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CDFIs & Impact Investing

CDFIs & Impact Investing: An Industry Review


First published December 2017

Many urban and rural communities throughout the country lack the capital and resources necessary to create opportunity and promote growth. The community development financial institution (“CDFI”) industry has focused on filling this gap by investing extensively in these communities to improve their economies, physical environment and the financial well-being of residents. In many ways, CDFIs have been pioneers of promoting progress by investing for social impact.

Recently, an international effort has coalesced around the concept of “impact investing.” According to the Global Impact Investing Network (“GIIN”), impact investments are “investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.” The term has a fairly short history, dating back only to 2008, but the concept has gained traction among mission-driven investors as a market-based opportunity to foster positive social change.1

As CDFI practitioners and funders will attest, CDFIs have been impact investment vehicles for decades, investing in financially underserved communities and providing investors with both financial and social returns. Over the past several years, CDFIs have ventured further into the expanding impact investing market and attracted capital through specialized off-balance sheet funds and online impact investment platforms. And very recently, several CDFIs have tapped the capital markets to pursue their community development missions, opening up an attractive new source of capital for the industry.

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