Community Development Financial Institutions (CDFIs) are crucial for getting funds into communities underserved by traditional banks. During times of crisis, the lending and capital needs of underserved communities are heightened. CDFIs have a track record of providing this critical support, beginning with the 1970’s recession. Today, they continue to provide much needed support. Here are a few examples from 2020 during the COVID-19 pandemic.
- Helping the smallest of small businesses access Paycheck Protection Program (PPP) funds
- Assisting households with mortgage and rent relief
- Arranging financing for nonprofit organizations to build affordable housing
- Lending to community organizations to preserve and expand local programs
The Federal Reserve’s own work in low- and moderate-income communities requires us to understand the CDFI landscape. What are the biggest hurdles for CDFIs? Which resources are needed? How are CDFIs faring as they serve low- and moderate-income individuals and businesses disproportionately impacted by the pandemic?
By gaining this understanding, the Fed is better positioned to shape policy recommendations and programming to support CDFIs. In 2021, this is essential information for promoting an equitable economic recovery for all.
One important tool for collecting it is the Federal Reserve’s biennial survey of CDFIs, which is open from March 22 through April 23, 2021.
This year’s survey focuses on the capacity of CDFIs to support communities as the economy recovers from pandemic shocks. Questions cover current policy support and where changes may assist CDFIs in their missions in ways that bolster racial equity. Unlike years past, the survey does not collect financial performance and benchmark data available through other sources.