Community Capital Association) is a national CDFI membership organization that promotes investment in low-income communities. Our Senior Vice President, Dorothy Bridges, delivered opening remarks.
In addition to convening conferences and workshops, Community Development has provided targeted training and technical assistance to some CDFIs. These efforts have included application reviews, assistance with finance and loan portfolio committees, and data analysis.
The History of CDFIs
Exploring half a century of serving low-income communities
CDFI Roots: The Self-Help Credit Movement
The CDFI concept is “part of a rich history of self-help credit. From the immigrant guilds of New York City’s Lower East Side and the Prairie Populists of the late 1800s, to African-American communities forming the first community development credit unions in the 1930s, communities have sought self-help credit solutions because traditional financial institutions have ignored or abandoned them.”*
* From the CDFI Coalition, What Are CDFIs?
Early 1960s
The CDFI industry as we know it today begins taking shape; the first organizations dedicated to community development are established. They work to address poverty, with strong support from the government. 
Early 1970s
CDFIs begin reaching out to private organizations for funding; the first business development loan funds are launched. In 1973, South Shore Bank in Chicago, the first community development bank, is established. In the same year, the Neighborhood Reinvestment Corporation (now known as NeighborWorks America) is formed.
1978
The Neighborhood Reinvestment Corporation begins funding affordable housing in 1978.
1985
At the midpoint of the 1980s, the National Community Capital Association (now known as the Opportunity Finance Network), a national network of CDFIs, is created. 
Early 1990s
1990 marks the beginning of a period of great expansion in the CDFI industry. In 1992, the CDFI Coalition, a national organization promoting the work of CDFIs, is founded. The CDFI Fund, a federal government agency that certifies and provides funding to CDFIs, is established two years later. 
1995
Revisions made to the regulations implementing the Community Reinvestment Act explicitly recognize loans and investments in CDFIs. 
Recent Years: Sustaining the CDFI Industry
Since the mid-1990s, CDFIs have had to pursue sustainability strategies in order to cope with several challenges, including demographic changes, declines in funding from philanthropic organizations, the foreclosure crisis, and the changing landscape of small business finance. 
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 June 30, 2012, the CDFI Fund reports that there are 999 CDFIs currently operating in the United States, including:
- 617 community development loan funds
- 25 venture capital funds
- 221 community development credit unions
- 82 community development banks or thrifts
- 54 bank holding companies
Statistics about the largest category of CDFIs, community development loan funds, are listed in the table below. This table is based on a comprehensive data set released by the CDFI Fund on December 5, 2011. Through its data collection system, known as the Community Investment Impact System (CIIS), the agency gathered financial data on 534 CDFIs that have reported to the CIIS. In general, these CDFIs have provided information on their overall assets, loans, investments, sources and cost of capital, operating expenses, staffing levels, and community impacts. The table captures basic financial information on community development loan funds that reported data to the CDFI Fund for the period 2004–2010.
Articles & Reports
CDFIs as Catalysts for Improving Social Outcomes
Spring 2012
From Community Investments, a publication of the Federal Reserve Bank of San Francisco
A discussion of how CDFIs can use a logic model to effectively communicate their role as catalysts for improving social outcomes in underserved communities.
From Community Dividend
Federal initiative brings healthy fare to food deserts
April 2013
A collaborative initiative by three federal agencies aims to increase the supply of nutritious foods in urban and rural areas where access to healthy food is low.
Rural CDFIs: Creating connections to marketplaces: A conversation with Mary Mathews of the Entrepreneur Fund
January 2013
Community Dividend speaks with Mary Mathews, founding president and CEO of the Entrepreneur Fund, to learn about the circumstances and challenges rural community development financial institutions (CDFIs) face.
Treasury's CDFI Fund announces nearly $18 million in Bank Enterprise Awards
January 2013
News and Notes
Native CDFI News
January 2012
Montana CDC project receives top honor
January 2012
Harvest Initiative and Hunkpati Investments: Stirring up economic development on the Crow Creek reservation
October 2011
The story of how residents of the Crow Creek Indian reservation, a prominent businessman, a church congregation, and two young attorneys came to be deeply involved in improving the reservation’s economic circumstances.
Making the New Markets Tax Credit work in Native communities
October 2011
Some Native communities have had success in attracting New Markets Tax Credit investments, despite unique challenges involved in implementing the program in Indian Country.
U.S. Treasury announces 2011 CDFI awards
October 2011
Measuring the impact of community development: A conversation with Paul Mattessich of Wilder Research
July 2011
Community Dividend speaks with Paul Mattessich, executive director of Wilder Research, about how to effectively and affordably measure the impact of community development work.
Recent rule changes expand definition of community development under the CRA
July 2011
New modifications to the CRA rules are designed to encourage financial institutions to help stabilize foreclosure-ravaged communities.
Hispanic entrepreneurship grows, but barriers persist
April 2011
Despite recent progress, Hispanic-owned firms lag behind in some respects. Fortunately, federal and nonprofit agencies offer programs designed to help close the gap.
CDFI News
January 2011
Fed Governor Duke tours Minneapolis marketplaces
July 2010
On a recent visit, Federal Reserve Governor Elizabeth Duke toured two culturally diverse marketplaces that have helped revitalize their surrounding neighborhoods.
Overcoming start-up barriers: Native-owned food business serves up lessons learned
November 2009
The founders of Native American Natural Foods demonstrate that the goal of starting up a well-positioned business on an Indian reservation is attainable, provided certain elements are in place.
2008 was a mixed year for CDCUs, report says
November 2009
CRF to launch green loan program for small businesses
November 2009
Earning income, serving the community: Guidance for building a social enterprise
January 2009
A description of the important steps nonprofit organizations should follow when creating enterprises to boost their earned income.
U.S. Treasury announces 2008 CDFI awards
November 2008
A “Six Forces” view of microenterprise development
September 2008
What happens when we apply a prominent, private sector, management-analysis framework to the world of microenterprise development organizations?
Achieving economies of scale through strategic restructuring: The case of Sparc
January 2008
How two well-established CDCs in St. Paul, Minn., responded to funding pressures by merging to form a new entity called Sparc.
Treasury announces New Markets Tax Credit allocations
January 2008
HP announces microenterprise development grants
November 2007
Native CDFI awards announced
November 2007
Microenterprise development in the U.S.: Past, present and future
May 2007
To learn more about the history of microenterprise development organizations in the U.S. and the challenges these organizations face, Community Dividend spoke with Elaine Edgcomb, director of the Aspen Institute Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination.
Minneapolis launches Alternative Financing Program
May 2007
African American enterprises on the rise in Minnesota
November 2006
Minnesota's African American entrepreneurs are likely to face a host of challenges that threaten to block their path to success. Fortunately, a network of organizations is ready to support African American entrepreneurs in their business ventures.
2006 Bank Enterprise Awards announced
September 2006
Minnesota loan fund offers capital through community collaboration
March 2006
Numerous small businesses and nonprofit organizations located in rural communities throughout Minnesota are benefiting from an innovative, nonprofit economic development loan fund known as the Minnesota Community Capital Fund.
CDFIs at a crossroads: A conversation with Mark Pinsky of National Community Capital Association
September 2005
Community development financial institutions, or CDFIs, are specialized entities that provide lending, investments, and other financial services in economically distressed communities. Community Dividend spoke with Mark Pinsky, president of a national CDFI network, to learn about the challenges these entities face.
Twin Cities refugee groups tackle community development
September 2005
Refugee groups in Minnesota are expanding their mutual assistance efforts to include community development activities.
With support, securitization could boost community development industry
November 2004
For community economic development lenders, selling loans to a secondary market can be an effective recapitalization strategy.
New Minnesota capital fund launched
August 2003
CDFI Fund awards NACTA grants
November 2002
New Markets Tax Credits: The next tool for community-development financing
August 2001
Buzz Roberts, vice president for policy at Local Initiatives Support Corporation, explains how the New Markets Tax Credit will work and what this new financing tool can and cannot accomplish.
CDFI Fund awards $112 million
August 2000
Revolving loan funds: A source of capital in South Dakota
August 2000
Revolving loan funds are a major source of capital for individuals who do not qualify for traditional financing.
Rural CDCs: Building the capacity for success
August 2000
In many American rural areas, crucial community development services are provided by community development corporations, or CDCs.
Microenterprise awards are announced
July 1999
Two Ninth District organizations recently received awards for their outstanding work in the field of microenterprise development.
Partnerships are the key to obtaining financing for building projects
October 1998
Straw bale construction projects in Minnesota and Montana obtained financing through partnerships with local banks and other community organizations.
The role of banking debt in community development
April 1998
An excerpt from a speech Federal Reserve Bank of Minneapolis President Gary H. Stern delivered at the 1997 Nation Building Conference in Missoula, Mont.
Bank CDCs: Building partnerships for community development
December 1997
Bank CDCs are tools for promoting economic and community development that have gained popularity in communities across the country.
Bank Enterprise Awards announced
December 1996
CDFIs focus on community development
December 1996
CDFIs serve an important function in their communities by meeting needs for financial services and products that are not currently being met through the traditional financial market.
Ninth District corporation is awarded CDFI funds
December 1996
A Ninth District organization is among the first-ever recipients of Community Development Financial Institutions Fund awards.
Ninth District corporation is awarded CDFI funds, community development venture capital
October 1996
An organization in Duluth, Minn., is among the first-ever awardees of the Community Development Financial Institutions Fund.
Partners & Links
Organizations and agencies that provide information, support, or regulatory guidance for CDFIs.
CDFI Networks
Association for Enterprise Opportunity
CDFI Coalition
Community Development Bankers Association
Community Development Venture Capital Alliance
National Federation of Community Development Credit Unions
National Community Investment Fund
Opportunity Finance Network
New Markets Tax Credit Coalition
Regulatory Agencies
Consumer Financial Protection Bureau
Federal Reserve Board Community Development Function
Community Affairs Function, Federal Deposit Insurance Corporation
Community Affairs Function, Office of the Comptroller of the Currency
National Credit Union Administration
CDFI Certification and Funding
CDFI Fund, U.S. Department of the Treasury
Native CDFI Support Organizations
First Nations Oweesta
CDFI Resource Centers
Federal Reserve Bank of San Francisco, Center for Community Development Investments
FIELD (Fund for Innovation, Effectiveness, Learning and Dissemination) at the Aspen Institute
Events
Microfinance Capacity Building Initiative Series: Scaling Up Microfinance
Last fall, the CDFI Fund launched the “Scaling Up Microfinance” training and technical assistance initiative to expand the capacity of CDFIs that specialize in microfinance. The initiative began with a series of two-day training sessions held earlier this year. It now continues with a series of ten webinars focused on decreasing costs, building human capital, and improving the business models of participants. The “Scaling Up Microfinance” webinars are free and open to the general public, but advance registration is required to access the presentation. The first four webinars, listed below, are open for registration. Information on the last six webinars will be posted here when it becomes available.
Registration and additional information
Innovative Business Models to Scale Microfinance
April 9, 2013
1:00 p.m. Central
A discussion of business model innovation to facilitate scaling microfinance. Explore a framework for analyzing your own business model, and hear examples of how other CDFIs are adapting their business models for scale.
Encouraging Innovation and Developing Talent
April 30, 2013
1:00 p.m. Central
Scaling microfinance will require change throughout your organization. Learn how to harness this opportunity to build talent and skills among staff at all levels of the CDFI and create an organizational environment to support growth.
Adding New Microfinance Products to Achieve Scale and Increase Impact
May 14, 2013
1:00 p.m. Central
This webinar presents the latest data on underserved consumers and highlights opportunities for microfinance CDFIs to meet the unique needs of these clients. Also, learn how a CDFI expanded its microfinance product offering to scale and increase its impact.
Technology to Improve Performance and Efficiency
May 21, 2013
1:00 p.m. Central
Technology can be a tool to reach new clients and lower costs through achieving efficiencies. This webinar will discuss both well-established and cutting-edge technologies that will improve performance at each step of the lending process.
Capacity Building Initiative: Strengthening Small and Emerging CDFIs Training Series
The CDFI Fund and Opportunity Finance Network present a free workshop to provide smaller CDFIs with the opportunity to receive training designed for their unique needs. The workshop, which will be held in five locations in the summer and fall of 2013 (see dates and locations listed below), will benefit CDFI loan funds, credit unions, and venture capital funds that have a strong ambition to serve their target market with greater impact. The session will focus on topics such as growth and sustainability, overcoming barriers to growth, building effective partnerships, and geographic and product expansion. CDFIs serving specific regions of persistent poverty that are traditionally underserved by financial institutions, such as Appalachia, the Colonias, and the Mississippi Delta, are especially encouraged to participate.
Registration and additional information
June 19–21, 2013
Houston, TX
July 31–August 2, 2013
Nashville, TN
August 14–16, 2013
Detroit, MI
September 25–27, 2013
Los Angeles, CA
October 2–4, 2013
New Orleans, LA
Find a CDFI
Looking for a CDFI that serves your neighborhood, city, or region? Enter your ZIP Code in the field below, select a search radius from the drop-down menu, and click "Find a CDFI." Results will appear in order of their proximity to the specified ZIP Code.
Source: Based on the CDFI Fund's list of Certified CDFIs and Native CDFIs. Calculations applied by the Federal Reserve Bank of Minneapolis for search purposes.
Contact Us
For more information about this site or our work with CDFIs, please contact:
Michou Kokodoko
Community Development Senior Project Manager
Federal Reserve Bank of Minneapolis
(612) 204-5064
michou.kokodoko@mpls.frb.org
