CDFIs

Loan making organisations that drive positive community development.

Community Development Finance Institutions are predominantly loan-making businesses that target under-served communities. Providing an affordable and ethical alternative to high-interest doorstep and payday lenders, CDFIs focus on local areas and specific groups of people and businesses that can’t access mainstream finance from high-street banks.

Similarly to Credit Unions, CDFIs’ targeted approach means that loans are continually reinvested within a predefined area or amongst a group of people. This creates a beneficial cycle within local economies, where initial funding from a CDFI can continue to circulate, driving growth, jobs and prosperity in previously neglected areas.

Although accounting for only a small proportion of financial services in the UK, CDFIs are growing quickly in reach and popularity. In 2013 the sector expanded by 52%, lending over £123 million and securing more than 17,000 jobs across the UK. With CDFIs lending to such a diversity of customers — from social enterprises and local businesses to home improvement and personal loans — this trend looks set to continue.

But CDFIs aren’t just good for borrowers and the economy: they’re a great place to move your money to as well. Investment in a CDFI can qualify for the government’s Community Investment Tax Relief scheme, worth up to 25% of the total value of your investment.

As a result, moving your money to a CDFI is not only a great way to make a positive social and economic impact in areas that need it most, it’s also a great way to make a tax-efficient return on your savings and investments.

To find out more about CDFIs, head over to the Community Development Finance Association website here.

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