The question isn’t whether investing in Community Development Financial Institutions (CDFIs) carries risk. It’s whether we can afford the risk of letting them fail.
As foundations and asset allocators navigate an increasingly volatile economic landscape, I find myself fielding the same question repeatedly: “Should we double down on CDFIs right now, or is this the moment to pull back and protect our boards’ appetite for future impact investing?”
I understand the concern. Many of you have spent years building board confidence in impact investing strategies. The fear that industry turbulence might lead to failed investments — which may shake board and leadership commitments to CDFIs or alienate them from the entire concept of impact investing — is not unreasonable. However, I want to offer a different lens through which to view this moment. The question many of you are asking — “What’s the risk if I put capital into a CDFI?” — is important. But I believe it overlooks the more critical question: “What’s the risk if these CDFIs fail?”
Acknowledging What We Stand to Lose
Compared to the landscape just a decade ago, Georgia’s CDFI industry has undergone a remarkable transformation – from a handful of institutions to a robust network of 35 that collectively move hundreds of millions of dollars into communities across the state. This growth wasn’t accidental but rather the result of years of intentional collaboration among foundations, public agencies, and private investors who understood that building financial infrastructure takes patience and coordination. The strategy of attracting national CDFIs to establish headquarters in Atlanta while simultaneously supporting locally-rooted CDFIs has created a complementary ecosystem, where national players bring large balance sheets and connections to different capital markets, and local CDFIs bring deep place-based expertise and relationship capital that create trusted footholds in communities across the state.
The emergence of CDFIs in markets like Thomasville and Athens tells an equally important story about adaptation and possibility. These institutions are proving that mission-driven lending works across Georgia’s diverse geography—from urban cores to small towns—each CDFI tailoring its products to what their specific market needs, whether that’s equipment financing for rural manufacturers or startup capital for Main Street businesses. The patient capital that foundations provided gave these CDFIs time to learn their markets, build trust, and develop sustainable operations without having to choose between mission and financial stability.
From 2005 to 2022, CDFIs deployed $3.6 billion in lending across Georgia communities. Using industry-established methodologies, including the 8:1 leverage ratio, we can reasonably estimate that this investment generated between $6.2 billion and $28.8 billion in total economic impact and created 30,000 to 60,000 jobs. These aren’t abstract numbers. They represent families buying homes, small businesses hiring employees, and communities building essential facilities like health centers and schools.
As tremendous as these figures are, data alone doesn’t illustrate the vital roles CDFIs are playing across Georgia. What makes CDFIs irreplaceable isn’t just their lending capacity, it’s their willingness to work with borrowers who don’t fit traditional banking models.