Is Your Assistive Technology Loan Fund Thinking About Becoming
a CDFI? What You Need to Know Before You Take the Leap!
RESNA TA Meeting
I. What are Community Development Financial Institutions?
A. CDFI’s are financial institutions that have “community development” rather than
profit as their primary mission. CDFIs serve “target markets” that have not been
adequately served by traditional financial institutions.
B. CDFI’s provide a wide range of services: mortgages for first-time home-buyers,
financing for housing and community development; financing for non-profits;
financing for small businesses and financial services for low-income households
and small businesses and, in a few cases, consumer loans. CDFI’s also provide
technical assistance, financial counseling and related services to ensure that the
credit they provide is used effectively.
C. CDFI’s have been around for many years but the numbers have grown
significantly since creation of the CDFI Fund, as part of the U.S. Department of
Treasury, in 1994 (Riegle Community Development and Regulatory Improvement
Act of 1994). The Fund was established to support the efforts of CDFI’s to
expand the availability of credit, investment capital, and financial services in low-
income communities. The Fund provides direct investment in CDFI’s and
provides incentives designed to leverage additional private capital for CDFI’s.
Since the Fund’s creation, it has made more than $534 million in awards to
community development organizations and financial institutions.
D. Basic types of CDFIs:
Community Development Banks - provide capital to economically
distressed communities through targeted lending and investment
Community Development Credit Unions –provide affordable credit and
financial services to low-income people with focus on minority communities
Community Development Loan Funds - aggregate capital from individual
and institutional social investors at below-market rates and re-lend this
money for nonprofit housing and business development
Community Development Venture Capital Funds – provide equity for
community real estate and medium-sized business projects
Microenterprise Development Loan Funds – provide small business and
consumer loans (often less than $5000) and technical assistance to low-
income populations unable to access conventional credit
E. There are 800-1000 CDFIs currently in operation in the United States, including:
More than 200 community development loan funds
More than 50 venture capital funds
More than 250 community development credit unions
More than 40 community development banks.
To locate CDFI’s in your state, check the following websites: http://www.cdfifund.gov or
II. How does an organization become a certified CDFI?
Apply to CDFI Fund (http://www.cdfifund.gov). Applications accepted
throughout the year.
Process can be lengthy but interactive with opportunities to dialogue and
to answer staff questions.
CDFI Certification must be renewed every three years.
Do not need to be certified to obtain Technical Assistance from CDFI
Fund. TA can be used to help organization obtain certification.
B. Elements: Must establish six elements:
The organization, when viewed as a whole, must have a primary mission
of promoting community development— i.e., improving the social or
economic circumstances of a population lacking adequate access to
capital or financial services and/or residents of distressed communities.
The organization must be a Financing Entity – i.e., an entity whose
predominate business activity is the provision, in arms-length transactions,
of financial products and development services.
The organization must principally serve a Target Market – i.e., an area or
population that lacks adequate access to loans, investment capital and
other financial services. Establishing and defining the target market can
be “tricky.” Once defined, 60% of activity must be directed to that market.
The organization must provide Development Services - i.e., services
intended to improve borrower’s ability to effectively use capital such as
business planning and ongoing technical assistance, money and financial
The organization must maintain Accountability to its defined Investment
Area or Target Population – i.e., by including representation on its Board,
Advisory Committee or through some other mechanism;
The organization must be a Non-Governmental entity, and must not be
controlled by one or more governmental entities.
III. What are the benefits of becoming a CDFI?
A. Access to CDFI Fund Dollars
Technical Assistance Grants – Capacity Building (market studies, strategic
planning, technology enhancements): Up to $50,000.
Financial Assistance Grants – Grants, Loans, Equity Investments;
Organizations must provide like-kind matching dollars.
New Markets Tax Credits (Investment incentive) – For profit investors earn
tax credits by investing in CDFI’s (that also have been certified as
Community Development Entities) that serve particular census tracts.
May mean that NMTC are not available for partnerships with CDFI’s that
serve statewide low-income populations.
Bank Enterprise Awards (Investment incentive) – Banks earn cash awards
for certain investments in CDFI’s. In 2003, funding available primarily
(only?) for investments in “hot zones” – selected areas with high
incidences of poverty. May mean that BEA awards are not available for
partnerships with CDFI’s that serve statewide low-income populations.
B. Access to Bank Dollars & Long Term Partnerships
Grants & Marketing Dollars
EQ2 Investments: Long Term (at least 10 years) at very low interest rates
to CDFI’s. Used for loan fund capitalization.
C. Access to Other Funding Options for CDFI’s
Private entities such as Partners for Common Good (http://www.pcg.org)
and National Community Investment Fund (http://www.ncif.org).
Private Individual and Entity Investor Dollars – e.g., Cascadia Revolving
State CDFI Funds
o California: http://www.insurance.ca.gov/COIN/Cdfi.htm
o New Jersey
o New York
o North Carolina
o South Carolina
D. Access to Lending & Community Development Expertise, Research & Tools
E. Opportunities to expand lending activity to meet other needs in disability
community (e.g., self-employment, small business lending)
F. For AT Funds, incentive to focus on economic development issues
G. Intangible Cache
A. Time, time, time: Application process; award to distribution.
B. Decreasing federal dollars & policy changes
C. Structural Fit: Must be non-government entity, must be primarily a
lending institution, must focus on a low income target population
V. Examples of CDFI’s that have Assistive Technology Loan Funds
A. Vermont Development Credit Union (http://www.vdcu.org)
B. Washington Assistive Technology Foundation (http://www.watf.org)
VI. Other Comments/Observations
A. Much to be learned through partnerships with existing CDFI’s.
B. Value of building bridge between disability community and “community
Frances Pennell, Washington Assistive Technology Foundation: email@example.com
Deepthi Jain, CDFI Fund, Department of Treasury: firstname.lastname@example.org
Sean Zielenbach, Community Development Consultant: email@example.com
Caryl Stewart, Vermont Development Credit Union: firstname.lastname@example.org
http://www.cdfifund.gov: U.S. Department of Treasury CDFI Fund website with
downloadable application materials, guidance, copies of regulations, etc.
http://www.cdfi.org: Coalition of Community Development Financial Institutions.
Advocates on behalf of the CDFI industry and educates the public about community
development finance. Coalition of national organizations that serve community
development financial institutions. http://www.cdfi.org/whatare.asp
http://www.communitycapital.org: Website of the National Community Capital
Association. Training, funding, policy analysis. Sponsors annual conference and training
program for CDFI’s.
http://www.assoceo.org: Association for Enterprise Opportunity. Association of over
450 microenterprise development programs, advocates and others working to remove
institutional & economic barriers that impede economic progress for low income
http://www.natfed.org: National Federation of Community Development Credit Unions.
Provides technical assistance, training, advocacy and financial support for community
development credit unions (many of which are also CDFI’s). Community Development
Credit Unions focus on financial services needs of low income individuals.