Community Development Financial Institution - CDFI

AAA

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.


INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  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. Microenterprise

    A small business that employs a small number of employees. A ...
  6. African Development Bank - ADB

    A financial institution comprising 53 African and 24 non-African ...
Related Articles
  1. Entrepreneurship

    Microfinance: What It Is And How To Get Involved

    This growing industry is full of opportunities for the socially conscious investor.
  2. 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.
  3. Options & Futures

    Extreme Socially Responsible Investing

    Make your money work for you without putting it into ventures that don't support your values.
  4. 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. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  2. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  3. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  4. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  5. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  6. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
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!