BID® Daily Newsletter
Oct 6, 2025

BID® Daily Newsletter

Oct 6, 2025

Insights from the 2025 Federal Reserve CDFI Survey

Summary: CDFIs are on a mission to expand economic opportunities in historically underserved, low-income communities by providing greater access to financial products and services. We detail findings from the Federal Reserve’s recent study on their progress.

The word “mission” has a rich history in civic life, tracing back centuries to humanitarian organizations mobilizing individuals to serve greater causes. Groups like the American Red Cross have long sent volunteers and staff across the country — and around the globe — to provide critical disaster relief, promote health, and support those in need, regardless of background or circumstance. Today, more than one million Red Cross volunteers and staff members are active worldwide, responding to emergencies, preparing communities, and advancing public well-being.
There’s a unique type of financial institution that’s also mission-driven. The mission of community development financial institutions (CDFIs) is to expand economic opportunities in historically underserved, low-income communities by providing greater access to financial products and services. More than 1K CDFIs are in operation today, ranging from banks and credit unions to loan funds and venture capital funds.
The Federal Reserve conducts a survey every other year to gain insight into how CDFIs are faring and evolving. This year’s survey, which was conducted from April 10 through June 13, is based on the responses of 448 executives from diverse types of CDFIs. This represents nearly one-third of the CDFI industry.
We discuss some of the survey’s key findings, including where CDFIs are thriving, where they’re struggling, and how they can improve performance.
Where CDFIs Are Thriving
Nearly three out of four (71%) CDFIs reported rising demand for their products across all business lines last year, while 77% said they expected growth to continue into this year. Strong demand was driven largely by new customers seeking small business, consumer, and residential real estate development loans.
CDFI executives cited their ability to offer flexible underwriting and tailored loan terms as the unique value adds CDFIs offer to communities. They view their strong focus on reaching otherwise excluded borrowers through innovation and adaptation as one of their key differentiators.
There is also a widespread commitment to growth among CDFIs, with 95% of executives planning to expand their customer base over the next five years and 80% intending to boost financing levels. These organizations plan to build capacity primarily through increased hiring and smart technology adoption.
Where CDFIs Are Struggling
CDFIs are facing some challenges despite the good news, starting with staffing. Nearly three-quarters (72%) of executives reported facing challenges in finding qualified candidates to fill open positions, while half said that skill deficiencies among staff limit development service capacity.
Technology is another challenge: More than three-quarters (76%) of executives said that the high costs associated with procuring and integrating new technology are a major constraint on their ability to grow. Among loan funds, the cost of lending capital (40%) and operational funding constraints (28%) present a major challenge. These funds rely heavily on external capital sources and are concerned about sustainability if federal and philanthropic funds decline.
How CDFIs Can Improve Performance
CDFI executives offered a number of suggestions for ways CDFIs can improve future performance, including these five:
  1. Expand talent pipelines and training by partnering with educational institutions and local organizations to recruit, train, and upskill diverse candidates. CDFIs can also invest in staff development to deliver more robust services and boost organizational capacity.
  2. Accelerate strategic technology investments by leveraging federal grant dollars and innovation-focused partnerships to offset their technology costs. By prioritizing scalable solutions, they can address client-facing and operational needs, especially cybersecurity and integration.
  3. Enhance access to stable capital by strengthening relationships with public-private funders and advocating for sustainable federal support. In addition, CDFIs can diversify their funding streams by blending earned income with deposits, philanthropy, and inter-institutional partnerships.
  4. Tailor their products for affordability and inclusion by reviewing and adjusting their underwriting to broaden credit access while maintaining prudent risk management. By expanding flexible loan products and development services, CDFIs can help borrowers in historically underserved communities overcome qualification barriers.
  5. Build on their mission-driven identity by clearly communicating the unique impact and value of their CDFI to stakeholders, policymakers, and the communities served. One way to do this is by monitoring and sharing success stories and metrics that demonstrate their community and economic impact.
How CDFIs View the Economy
CDFI executives were not enthusiastic in their outlook for the broader US economy, with over half feeling either somewhat or very pessimistic. However, they were much more optimistic about their own organization’s outlook. This may be due to the fact that CDFIs act as “financial first responders” for lower-income borrowers, which could translate to demand growth in a weakening economy.
CDFIs will continue to serve a critical role in meeting the financial needs of customers in historically underserved, low-income communities. Innovation, investment, and community partnership will be essential to their continued success.
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