Understanding CDFI Financial Data: A Primer for New Investors

Rocio Sanchez-Moyano and Sarah Simms
Additional contact information
Sarah Simms: https://www.frbsf.org/community-development/about/staff/sarah-simms/

Community Development Research Brief, 2023, vol. 2023, issue 05, 28

Abstract: Community Development Financial Institutions (CDFIs) are gaining broader recognition as effective conduits of capital to underserved communities. As a result of the diversity of CDFI business models and their unique approach to blending different capital sources, these mission-driven capital providers have varied and often complex financial structures, and their financial statements can be difficult to understand for those not familiar with the sector. As interest in the sector from prospective investors has grown, so too has the need for broader understanding of how to assess CDFI financial health and soundness. This brief highlights sector dynamics that provide important context for any analysis of individual CDFIs, and shares suggestions for both the CDFI industry and investors new to the sector for how to improve understanding of CDFI financial metrics. Key takeaways: CDFI loan funds are unique entities relative to other financial institutions, and measures of financial health typically used for traditional financial institutions often do not readily map onto the CDFI sector. Heterogeneity in the sector makes CDFI loan funds difficult to assess at an industry level; institution-level evaluations are likely to be more fruitful. Efforts around standardization of financials have been undertaken by the sector itself in the past but more can be done (both by CDFIs and investors) to increase the understanding of CDFI loan fund financial data by mainstream financial actors.

Keywords: finance; CDFIs; business models; business loans (search for similar items in EconPapers)
Date: 2023
Note: Author(s): Rocio Sanchez-Moyano and Sarah Simms, Federal Reserve Bank of San Francisco
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.frbsf.org/wp-content/uploads/understan ... -data-cdrb202305.pdf Full Text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfcb:97501

Ordering information: This journal article can be ordered from

DOI: 10.24148/cdrb2023-05

Access Statistics for this article

More articles in Community Development Research Brief from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().