An early look at results from the Federal Reserve’s 2023 CDFI Survey


Carrie Cook

2023 CDFI Survey

In the spring, I wrote about the value of the Federal Reserve’s biennial Community Development Financial Institution (CDFI) Survey. The survey provides policymakers and community development stakeholders with information about how CDFIs are faring as they work to close gaps in credit and capital access. We are thrilled that 453 institutions responded during the survey fielding period from April 24 to June 2, including nearly 30% of all certified CDFIs in the country. CDFIs shared their experiences in these areas:

  • Demand for products
  • Challenges they face in meeting demand
  • New products and practices they are developing
  • Approaches and limitations to tracking outcomes
A new top challenge for CDFIs

We will release our full key findings report in a few weeks. For now, I want to share some high-level insights based on what we heard.

Three quarters of respondent CDFIs reported seeing increased demand over the past year. About 40% of them said that they have been able to fully meet demand.

Among the 60% of CDFIs not fully meeting demand, a new challenge emerged. When we last surveyed CDFIs in 2021, staffing was the primary issue, but this time it was lending capital. Half of the CDFIs not fully meeting demand cited lending capital as a significant factor, with many citing the cost of capital as a challenge. Perhaps this is not surprising given the marked rise in interest rates over the past year.

Community Development Financial Institution (CDFI)

CDFIs are mission-driven banks, credit unions, loan funds, and venture capital funds. They deliver a range of financial products and services to individuals and communities underserved by traditional lenders. CDFIs also provide an affordable alternative to nontraditional—sometimes predatory—lenders.

2023 CDFI Survey Key Findings are now available! Visit the full report.

CDFIs continue to innovate

Still, in the face of challenges, CDFIs continue to innovate. Respondents shared how they are creating products to serve as alternatives to payday and other nontraditional loans. They are developing flexible underwriting procedures to accommodate borrowers with troubled credit histories and limited collateral. And they are building partnerships with other CDFIs and conventional lenders to address larger community needs.

For the most part, CDFIs know the outcomes they would like to track for these types of initiatives. But many CDFIs are constrained in regularly assessing their progress beyond capturing the number of clients served and the dollar value of products provided. Operational capacity—such as costs and staff time—and difficulty accessing client data pose the greatest challenges.

There is much more to share about the results. Stay tuned for the release of our full report. It will dig into the factors impacting CDFIs’ ability to meet demand. It also explores the road ahead for CDFIs, including:

  • What they expect demand to be
  • What would help them serve their clients more fully
  • Outcomes they aspire to track

Until then, I will close with a very sincere thank you to all the CDFIs that responded to the survey. Thank you for sharing your work and creating lending opportunities in many underresourced communities!

About the Federal Reserve CDFI Survey

The Federal Reserve’s CDFI Survey aims to understand current challenges and opportunities for community development financial institutions (CDFIs) across the nation. The information we collect helps provide policymakers, researchers, practitioners, funders, investors, and other community development stakeholders with timely information about the CDFI industry. CDFIs can also use the results to compare their organizations to a larger national sample and to learn about other CDFIs’ products and practices.

The Federal Reserve Bank of Richmond launched a biennial survey of CDFIs in the Southeast in 2009. Due to growing interest, the survey expanded nationally in 2019. The 12 Federal Reserve Banks, CDFI Fund, Opportunity Finance Network, and other distribution partners administered the 2023 survey.

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