The Role of Cdfis in Economic Empowerment

I’ve worked in community development finance long enough to see a pattern — one that either accelerates or strangles access to capital in emerging market communities. Here it is: Municipal investment in CDFIs is the difference-maker. I’ve seen what happens when cities put real dollars behind local CDFIs. In places like Philadelphia, the city stepped up with capital during the pandemic, deploying funds through trusted CDFI partners. That decision kept small businesses alive, especially in Black and Brown neighborhoods where banking relationships were limited or non-existent. In Chicago, the city doubled down by using CDFIs to deploy grants and loans through the Neighborhood Opportunity Fund and Recovery Plan programs. Entire blocks began to come back to life — with community-owned businesses hiring locally and reinvesting into the very neighborhoods they grew up in. But I’ve also seen the flip side — where cities don’t invest in their CDFIs. And the results are painful. Business dreams delayed or abandoned. Local jobs never created. Disinvestment becomes generational. When municipalities don’t put resources behind local CDFIs, they send an unspoken message: “You’re on your own.” And in the communities we serve — that message can be the nail in the coffin for growth, ownership, and economic mobility. CDFIs are built for this work. We know the neighborhoods. We know the entrepreneurs. We take the calls at night, we sit down at kitchen tables, and we structure deals that traditional lenders won’t touch. But we can’t do it on vision alone. We need capital. If you’re a municipal leader or economic development stakeholder reading this — investing in your local CDFI isn’t a political favor. It’s economic infrastructure. It’s how you build a stronger, more inclusive city. Period. Let’s stop talking about equity…..and start funding it. #CDFI #MunicipalInvestment #CommunityDevelopment #EconomicJustice #AccessToCapital #EmergingMarkets #PublicPrivatePartnerships #BlackBusiness #LatinoEntrepreneurs #WealthBuilding #LocalFirst #CDFIPower

This isn’t charity - it’s shared infrastructure. The CDFI Fund isn’t a handout. It’s a proven system that keeps capital flowing into communities - and fuels real returns for banks, investors, and the economy. When we protect the pipeline that connects capital to community, we protect one of the best ROI stories in banking. When we talk about protecting the CDFI Fund, we’re not just talking about community impact - we’re talking about return on investment for the entire financial system. For decades, Community Development Financial Institutions (CDFIs) have helped banks expand access to capital in markets that traditional lending alone can’t always reach. These partnerships are not just good for communities - they’re good for business. Every dollar invested through a CDFI has historically leveraged up to twelve dollars in additional private capital, according to Treasury reports. That’s a multiplier effect that most asset classes would envy. The ROI is clear: For banks, CDFI partnerships enhance CRA performance, strengthen brand reputation, and deepen customer relationships in emerging and underserved markets. For communities, these investments fund small businesses, affordable housing, childcare centers, and health clinics - assets that build local economic resilience. For the economy, this flow of capital creates jobs, stabilizes neighborhoods, and fosters innovation at the local level. If the CDFI Fund were dismantled, this ecosystem - this pipeline of capital and trust - could be severely disrupted. The infrastructure that connects banks, investors, and communities is not easily rebuilt. I’ve seen firsthand how this works in practice. A regional bank partners with a CDFI to finance a small business expansion in a rural area. The CDFI absorbs some of the early risk, supported by federal funding, leveraged by private sector funding and philanthropic grants, and the bank provides senior debt. That small business grows, hires ten new employees, and deposits its earnings right back into the bank that believed in it. That’s not just social ROI - that’s economic ROI in motion. Eliminating the CDFI Fund isn’t about cutting bureaucracy; it’s about cutting a proven engine of growth. The New Markets Tax Credit Program, also administered through the CDFI Fund, has generated billions in private investment and created or retained hundreds of thousands of jobs nationwide. These are tangible outcomes - measurable, reportable, and repeatable. The CDFI Fund represents more than programs and partnerships - it represents possibility. It’s proof that when capital connects with purpose, growth becomes shared, sustainable, and real. Protecting this pipeline means believing in a financial system that works for everyone - and that’s an investment worth defending. #ProtectThePipeline #CRA #CDFI #AccessToCapital #CommunityDevelopment #NMTC

Black-owned banks and credit unions have long been critical pillars of economic empowerment for Black communities across the U.S. These institutions, known as Community Development Financial Institutions (#CDFIs) and Minority Deposit Institutions (#MDIs), emerged as safe havens for Black Americans when larger banks excluded or marginalized them. Today, they continue to play a pivotal role in closing the #racialwealthgap by providing access to capital and fostering financial inclusion. Through my work as a co-lead of Southern Communities Initiative (SCI), I’ve seen how CDFIs and MDIs help alleviate the economic inequities that persist in Black and other underrepresented communities. SCI is committed to modernizing these financial institutions by improving their access to technology and resources. We aim to boost their capacity to issue more capital, support small business owners and grow generational wealth in historically underrepresented areas. As we push for systemic change, I encourage everyone to explore and support Black-owned banks and credit unions, as highlighted by Business Insider. By choosing to bank with these institutions, we can collectively invest in the economic well-being of our communities and work toward a more equitable future. https://bit.ly/40kv2IV

Why Local Development Needs Local Capital Small developers are doing some of the most important work in our cities, bringing life back to vacant lots, rehabbing main streets, and creating new housing at a human scale. But while their projects are often the most responsive to community needs, they’re also the hardest to fund. Because the truth is: our capital systems aren’t built for small-scale development. The Funding Gap Traditional banks and investors like predictability and scale. They want projects that fit a formula, big enough to absorb risk, backed by deep equity, and secured by institutional guarantees. That might work for large developers with national portfolios. But for local builders trying to transform a single block, that system is a dead end. A duplex, a mixed-use corner building, or a 10-unit infill project might mean everything for a neighborhood, but it often can’t get financed under conventional terms. And without capital, even the best ideas never leave the sketchbook. What’s Missing Local developers don’t lack skill or vision. They lack patient capital, funding that understands context, timing, and community value. We need financial tools that see beyond spreadsheets: -CDFIs (Community Development Financial Institutions) that invest in people, not just projects. -Credit unions that know the neighborhoods they serve. -Local investment cooperatives that allow residents to become stakeholders in development. -Public-private funds that reduce barriers for emerging and BIPOC developers. These institutions create an ecosystem where capital works with community, not against it. The Power of Proximity When capital is local, it behaves differently. It’s more flexible because it’s invested in shared outcomes. It’s more forgiving because it understands the long game. It’s more equitable because it values who’s at the table, not just what’s on the pro forma. Local capital can bridge the trust gap between developers and neighborhoods, because it keeps wealth circulating close to where it’s created. Why It Matters Cities that want equitable development can’t rely solely on policy reform. They need to reimagine finance. Because without access to capital, local developers can’t build. And if they can’t build, communities lose the ability to shape their own future. Capital isn’t neutral. It decides what gets built, who builds it, and who benefits. If we want to see more neighborhood-rooted, community-driven projects, we have to fund them the same way, locally, patiently, and with purpose. What’s one example you’ve seen of local capital helping small-scale or community developers succeed?

Most conversations about CDFIs focus on impact. But the real story is about capital circulation. When institutional capital flows into CDFIs, something very specific happens: It doesn’t just get deployed. It gets multiplied. Here’s what that looks like in practice: CDFIs take in capital from banks, foundations, and public sources… and move it into smaller, community-scale deals that traditional capital often can’t reach. • $500K – $10M projects • Emerging and local developers • Early-stage and flexible capital needs Those projects get built. Communities stabilize. And then something important happens: The loans perform. Interest is generated. Principal is repaid. Track records are built. And that capital? It comes back. Stronger. Faster. More investable. This is the part most people miss: CDFIs aren’t just deploying capital. They are creating a repeatable system for capital to circulate through overlooked markets. And when you increase: • Loan sizes • Deployment volume • Pipeline quality You don’t just fund more deals. You accelerate the entire ecosystem. This isn’t charity. It’s infrastructure. #CDFI #ImpactInvesting #CapitalStrategy #AffordableHousing #CommunityDevelopment

21 million new businesses since 2021 — our challenge is making sure every entrepreneur has the capital, tech, and support to succeed. In my latest piece for ImpactAlpha, I do a deep dive into one corner of this work: unlocking impact investing capital for community development financial institutions (CDFIs) At Mastercard Strive USA, we’re investing in the connective infrastructure that bridges this divide — helping unlock scalable, investable pathways for CDFIs to reach impact investors. In my op-ed, I share examples from Strive grantees leading this work: • Aeris Insight Inc. — creating standardized, investor-grade data that helped rated CDFI loan funds grow $70M more in assets than peers between 2017–2023. • CNote — directing $390M+ to community lenders, with 90% of participating investors making their first-ever CDFI deposit. • Momentus Securities has— pioneering securitization of small business loans, starting with a $20M transaction and pointing toward a $5B annual market. These innovations show what’s possible when philanthropy de-risks and invests in systems, and when investors see CDFIs not as niche players but as core engines of inclusive growth. https://lnkd.in/eqEFbsES

Negative assumptions about rural America's capacity for growth leave thousands of families without the resources and opportunities they deserve. One rural East Texas community achieved notable development thanks to the T.L.L. Temple Foundation's ROC-ET Initiative and support from CDFIs PeopleFund and Communities Unlimited. More than $1.8 million in loans were deployed across 13 counties, leading to the creation/retention of 258 jobs and support for over 50 entrepreneurs investing in local businesses and startups. The average ROC-ET Initiative loan recipient is likelier to be a woman and a person of color with a low to moderate income, living in a rural community with a population below 50k. We cannot let population size or uninformed perceptions deny entire communities access to opportunities for economic growth. The need is high in these underdeveloped communities. However, these inequities can be addressed for overlooked populations with diversified CDFI services, trust-strengthening partnerships, and inclusive business development. #CDFI #Philanthropy #ImpactInvesting

📰 New small business research just dropped 👇 Visa Economic Empowerment Institute (VEEI) released a paper that suggests the presence of community financial institutions (FIs) is associated with small business health and stability, especially in the face of economic shocks. Key findings: 💸 The analysis suggests that during the COVID-19 pandemic, counties with the greatest presence of community FIs—measured in terms of payment volume—experienced a milder downturn in small business revenue, in addition to a quicker recovery. 🤝 The analysis also suggests that community FIs’ positive relationship with small business revenue appears strongest in low-income urban counties. Among these counties, the downturn in small business revenue was roughly 25% less in those with the greatest community FI presence. 🏦 These findings contribute to the growing body of evidence indicating that community FIs serve as important sources of stability for small businesses in times of economic uncertainty, especially those operating in underserved areas. You can read the full report here: https://lnkd.in/eqAe4Aut Congrats to my colleague Jacob Levy on releasing this work! #SmallBusiness #CommunityBanks #CreditUnions #COVID19

As #leaders, we cannot afford to live in fear of addressing the systemic inequities that continue to limit #Black communities. For far too long, traditional financial institutions have failed to meet the unique needs of these communities, reinforcing barriers to success. It's time to confront the uncomfortable truth: without equitable access to capital, many small businesses in these communities are left to struggle, unable to grow or create lasting generational wealth. This is where Community Development Financial Institutions (CDFIs) come in. CDFIs were built to fill the gap left by mainstream lenders. They provide a critical lifeline to Black entrepreneurs, empowering them to build businesses that create jobs, reinvest in their neighborhoods, and generate wealth that can be passed down for generations. The importance of this work extends far beyond individual success stories—it’s about dismantling the cycle of economic exclusion that has plagued these communities for generations. We cannot continue to let fear, whether of risk or failure, hold us back from investing in these businesses. The time to act is now. Let’s not “test positive” for living in fear, especially when the stakes are so high. CDFIs are not just a solution—they are the foundation for transformative economic change. By ensuring that Black entrepreneurs have the same access to capital as others, we are creating a more equitable financial system and building generational wealth that strengthens entire communities. The work we do today will reverberate for decades. If we are serious about closing the racial wealth gap and ensuring that Black communities can compete on a level playing field, we must champion and support CDFIs with the urgency and conviction this moment demands. Fear has no place in this conversation—only action, #strategy, and a commitment to lasting change. #EconomicEquity #nofearinequity #EmpowerCommunitie #GenerationalWealth #CDFIsForChange #LevelThePlayingField #SupportBlackBusiness #InclusiveEconomy #FinancialEmpowerment #cdfis