serve poor people and people who are in danger of becoming poor.
But the poor are not always who and where we expect. For years,
the majority of people on welfare have been white, and many poor
people live in rural areas, not in urban ghettos. There are many
causes of poverty, so there can't be a single solution. But CDFIs
address a key problem that has aggravated poverty in many communities:
access to capital.
a community starts to experience economic decline, banks and other
financial institutions start to withdraw capital. In its crudest
form, this is known as red-lininga practice in which
financial institutions literally draw a red line around a particular
neighborhood and declare it off-limits for further lending. Although
this is now illegal, many financial institutions continue to close
branches in poor inner cities neighborhoods and rural areas and
invest their capital in wealthy suburbs.
mission of CDFIs is to go where banks fear to tread and to initiate
an upward spiral of economic activity in poor communities that
will ultimately help them become self-sustaining.