CDFI vs Bank
How does a CDFI compare to a bank?
Legacy Redevelopment Corporation provides strategic lending solutions for Milwaukee’s underserved markets. We are the only U.S. Treasury-certified Community Development Financial Institution (CDFI) with a focus on housing and commercial real estate in Milwaukee’s central city. A CDFI and a bank are two distinct types of financial institutions that serve different purposes and target different customer bases. Here are the key differences between them:
✅ CDFI Mission and Focus: Promote economic development, job creation, and community revitalization. CDFIs often prioritize serving low-income individuals, minority groups, and businesses that may have difficulty accessing traditional banking services.
✅ Bank’s Mission and Focus: Banks are general financial institutions that offer a wide range of financial services to individuals, businesses, and other entities. While some banks may have community development initiatives, their primary objective is to generate profits for their shareholders.
✅ CDFI’s Regulatory Framework: CDFIs are regulated by the Community Development Financial Institutions Fund (CDFI Fund), which is a division of the U.S. Department of the Treasury.
✅ Bank’s Regulatory Framework: Banks are regulated by various entities such as the Office of the Comptroller of the Currency (OCC), Federal Reserve System, or state banking authorities, depending on their charter type.
✅ CDFI’s Services and Products: CDFIs offer affordable loans, micro-loans, financial education, technical assistance, and investments in community projects.
✅ Bank’s Services and Products: Banks offer a comprehensive suite of financial services, including checking and savings accounts, credit cards, mortgages, business loans, investment products, and wealth management services.
Some banks may also engage in community development activities or partner with CDFIs to support community initiatives. However, the core distinctions lie in their missions, regulatory frameworks, ownership structures, customer focus, and profit motives.
