Long before Occupy Wall Street in the fall of 2011, groups of social activists, community organizers, and even some bankers were working to build institutions to bring capital to the corners of American society where the streams of wealth and bank credit did not flow. As CEO of the National Federation of Community Development Credit Unions (now: Inclusiv), the association for credit unions serving low-income and minority communities, raising capital from the public and private sectors was one of my top priorities. In the mid-1980s, I wrote the first concept paper calling for the establishment of a federal fund much like what became the CDFI Fund. In 1990, I cofounded the CDFI Coalition that became the primary grassroots advocate for the creation of the fund.
In 1994, our work gathered huge momentum with the passage of federal legislation championed by President Bill Clinton, establishing the CDFI Fund under the Department of the Treasury. Its purpose: provide capital and build the capacity of credit unions, loan funds, banks, and venture funds that were singularly dedicated to serving low-income, minority, and underserved communities and enterprises.
The growth of the Community Development Financial Institutions (CDFI) movement is a uniquely important public-policy success story, made possible through the efforts of visionary community activists, foundations, congressional supporters, and key allies within the executive branch. Over its twenty-year history, the CDFI Fund of the Treasury Department has invested more than two billion dollars in community-based lenders, providing a vital source of expansion capital for non-profit and for-profit institutions that supply financial services and credit to low-income households, organizations, and development projects beyond the comfort zone of conventional banks. ”CDFI” has become the leading, most sought-after brand in community development.
The history of the CDFI movement long precedes and is much broader than the CDFI Fund. But with the advent of the Fund, the movement expanded exponentially, changing approaches to public and private investment in community development, altering notions of “bankability,” and incubating a new generation of poverty-fighting institutions.
Democratizing Finance documents the political history of community development finance and traces the evolution of CDFIs themselves. It draws upon archival materials and interviews with hundreds of the stakeholders in the development of the CDFI movement: federal and state policymakers, CDFI Fund leadership, foundation investors, banks and social investors, leaders of the CDFI organizations, individual CDFIs, and the communities they serve.