Almost 500 community development financial institutions (CDFIs) are lending and investing in low-income communities in the United States today. Virtually all of them exist with the support of a variety of subsidies, including low-interest loans and donations from public, private and individual sources. This paper examines prevalent CDFI business models and suggests strategies for reducing reliance on subsidies and, ultimately, creating profitable businesses. Creating more transparent and profitable operations will increase the flow of capital to CDFIs, thus strengthening their position and capacity to further their community investments.
