CDFIs 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.

When 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-lining——a 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.

The 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.

"The brilliance of the people who founded the South Shore Bank was to say let's create an institution that generates wealth and that uses that wealth in the community, and that furthermore, by investing in the community, strengthens that very institution."

Richard Taub, University of Chicago