CDFI Industry Analysis

The Carsey Institute, under contract to NeighborWorks® America and the U.S. Department of Treasury’s Community Development Financial Institutions (CDFI) Fund, conducted a detailed analysis of a large sample of community development financial institutions (CDFIs) on issues of capitalization, liquidity and portfolio, and risk management by CDFIs from 2005 to 2010. This work is part of the CDFI Fund’s Capacity Building Initiative. The purpose of the report is to explore issues of capitalization, liquidity, and portfolio and risk management by CDFIs. This study involved a large sample of CDFIs. However, at least for CDFI Loan Funds, it was a selected analysis. It is important to note that the analysis is not necessarily representative of all CDFI Loan Funds; but it is representative of CDFI Banks, CDFI Credit Unions and CDFI Bank Holding companies, as information obtained is from all institutions with CDFI certification.

CDFIs fill a market gap by supplying financial products and services tailored to the needs of underserved communities and are targeted to promote community development. CDFIs may take the form of loan funds, credit unions, banks, holding companies, and venture funds within the finance/insurance/real estate industry sector. As of November 30, 2010, there were approximately 907 certified CDFIs in operation in the United States, including 572 nonprofit loan funds, 197 credit unions, 72 CDFI banks, 41 bank holding companies, and 25 venture funds.

There is a distinction between a CDFI and the CDFI Fund. The CDFI Fund provides certification to CDFIs that meet the six statutory and regulatory criteria of the CDFI Fund.