CDFIs Stepping into the Breach

This report summarizes research undertaken by the Carsey School of Public Policy to evaluate impacts of the Community Development Financial Institutions (CDFI) Fund on CDFIs and of the CDFI industry on the people and communities it serves. Major research tasks included:

• Structured interviews with staff leadership at 22 CDFIs to discuss their impact evaluation activities and challenges, and opportunities they face for impact evaluation work. These interviews were complemented by additional reports, documents and evaluations provided by the CDFIs.
• A detailed analysis of CDFI Fund Transaction Level Report (TLR) data to study the types of borrowers and communities that CDFIs are serving, and the types and terms of financing they are providing.
• A multivariate analysis combining TLR data with other data sources to explore the relationships between CDFI activity and mainstream lending—specifically whether CDFIs play a role in “priming the pump” for mainstream lending, or whether they act to fill gaps left behind by mainstream lenders.
• An exploratory analysis of the neighborhood impacts of concentrated CDFI lending activity, looking at 15 census tracts that have received large and consistent levels of CDFI investment between 2007 and 2011, versus a set of comparison tracts matched on indicators of distress such as poverty and unemployment rates.
• An analysis seeking to determine the impacts that CDFI Fund awards have on the subsequent growth and health of CDFI loan funds. The analysis used a regression discontinuity approach to compare organizations that fell just below and above the scoring cutoff points for funding on their CDFI Financial Award applications.

Key findings of this research are laid out in this report, with supporting analysis presented in more detail in a series of technical appendices.

In summary, we find a variety of evidence indicating that CDFIs are advancing the statutory purposes of the CDFI Fund to promote economic revitalization and community development through the provision of credit, capital and financial services to underserved populations and communities in the United States.