NAAHL POLICY BRIEF
Community Development Financial Institutions
Communities need access to capital to fuel their economies and to provide affordable living. But in many places, there is a persistent gap between what communities need and what the traditional market can provide.
Community Development Financial Institutions were created by Congress to close that gap.
Community Development Financial Institutions (CDFIs) are essential partners in the American financial system, bridging the gap between traditional lending and community needs. Operating across all 50 states, CDFIs transform limited public investment into substantial flows of private capital for affordable housing, small business development, and critical community infrastructure. This market leverage is their superpower: CDFIs make possible investments that would otherwise never happen, creating economic opportunity in places the conventional market cannot profitably reach.
For banks and communities alike, the CDFI model works. Banks gain access to underserved markets and meet regulatory obligations through partnerships with institutions that possess deep local knowledge and specialized expertise. Communities gain pathways to homeownership, jobs, and essential services. By channeling private capital through mission-driven intermediaries, CDFIs demonstrate that economic inclusion and sound investment are not competing goals but instead are complementary strategies for building stronger, more resilient local economies.
Community Lending:
Leveraging Private Capital for Public Good
“CDFIs operate as local economic engines, bridging deep community knowledge with private capital. They help create and sustain markets that would not otherwise exist. As a result, communities benefit with lower costs of living, affordable housing, stable jobs, and real economic opportunity.”