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What You Need to Know about Community Development Financial Institutions (CDFIs): Opportunities and Benefits for Financial Institutions

 

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For an in-depth look into CDFI funding and what certification can mean for your financial institution, register for FTSI’s webinar on demand, “Innovating for Good: CDFI Certification for Financial Institutions." 

 

With 5.9 million households unbanked in the United States, and 18.7 million underbanked, it’s becoming increasingly more important for financial institutions to seize opportunities that can help reach this population. 

 

CDFIs are mission-driven financial institutions that provide financial services to low-income communities and un/underserved populations. These institutions are certified by the U.S. Treasury Department's CDFI Fund, which awards this designation to financial institutions that meet certain criteria, such as having a mission to serve low-income communities and underserved markets and having a track record of success in doing so. 

 

How CDFI’s Uplift Communities 

As mission-driven financial institutions, CDFIs provide access to capital, credit, and other financial services to low-income and underserved communities. This can help spur economic development, create jobs, and promote financial inclusion. CDFIs often work with small businesses and entrepreneurs who may have difficulty accessing traditional bank financing, providing them with the resources they need to grow and succeed.  

 

Additionally, CDFIs may offer financial education and counseling services to help individuals and families improve their financial well-being and stability. By serving as a trusted partner in the community, CDFIs can help promote greater economic opportunity and empowerment for all residents while promoting economic growth and development in low-income communities and help reduce poverty in the United States. 

 

Advantages of Becoming a CDFI 

One of the key advantages of becoming a certified CDFI is access to funding. Certified CDFIs are eligible for a variety of government programs and incentives, such as grants, loans, and tax breaks. These programs can provide your institution with a significant source of funding to support your mission of serving the underserved in your community. 

 

In addition to funding, being a certified CDFI can also provide your institution with access to a network of other CDFIs. This network can offer your institution resources and support to help you succeed. Through this network, you can share best practices, learn from other institutions' experiences, and collaborate on projects and initiatives. 

 

The CDFI designation is a recognized symbol of a financial institution's commitment to serving low-income communities and underserved markets. It can help your institution differentiate itself from other financial institutions and attract customers who share your mission and values, while building trust within your community. 

 

CDFI Certification Process 

To become a certified CDFI, your institution must meet certain criteria. First, you must have a primary mission of serving low-income communities and underserved populations. Second, you must have a demonstrated track record of providing financial services to these communities. Finally, you must be a legal entity that is organized under state or federal law and operates in the United States. 

 

Once your institution meets these criteria, you can apply for CDFI certification through the U.S. Treasury Department's CDFI Fund. The application process involves submitting information about your institution's mission, services, and financial performance. The CDFI Fund evaluates each application based on its ability to meet the criteria for certification. 

 

Becoming a certified CDFI can provide numerous benefits to your institution. These benefits include access to funding, a network of other CDFIs, and a recognized symbol of your commitment to serving low-income communities and underserved markets. To become certified, your institution must meet certain criteria and go through an application process. If you are interested in becoming a certified CDFI, we encourage you to explore the options available to you and take advantage of this opportunity to support your institution's mission and make a positive impact in your community. 

 

Have more questions about CDFI funding and certification? View our webinar on demand, “Innovating for Good: CDFI Certification for Financial Institutions." Our speakers include Michaeljohn “Mj” Green, Deputy Director of Economic Development at Miami-Dade County, and Alison Carr, Chief Strategy Officer at Your Credit Union Partner. Watch to explore real-world strategies and examples from these experts and engage in a live Q&A session at the end.

 

 

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