Definitions for "Community Development Financial Institution"
The term "Community Development Financial Institution” describes financial services providers (including community development banks, community loan funds and community development venture funds) whose mission specifically requires them to achieve social objectives. The CDFIs (sometimes in the UK called CFIs - community finance initiatives) considered in this report focus specifically on financial services for businesses and social economy organisations rather than for personal use. They may provide equity, quasi-equity or debt services. While some UK CDFIs are regulated as banks or building societies, most CDFIs in the UK do not have deposit-taking status. The legal forms most often used are the Industrial and Provident Society (I&PS) and, in association with charitable status, the company limited by guarantee. Community Development Venture Capital Fund A venture capital fund, run for profit, targeted at under-invested communities.
Private financial institutions that have community development as a primary mission and develop a range of programs and methods to meet the needs of low-income communities. CDFIs make loans and investments that may be considered unbankable by conventional industry standards and serve borrowers, investees, and customers not serviced by mainstream financial institutions.
A financial institution whose primary mission is community development and the development of programs and strategies to meet the needs of low-income communities. CDFIs make loans to entities unable to get approved by traditional banking institutions. CDFIs provide comprehensive credit, investment, banking and development services. Some are chartered banks, others are credit unions, and many operate as self-regulating, non-profit institutions that gather private capital from a range of investors for community development or lending. In 1994 the Community Development Banking and Financial Institutions Act created a source of federal funding to fund community development financial institutions.