August 2011

Joseph Firschein: Welcome to the Federal Reserve Bank of Atlanta's Economic Development podcast series. I'm Joseph Firschein with the Federal Reserve Board of Governors.

Community development financial institutions, also called CDFIs, provide traditionally underserved communities with access to capital, financial services, and technical assistance. The CDFI industry has experienced significant growth in the past decade, and CDFIs are increasingly recognized as an integral component of the financing continuum that supports low- and moderate-income communities and populations.

Today I'm speaking with Donna Gambrell, director of the U.S. Department of the Treasury's CDFI Fund since 2007. Previously, Ms. Gambrell served as deputy director at the Federal Deposit Insurance Corporation, or FDIC. And at the request of former FDIC chairman Donald E. Powell, she served an 18-month assignment in the Gulf Coast region, working on rebuilding initiatives in the wake of hurricanes Katrina and Rita.

Donna, thank you for joining me today.

Photo of Donna GambrellDonna Gambrell: Thank you for the invitation; it's a pleasure to be here.

Firschein: So we're going to jump right into the questions. First, I'd like to ask you some general questions about community development financial institutions, or CDFIs. At the most basic level, what makes a CDFI different from more traditional financial institutions, and can you give us some information on roughly how many CDFIs there are and where they're operating?

Gambrell: That's a great question. So the main way, Joe, that CDFIs are different from traditional financial institutions is that they generally have, as their primary mission, serving low-income and underserved communities, and they do the majority of the work in those areas. So we have community development financial institutions that work at the national level, at the regional level, at the local level, all serving those struggling communities all across the nation. And as of May 2011, the CDFI Fund has certified 952 CDFIs, and we're getting more certification applications every month.

Firschein: And of the 952 organizations, can you give some indication of the different categories or types of CDFIs and the primary services that they provide?

Gambrell: Yes, and I consider the variety of CDFIs their real strength because we see so many different types of these community development financial institutions. They may be community development banks, community development credit unions, loan funds, venture capital funds, and what we see with all these different types of institutions is that they also have a variety of focuses and serve a lot of different needs. So they may offer retail banking services, as well as loans for small businesses and microenterprises. They're involved in affordable housing projects. They also support social service organizations, and they do a lot of that important work that's necessary in communities to really help lift those communities into economic self-sufficiency and home ownership. So they may provide business planning, credit counseling, home buyer education, financial education, really to help residents better understand credit, but also give them an opportunity to have greater access to that credit.

Firschein: When you think about the different types of CDFIs, can you provide a sense of the impact that CDFIs are having in low- and moderate-income communities?

Gambrell: I think that CDFIs, the impact that they're having is really transformational. When you look at the impact of these institutions, what you see is that they are having a critical role in charter schools, health centers, mixed-use real estate, affordable housing complexes, green energy manufacturing, transit-oriented development projects in both urban and rural areas that really desperately need these facilities. And, because of the work that they do, this is also considered in many cases high risk, they have difficulty attracting investment from mainstream financial institutions.

And let me give you an example. They've been at the forefront of the movement to eliminate food deserts. A food desert is typically an area, a location, or a community where there is little to no access to healthy food options. So typically what you find is that residents are having to rely on either very high cost, unhealthy food, or that they have to travel long distances in order to get to a place to buy their groceries.

The Reinvestment Fund in Philadelphia, for example, which is a certified CDFI, is an organization that has drawn national attention to the problem through its efforts to promote healthy foods throughout the Pennsylvania Fresh Foods Financing Initiative. And this is an initiative in Pennsylvania that is in both rural and urban areas in the state. In response to the housing crisis, several CDFIs have developed ways of fighting foreclosure and neighborhood destabilization. Two great examples are Neighborhood Housing Services of Chicago and the Boston Community Capital.

They'd looked at this foreclosure issue and really thought outside the box, looking at implementing strategies that help homeowners stay in their homes, those who have, again, been in great difficulty, who are at risk of losing their homes. So, you see this time and time again, with CDFIs, not only the three that I've mentioned here, but in many, many more across the country.

So I think when you see not only what they do, but measuring the success of what they do, it really begins to make an impression. I really want to emphasize that these impacts are critical to changing these distressed communities.

Firschein: Donna, can you talk a little bit about how most CDFIs are capitalized and who are the primary funders of CDFIs?

Gambrell: Sure! CDFIs are capitalized from a range of sources, including grants and loans from foundations, banks, or even other intermediary CDFIs. In particular, banks looking to secure Community Reinvestment Act requirements, and investors seeking socially responsible institutions, make a sizable portion of CDFIs' capitalization. And Joe, I'd be remiss if I didn't mention that the CDFI Fund has provided nearly $1.3 billion in funding since our inception, and almost $105 million in just 2010. Let me give you an example of how that capitalization works.

Community Redevelopment Loan and Investment Fund was the first nonprofit in the city of Atlanta to receive CDFI certification. They've received grant and PRI [program-related investment] funding from the Robert W. Woodruff Foundation, and several local and national banks, for example, Best Bank, Flagstar, Northern Trust, Washington Mutual, Wells Fargo, BB&T, Bank of America, SunTrust, and Wachovia. So you see that over the years, mainstream financial institutions have actually provided that capitalization that was needed for this CDFI to ensure that they had funding to continue doing the important work that they're doing in the community.

Firschein: We've been speaking with Ms. Donna Gambrell, who is the director of the U.S. Department of the Treasury's CDFI Fund.

For more podcasts on this topic and others, please visit the Atlanta Fed's website at And if you have comments or questions, please e-mail Thanks a lot for listening.

Voiceover: This concludes part one of this two-part podcast on community development financial institutions, or CDFIs. Part two focuses on how CDFIs help to create jobs.