A history of the women who nurtured the roots of CDFIs

January 24, 2025 at 15:08 PM EST

My personal interest in CDFIs began with the tale of a woman.

Early in my career, I had the chance to join a panel discussion that changed the trajectory of my life in advocacy for ethical investing. The speaker before me was named Chuck Matthei. He was an unpresuming looking man who had started something called the Institute for Community Economics. He started quietly, “I would like to share with you the story of Maria and her eleven dependents, living in squalor, in Cincinnati. I’d like to convince you to help her out with a loan.” His words helped me to understand that my own message was nothing if my work did not directly affect the lives of Maria and her dependents.

The Early Seeds of CDFIs were Planted and Nurtured by Trailblazing Women

The roots of modern community development financial institutions (CDFIs) stretch back to the late 1960s, to the racial riots that had rocked America, causing the Lyndon B. Johnson administration to commission a group to study the sources of unrest. The National Advisory Commission on Civil Disorders ‘discovered’ that racism had starved many low-income neighborhoods by denying access to capital. Our nation was stunned but motivated to act. On April 28, 1968, the National Council of Churches announced its Investment Program for Ghetto Community Development. On June 5, 1968, the Episcopal Church announced its decision to start a Ghetto investment program, and five days later the New York Urban Coalition followed suit. Life insurance companies began their “social investment” programs and invested primarily in affordable rental properties in hollowed-out communities. These were top-down initiatives, reliant on the funding of a single entity.

Only one woman had been named to the Commission, Katherine Graham Peden, was later one of the first women to join a Fortune 500 company’s board of directors. The committee’s efforts led to the creation of the Community Development Block Grant (CDBG) program, a vital source of funding enabling state and local governments nationwide to develop affordable housing and provide essential services to improve the health and prosperity of low- and moderate-income communities.

President Jimmy Carter had tasked HUD secretary Patricia Harris to head a policy group tasked with addressing the credit and wealth inequities the race riots had so starkly revealed. Harris’s own career broke many barriers, as the first Black woman to hold any cabinet position (she held two), to serve on a Fortune 500 company’s board (she would serve on four), and to be Dean of a law school. One of the group’s core initiatives was to create a budget to fund Community Development Credit Unions. This was soon enhanced by the 1977 Community Reinvestment Act, which established the mechanism for larger banks to invest in the poorest neighborhoods, even if they did not have branches there. The strength of borrowing from the many to lend to the many was recognized. Top down do-good efforts continue, but with a dynamic new partner — the modern CDFI.

Women in the Movement

Soon, entities that borrow from many in order to come up with the funds to lend to those in need began to take on new forms. In addition to banks and credit unions, non-profits began to borrow and make loans. While tiny and few in number, in Chuck Matthei they nonetheless found a voice. He became the Johnny Appleseed of the Community Development Loan Fund concept, convincing them to band together and learn from one another as a fledgling coalition. On October 16, 1985, when the few initiatives dedicated to borrowing from the many and lending to the poor met together to strengthen each other, a truly powerful movement for community investing was born.

The National Association of Community Development Loan Funds (NACDLF), as it became known, was founded a year later, and soon I was asked to serve as a board member, where I represented investors. Over the next few years, we grew to 50 lending organizations, always sticking to a few simple standards, worth repeating here:

Our members were intermediaries, borrowing to lend. Member mission statements specifically stated the goal of economic justice.
Member boards would be made up one third by people with technical stills that were needed, one third by those with access to sources of capital and one third by those representing or advocating for the borrowers.
Members were subject to in-depth peer reviews

Early leaders in the CDFI field included Sr. Corinne Florek, a member of the Dominican Sisters of Adrian, MI. She brought the nuns to the table and became a spokesperson for economic justice. Joan Shapiro from South Shore Bank crisscrossed the nation advocating for and raising funds for the model, which her bank took a leadership role in shaping. Nancy Andrews, who had been the Deputy Director of the Ford Foundation’s social investment portfolio, worked in the Clinton administration Departments of Treasury and HUD to head its Low Income Housing initiatives, and then helped grow the Low Income Investment Fund over 30 years from $35 million to over $1 billion in assets. Julie Eades of New Hampshire Community Loan Fund tirelessly reminded the industry that not all poverty was urban, and that multiple investment and lending models were needed to address it.

The Federal Program Begins

One early leader deserves a special call-out. A self-described nerd, Kirsten Moy oversaw the Social Initiative Investment Department at The Equitable Life Assurance Society. As such, she was managing a budget unimaginable in scale by the community loan funds. Her willingness to partner with the small hardscrabble peers was noted. On January 26, 1995, President Clinton announced his intention to nominate Kirsten Moy as the first administrator of the new federal program within the Treasury Department, the Community Development Financial Institutions Fund. At the Rose Garden ceremony where most of the above listed women, myself included, were present, it felt like witnessing a miracle.

The year before Newt Gingrich managed a takeover of Congress. Target number one was the CDFI Fund. Kirsten managed to steer $35 million out to the network against great adversity, and she and her successors protected the program year after year. The community investing movement’s sprouts and saplings were nourished by this new flow of federal funds and sprung up within the broader financial canopy. Between 1994 and 2024, CDFIs originated over $22 billion that supports 564,000 quality jobs, 105,000 units of housing and over 151,000 community health clinics, nonprofits, daycare centers, job training programs, and more.

The fact that today our nation has a healthy CDFI network makes financial services accessible and economic prosperity possible for millions. NACDLF, now known as Opportunity Finance Network, which is now celebrating 40 years, and its members have distributed $111,087,489,003 over those four decades. Behind the figures are million new jobs and over 800,000 new businesses in addition to the housing and community services provided to millions. Further, just this past year, CDFIs received roughly $16 billion in federal grants for the development of clean energy, decarbonization of transportation and the built environment and pathways to a clean energy economy by and for disadvantaged communities. All this grew from an initial disbursement of $35 million, thoughtfully handled, from the US Treasury. And the women are still strong in support. OFN CDFI’s women’s network has 1,600 members in 15 local chapters.

Community Development Financial Institutions are an essential component in bending towards justice, and women were essential architects of the field.

This story originally appeared on GreenMoney.

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A history of the women who nurtured the roots of CDFIs

The Early Seeds of CDFIs were Planted and Nurtured by Trailblazing Women

Women in the Movement

The Federal Program Begins

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