This CNET article is a great explanation of the work CDFIs do, and how they are different from banks.
“CDFIs don’t just talk the talk; they walk the walk of creating positive social change,” said Michael Ryan, a former financial planner and founder of Michael Ryan Money. Generally, CDFIs team up with community-based organizations, government agencies and foundations to maximize their impact, Ryan said.
CDFIs can fall under four different umbrellas: community development banks, credit unions, loan funds and venture capital funds. These financial institutions wouldn’t be considered CDFIs on their own. The determining factor is the community they’re aiming to serve. What sets them apart is who the bank is targeting to help, said Hall.
CDFIs are available everywhere, but some credit unions serving as CDFIs still have membership requirements, just like a regular credit union, said Hall. So if you want to join a community development credit union, keep in mind that you may have to be a county or city resident or be employed by a certain business.
