Reflections on 25 Years of CDFI Practice

Guest post by Michael Swack, Professor and Director, Center for Impact Finance, Carsey School of Public Policy, University of New Hampshire.

As I reflect on the CDFI field, I realize what great success this field has achieved over the past 35 years – and in the 25 years since the creation of the CDFI Fund by the anniversary the Riegle Community Development and Regulatory Improvement Act of 1994.  Assets held by all CDFIs now exceed $150 billion.  Over 1,000 CDFIs operate throughout the United States – in all 50 states, as well as the District of Columbia, Guam, and Puerto Rico.  Although this equates to only 1.4 percent of the assets held by the four biggest banks, CDFIs have created a large footprint in low- and moderate-income communities. 

CDFIs have demonstrated that sound and safe investments can be made and positive outcomes achieved for low-income, low-wealth, and other disadvantaged people and communities—the same people and communities that were considered “too risky” for investment.  CDFIs have created economic opportunity in the form of jobs, affordable housing units, health clinics, child care facilities, and financial services for the underbanked and unbanked.  

In Fiscal Year (FY) 2018, CDFI program awardees made over 280,000 loans or investments totaling over $11 billion, including loans to nearly 15,000 small businesses. The average size of each loan or investment was $39,821. CDFIs also financed over 33,613 affordable housing units; and provided financial literacy training to 343,471 individuals.[i]

CDFIs have also brought new investors into community development.  What started out as a field capitalized primarily by government and foundations, now claims a wide range of individual and institutional investors – including banks, insurance companies, hospitals, foundations, universities and more.

Over the past 25 years, CDFIs have worked to better align their activities with other institutions and programs that serve communities.   CDFIs not only serve housing and small business needs, but also align with a range of other “sectors” – and address issues related to workforce development, environment and energy, community health, and more. 

Finally, as someone who has been involved in the education and training of practitioners for over 35 years, I continue to be impressed by the growth of the “human capital” in the field.  Community development practitioners are smart and committed advocates for their communities. But experience, along with training and educational opportunities, have created an increasingly sophisticated universe of practitioners.  Think about our range–we are a field that can blend community organizing strategies with the ability to create rated financial securities in the capital markets–all to create a more just and equitable society. 

[i] Audit of the CDFI Fund’s 2018 and 2017 financial statements by the Treasury Dept. Office of Inspector General.