Over the year Charlotte and Creighton Jones received loans from Vermont Development Credit Union, which helped to finance the purchases of a car and a five-bedroom home, as well as pay off dental and vehicle repair bills. "They are always looking out for the little guys, and they want you to succeed,” says Charlotte Jones. “Thanks to them, we have stability in our financial lives and assets we can pass on to our children.”

Women and racial and ethnic minorities have historically been denied access to capital and services from formal sector financial institutions. Committed to serving populations disenfranchised from conventional banking and lending institutions, many CIIs focus their lending, training, and business development on women and minorities. As displayed in the graph below, half of all clients with CDFIs, the primary type of Community Investment Institutions (CIIs), are women, and the majority are low-income people and members of racial and ethnic minorities.

CDFI Clients Served (U.S.)

*Data as reported by 517 CDFIs for the FY 2004. Taken from CDFI Data Project study “CDFIs: Providing Capital, Building Communities, Creating Impact.”

CIIs that lend internationally follow the same trends of directing their lending to women and people oppressed by racial inequality or poverty. As women are often responsible for raising children, their poverty results in the undernourishment of the next generation. The Microcredit Summit Campaign, an international campaign to provide microcredit to impoverished communities abroad, reports that lending to women has proven to be a good credit risk. Women are likely to invest their income in the well-being of their family, making it an investment with a far-reaching impact.

Minority-owned and Women-owned CIIs

In addition to being borrowers, women and minorities are also leaders and lenders in the community investing industry, by owning and managing financial institutions such as CIIs. Minority CIIs exemplify the mission of community investing in their leadership as well as in their institutional practices. Minority CIIs are owned and/or managed by African Americans, Asians, Latinos, Native Americans, women, and other ethnic and minority groups.

Minority CIIs provide lending expertise greatly needed in the community investing market where 60 percent of their clients are racial and ethnic minorities and 50 percent are women. As minority lenders, the managers share a common culture and possess specialized knowledge about their clients. They are capable and committed to implementing more effective financial programs for their clients that would be too costly or time consuming for mainstream financial institutions to provide.

Sharing similar banking and lending strategies as other CIIs, minority CIIs often provide additional and specialized services to their clients. Latino CIIs offer customer service and marketing information in Spanish, remittances sent to their home country for lower costs, and more guidance in financial transactions. Native CIIs are bringing formal sector financial services to Native communities that have suffered from a lack of access to capital due to geographic isolation, historical discrimination, redlining by mainstream financial institutions, and a lack of locally owned financial institutions. The number of Native CIIs has leaped from one institution in 1999 to 25 institutions in 2003. Among many lending successes has been the financing of 27 microenterprises in native communities in 2003, as reported by 6 Native CIIs. ²

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¹ Microcredit Summit Campaign http://www.microcreditsummit.org/pubs/reports/socr/2003/SOCR03-E[txt].pdf
² First Nations Oweesta Corporation, “Investing in Community: Community Development Financial Institutions in Native Communities,” 2004.