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Different types of CDFIs can receive investments in different ways.

 

   

If the CDFI is a bank or a credit union, you can invest by making a simple deposit in a savings account or purchasing a certificate of deposit, just as you might at a commercial bank. Like banks, credit unions are regulated and insured by government agencies. However, only Community Development Credit Unions officially designated as low-income are allowed to take deposits from nonmembers.

Investing in a loan fund or venture capital fund can be more complex. Each investment is a separate contract. Some states require that investors prove that they can afford to take the risk. However, a number of loan funds have streamlined the investment process and attract hundreds of individual investors. Although deposits are not covered by government insurance, most loan funds have nearly perfect records of repayment.

"In the beginning, the people who invested were predisposed to do so out of liberal social values. Or they were people from the church community, often Roman Catholic orders and some of the mainline Protestant denominations. But, as we built more credibility, we got more interest from banks, insurance companies, foundations, and from hundreds and hundreds of individuals."

Jeremy Nowak, The Reinvestment Fund