CDFI Types
Comparing Different Types of CDFIs
The following tables present a detailed comparison of six types of community development financial institutions.
| CDFI TYPE | PURPOSE | START-UP CONSIDERATIONS | GOVERNANCE & OWNERSHIP | REGULATION | BORROWERS | CAPITAL SOURCES | FINANCIAL PRODUCTS & SERVICES OFFERED | TECHNICAL ASSISTANCE PROVIDED |
| Community Development Bank | To provide capital to rebuild lower-income communities through targeted lending and investment | •Large capital requirement •Compliance with regulatory agencies | For profit corporation; stock ownership; community representation on board | Federally regulated and insured through the Federal Depository Insurance Corp., the Federal Reserve, Office of the Comptroller of the Currency, state banking agencies | Non-profit community organizations, individual entrepreneurs, small businesses, housing developers | Deposits (often below market investments) from individuals, institutions and the government | Mortgage financing; home improvement, commercial business, non profit and student loans; consumer banking services | Usually sub-contractors or separate subsidiaries offer credit counseling, business planning |
| Community Development Credit Union | To promote community ownership of assets and savings, provide affordable credit card and retail financial services to lower-income people with special outreach to minority communities, take deposits and make loans only to members | •Need to organize communities •Compliance with regulatory agencies | Nonprofit financial cooperatives owned and operated by lower-income persons who are members | Federally and state regulated and insured by the National Credit Union Administration | Members of the credit union (usually individuals) | Member deposits and limited non-member deposits from social investors, the government | Consumer banking services (e.g. savings accounts, check cashing, personal loans , home rehabilitation loans) | Credit counseling, business planning |
| Community Development Loan Fund | To aggregate capital from individuals and institutional social investors at below-market rates and re-lend this money primarily to non-profit housing and business developers in urban and rural lower-income communities | •Flexible start-up requirements | (Mostly) nonprofit, democratic; community investors, borrowers and technical experts serve on the board and loan committees | Self-regulated; except for non-profit 501(c)(3) restrictions and state securities law where applicable | Non-profit community organizations, social service provider facilities and small businesses | Foundations, banks, religious organizations, corporations, the government, insurance companies and individuals | Construction; pre-development; facilities and business start-up and expansion loans | Extensive guidance before, during and after the loan transaction |
| Community Development Venture Capital Fund | To provide equity and debt with equity features for medium-sized businesses to create jobs, entrepreneurial capacity and wealth that benefit low-income people and communities | •Large capital requirement | For profit or nonprofit.; varied community representation. | Variable; depends on funding sources | Invests in small to medium-sized businesses in distressed communities that hold the promise of rapid growth | Foundations, corporations, individuals, the government | Commercial equity investments and loans with equity features | Extensive technical assistance to portfolio companies, including taking seats on their board of directors |
| Microenterprise Development Loan Fund | To foster social and business development through loans and technical assistance to low-income people involved in very small businesses or self-employed and unable to access conventional credit | •Flexible start-up requirements | Nonprofit, democratic; in peer lending model, borrower groups make loan decisions | Regulated by the IRS and grant makers as any other 501(c)(3) nonprofit | Low-income individuals and entrepreneurs | Foundations, the government | Micro-business start-up and expansion | Substantial training and technical assistance in social and business development |
| Community Development Corporations | To revitalize neighborhoods by producing affordable housing, creating jobs, and providing social services to low-income communities | •Community participation •Community-directed workplans | Nonprofit; formed by local community residents; operated by a volunteer board, community residents are board members | Regulated by the IRS and grant makers as any other 501(c)(3) nonprofit | Entrepreneurs, homeowners, business owners, consortia of community residents | Banks, foundations, corporations, other private support, the government | Equity Investments, mortgage lending, debt financing, linked deposits, Individual Development Accounts | Marketing, business planning, flexible manufacturing networks, business improvement |