Community Development Financial Institution - CDFI


DEFINITION of 'Community Development Financial Institution - CDFI'

A private sector financial institution that focuses on personal lending and business development efforts in local communities. CDFIs can receive federal funding through the U.S. Department of the Treasury by completing an application. They can also receive funding from private sector sources such as individuals, corporations and religious institutions.

BREAKING DOWN 'Community Development Financial Institution - CDFI'

CDFIs focus on serving the needs of the poor and working class within urban and poor rural communities, as many of these citizens are underserved or ignored by traditional commercial banks and lending processes. The goal is to help these people to become financially self-sufficient, allowing them to increase their contributions to national economic growth and to rebuild run-down communities.

There are hundreds of chartered CDFIs operating in the United States, each with the goal of fostering economic growth within the local community through innovative (and often less stringent) lending practices, educational efforts and small business lending.

CDFIs tend to be controlled locally, without interference from the federal government or national corporate hierarchy.

  1. Microfinance

    A type of banking service that is provided to unemployed or low-income ...
  2. Financial Cooperative

    A financial institution that is owned and operated by its members. ...
  3. Thrift Bank

    A financial institution focusing on taking deposits and originating ...
  4. Credit Union

    Member-owned financial co-operative. These institutions are created ...
  5. African Development Bank - ADB

    A financial institution comprising 53 African and 24 non-African ...
  6. Microenterprise

    A small business that employs a small number of employees. A ...
Related Articles
  1. Active Trading Fundamentals

    The Top 5 Impact Investing Firms

    Learn what impact investing is and obtain information on some of the top impact investing firms ranked by total assets under management.
  2. Entrepreneurship

    Microfinance: What It Is And How To Get Involved

    This growing industry is full of opportunities for the socially conscious investor.
  3. Credit & Loans

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  4. Options & Futures

    Extreme Socially Responsible Investing

    Make your money work for you without putting it into ventures that don't support your values.
  5. Investing Basics

    Subprime Lending: Helping Hand Or Underhanded?

    These loans can spell disaster for borrowers, but that doesn't mean they should be condemned.

You May Also Like

Hot Definitions
  1. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  3. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  4. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  5. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!