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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 loans.