To what extent is Community Development Finance Institution (CDFI) movement fulfilling its original purpose to provide affordable finance to disadvantaged communities?
By analysing the experience of four case study organisations, we consider this question in the context of the varying demands being placed on CDFIs by both policy-makers and funders.
We argue that the failure of the sector to realise its full potential lies in the conflicting demands placed upon CDFIs. The core functions of CDFIs – outreach and regeneration – cannot be easily reconciled with financial sustainability. The operating practices of CDFIs and the realities faced by the communities they serve mean that they are seeking to generate long-term social benefits, rather than financial profits.
In this study we address the following questions regarding the UK community finance sector:
The report concludes with a set of practical recommendations to enable CDFIs to achieve a step-change in both effectiveness and impact.
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