What is “community finance”?  Historically, credit unions, member-controlled nonprofit banks, have been most prominent. Nonetheless, in the U.S., community finance today often refers specifically to community development financial institutions (CDFIs)—credit unions and other mission-driven financial institutions that invest primary in low-income neighborhoods.  

CDFIs emerged as a civil rights movement response to redlining—the systematic denial of credit to Black and Brown communities. In the 1970s, community activists got Congress to pass the Community Reinvestment Act (CRA), which compelled banks to invest in previously redlined neighborhoods. However, it quickly became clear that community-owned institutions were needed for those investments to happen. In 1994, Congress established the CDFI Act, which helped support community-based financial institutions. Since then, a network of over 1,000 CDFIs has developed. Explore this section to learn more about the growing range of democratic means to provide community finance.