CDFIs Support Supplier Diversity and Economic Development Initiatives
While Community Development Financial Institutions (CDFI) may not receive the same recognition as big banks, these institutions are quietly rewriting the rules of who gets access to capital, proving that when you invest in people, whole neighborhoods change.
For communities that have historically faced barriers to traditional financing, access to capital is often discussed as the missing piece, and there is no question that access matters. For instance, a lack of financing can keep a promising business from hiring its first employees, purchasing equipment, moving into a brick and mortar, or taking advantage of a new contract opportunity. When a community faces financial privation, you will often see run-down and vacant lots, higher rates of unemployment and poverty, and a lack of resources that allow both individuals and local markets to thrive.
Importantly, money (on its own) does not automatically create opportunities. Capital requires embedded institutions with a commitment and knowledge to the communities they serve to be transformative; CDFIs have long played this important role. CDFIs are often discussed in terms of the capital they deploy, such as loans made, businesses financed, homes supported, or dollars invested in underserved communities. Those numbers matter because they help demonstrate reach and scale, but they do not tell the whole story.
Community Development Financial Institutions (CDFIs) have long occupied an important space in that story. They are often discussed in terms of the capital they deploy: loans made, businesses financed, homes supported, or dollars invested in underserved communities. Those numbers matter, and they help demonstrate reach and scale.
Think of a CDFI as a lender or supporter with purpose intertwined in its structure. Contrary to traditional banks and other mainstream financial institutions, CDFIs exist to make an impact for people, particularly people and places that mainstream finance systems have historically overlooked. What also makes CDFIs different is their approach. A conventional bank looks at a loan application and asks what the risks are based on numbers. A CDFI asks questions beyond numbers, such as looking at the potential the engagement would seek to fulfill.
Through contributions towards small business development, affordable housing, and infrastructure building in communities, CDFIs promote economic prosperity in ways that the normative mechanisms of mainstream capital have not. Many CDFIs specialize in financing that's essential for small businesses, community health centers, grocery stores in food deserts, and even clean energy projects, such as homeownership and commercial property acquisition. This is the capital that private investors typically pass on. CDFIs fill the gap, helping level the playing field between areas that attract investment easily and those that need it most. Over time, this adds up to inclusive growth, leading to job creation, tax bases that grow, and local governments with more resources for local infrastructure.
CDFIs trace their roots to the late 1800s, though the structure has changed over time, with the earlies leading to the first community development credit unions formed by African Americans in the 1930s. African American communities heavily relied on these credit unions during the Jim Crow Era. The current structure began to form in the late 1960s-70s through government funding. CDFIs then expanded their funding sources to private organizations in the 1970s. The most important aspect of the overall financial design of CDFIs, which led to the huge expansion of their structure, was the establishment of the Riegle Community Development Banking and Financial Institutions Act of 1994 (1). This act birthed the CDFI Fund, which legislatively implemented the federal government's responsibility towards investment and economic revitalization within underserved areas. Today, there are over 1,400 CDFIs nationally that have contributed billions of dollars towards investment in communities, businesses, homeownership initiatives, and more. (2,3)
An important example of the work CDFIs have done is the Self-Help Credit Union, starting in the 1980s in Durham, NC. The Self-Help Credit Union was initially started to assist rural North Carolinians through a $77 bake sale. Through mergers and acquisitions, Self Help has made an overall economic impact with over 80 credit union branches and other lending efforts nationally, giving over $900 million to many community development initiatives. Self Help is considered one of the nation's fastest growing CDFIs to date (4).
Today, the sources of public funding are being challenged by the Trump Administration, which has repeatedly moved to shrink the CDFI Fund to a near overall elimination. The Administration has argued that the industry has "matured beyond the need for seed money and should at this point be financially self-sustaining" (5), despite the crucial gap-filling role of CDFIs to address barriers in communities that have been historically underfinanced and under-resourced. The Administration's view has resulted in funding freezes for fiscal years 2025-26, employee eliminations in Treasury staff, and ultimately, awarded monies being withheld. (6) Its fiscal year 2026 budget proposal initially called for a 90% cut to the Fund's discretionary awards (7). Nevertheless, Congress voted to maintain the Fund by allocating $324 million for fiscal year 2026, (8) rejecting the steep cuts proposed by this Administration. The battle on the federal level continues as the administration persistently signals that it will keep pressing for reductions in future budget cycles, leaving many CDFIs to plan for a leaner, less certain federal partner going forward.
At a moment when so many communities are grappling with rising costs, housing shortages, and economic uncertainty, CDFIs have offered something rare: a financial model built for resilience rather than just returns. These institutions prove that profitability and purpose are not mutually exclusive, and that sometimes the smartest investment is the one nobody else is willing to make.
Whatever happens in Washington, the need CDFIs were built to meet is not going away. Small businesses will still need a first loan. Neighborhoods will still need investing through transactions nobody wants to make. Families, entrepreneurs, and other community individuals locked out of the financial system for generations will still need a changemaker willing to see their potential, not just their risk. The question now is whether the country will keep investing in the institutions that invest in it. Through Griffin & Strong’s mission to support the growth of diverse and small owned businesses, G&S believes that CDFIs are within perfect alignment towards fostering economic prosperity on a broader level for communities that have historically suffered.
[1] About cdfis. CDFI Coalition. (n.d.). https://cdfi.org/about-cdfis/
[2] Fci. (2025, September 25). How do CDFIs work? | Forward Community Investments. Forward CI. https://www.forwardci.org/news/how-do-cdfis-work/
[3] CDFI Fund – CDFI Coalition. (n.d.). https://cdfi.org/about-cdfis/cdfi-fund/
[4] A Short History of Self-Help. (n.d.). Self-Help Credit Union. Retrieved August 28, 2026, from https://www.self-help.org/who-we-are/about-us/our-story
[5] Williams, C. (2025, May 5). Trump budget suggests eliminating some CDFI awards. National Mortgage News. https://www.nationalmortgagenews.com/news/trump-budget-suggests-eliminating-some-cdfi-funds
[6] Systems, E. (2025, October 12). Mass Federal Firings Begin: Thousands Laid Off As Treasury Reportedly Shuts Down CDFI Fund / THE feature / CUToday.info - CU Today. CUToday. https://www.cutoday.info/THE-feature/Mass-Federal-Firings-Begin-Thousands-Laid-Off-As-Treasury-Reportedly-Shuts-Down-CDFI-Fund
[7] Vought, R. T. (2025). Letter from Russell T. Vought to The Honorable Susan Collins regarding President Trump’s recommendations on discretionary funding levels for fiscal year 2026. https://www.whitehouse.gov/wp-content/uploads/2025/05/Fiscal-Year-2026-Discretionary-Budget-Request.pdf
[8]Staff, A. B. J., & Staff, A. B. J. (2026, January 16). Congress budgets $342M for CDFI Fund in 2026. ABA Banking Journal. https://bankingjournal.aba.com/2026/01/congress-budgets-342m-for-cdfi-fund-in-2026/#:~:text=Lawmakers%20have%20agreed%20to%20budget%20%24324%20million%20for,released%20this%20week%20by%20the%20Senate%20Appropriations%20Committee.
