What is a CDFI?
A community development financial institution (CDFI) is a private sector, financial intermediary (nonprofit or for profit) with community development as its primary mission. A CDFI facilitates the flow of lending and investment capital into low-income communities and to individuals who have been unable to take full advantage of the services offered by traditional financial institutions. CDFIs make loans and investments that generally are unbankable by conventional industry standards. There are six basic types of CDFIs: community development banks, community development loan funds, community development credit unions, microenterprise funds, community development corporation-based lenders and investors community development venture capital funds

What is a Certified CDFI?
The Community Development and Financial Institutions Act of 1994 established the Community Development Financial Institutions Fund within the U.S. Department of the Treasury. The CDFI Fund provides both technical assistance and financial resources to banks, credit unions, and community organizations certified as CDFIs. CDFIs are entitled to apply for and receive certification by establishing that they meet the Fund's eligibility requirements, which include: having a primary mission of promoting community development, serving an investment area or targeted population providing development services, maintaining accountability to residents of its investment area or targeted population through representation on its governing board of directors, or by other means not constituting an agency or instrumentality of the United States, of any state or political subdivision of a state. Boston Community Capital, Boston Community Loan Fund and Boston Community Venture Fund were among the first certified CDFIs in the United States.

Are there other organizations like you?
Yes. For a list of other community development financial institutions throughout the United States, please visit the web site of the National Community Capital Association, (www.communitycapital.org), the national membership association of community development financial institutions.

Where do you get the money you invest?
Boston Community Capital gets the money it invests from individuals, groups, religious organizations, banks, mutual funds, foundations, corporations and any other organization that wants to make socially responsible investments in community development.

Do you lend money to individuals?
Boston Community Capital does not lend money to individuals for private purposes. We have loaned money to individuals involved in development that supports our mission.

What does the Loan Fund do?
Since 1985, Boston Community Loan Fund has provided critical help to organizations serving low-income people by providing loan capital and technical expertise.

Community-based organizations need loan capital. The Loan Fund supplies capital to projects and organizations that might otherwise not be financed. The measure of the Loan Fund's effectiveness is that it funds projects that often were not able to secure loans from traditional financial institutions, yet it maintains an extraordinary lending record with total losses of less than one-third of one percent.

The Loan Fund makes loans based on its assessment of the borrower's capabilities, the Loan Fund's knowledge of the community and its evaluation of the community impact of the project. The Loan Fund provides technical assistance to its borrowers before, during and after a loan is made to ensure the project's success.

Originally, the Loan Fund financed only affordable housing. Today, recognizing that healthy communities need community organizations and services, the Loan Fund finances other kinds of projects, from construction loans for day care centers to working capital for social service providers.

How does the Loan Fund do this?
The Loan Fund solicits money for its community-based investment projects from socially responsible lenders. Successfully managing its diverse portfolio, the Loan Fund has had losses of less than one-third of one percent of its lending.

To meet our mission and maintain the caliber of our lending, the Loan Fund raises three kinds of money:

• Loans to the Loan Fund, which are pooled and lent to community projects
• Grants to the Loan Fund, which build our permanent capital and loan loss reserves
• Grants and gifts to Boston Community Capital, which help pay for our operating expenses

The Loan Fund is largely funded by loans made by individuals and institutions. Loans to the Loan Fund are not donations. If an investor chooses, the loan will be repaid when it becomes due. The Loan Fund allows investors to put their money to work in community development for a defined period of time. When that time is up, the investor can choose to have the loan repaid. Alternatively, the investor can choose to renew the loan, or to donate the loan to the Loan Fund. About 90% of our investors choose to renew their loans.

What is an example of the work you do?
One of the Loan Fund's primary housing initiatives is its One-to-Four Family Program. This home ownership program both increases the number of first-time homeowners and stabilizes deteriorating neighborhoods. Vandalized, boarded up or burnt-out houses of one to four units are targeted for renovations by community development corporations. This housing is chosen because its condition makes it too expensive for a single household to rehabilitate, and its size makes it too small to interest a developer. As a result, the structures have remained untouched, pulling down the entire neighborhood.

The new homes renovated through the One-to-Four Family Program are making an impact far beyond their greatly improved facades: these neighborhoods are being given new life by making the houses attractive places for first-time homeowners to make an investment, and by encouraging long-time residents to fix up their homes.

How can I get involved?
If you would like to put your money to work helping community development in metropolitan Boston and across Massachusetts, please contact Boston Community Capital, or see our Support Us page.