BankThink: Flush with Capital, CDFIs Need to Start Thinking Bigger

American Banker
Monday, August 16, 2021

There was a time not long ago that community development financial institutions and minority-owned banks struggled to find the capital needed to increase financial inclusion, catalyze growth and reduce inequality in low- to moderate-income communities across the United States. Today, though, the sector has the opportunity to scale up by increasing total assets by a factor of 10 — and commensurately increase the impact in LMI markets. Everything changed last year when the Black Lives Matter movement helped local and national leaders recognize the sector as an important agent of change in these communities. Both the public sector (via the Emergency Capital Injection Program and CDFI Fund) and the private sector are investing new capital and committing other support to these institutions — in billions, rather than millions, of dollars. The industry is now at a pivotal and transformative moment in its history. It has the potential to reimagine and scale up the impact in LMI communities that form the foundation of their work and help solve social and economic justice issues that our society faces. This piece outlines a strategy for the sector to achieve scale