There is over $300 billion in total assets connected to over 800 certified CDFIs in the United States (Cortese, 2011). CDFI, or Community Development Financial Institutions, are often times identified as community banks, credit unions, loan funds, or venture capital funds, but they must be certified by the Treasury Department as such (Cortese, 2011). Community development loan funds get the bulk of their funding from low-interest loans or grants from banks. Additionally, they allow individuals to invest for a fixed rate of return.

If one is considering this method, they should review the pros and cons associated with it. Community loan funds pay investors a fixed return. Although returns are modest, the risks are low. Similar to a CD, you can secure better interest rates with a longer-term loan. Funding is not limited to individual loan funds, investors can also put money in Community Investment Notes, which in turn is invested in CDFISs. Contrastingly, nonbank community loan funds are not FDIC insured. Furthermore, many CDFIs loan funds can be difficult to find as they are not heavily promoted.


Cortese, A. (2011). Locavesting: The revolution in local investing and how to profit from it. Hoboken, NJ: J. Wiley & Sons.

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1 Comment

  1. I had not heard of CDFIs before this book. They seem like a great way of giving back to the community, as a potential investor. I like the idea of being able to contribute to the success of other local entrepreneurs by helping provide funding that they may not have been able to acquire otherwise. It is nice to know that such options exist, and that people with smaller amounts of funds can still help with these options. As an entrepreneur, it is an exciting way of finding potential startup or expansion funds from within the local community. I will definitely be trying to find out more about these in my local area.


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