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Community development finance is the provision of debt and equity finance (loans and shares) in communities or markets where mainstream financial services are weak and which are said to be 'undercapitalised'. Examples include financial services for for-private-profit businesses working in disadvantaged neighbourhoods or for social enterprise activity. These services are usually provided through community development finance institutions (CDFIs), whose customers typically are individuals, micro, small and social businesses.
According to the Community Development Finance Association (CDFA), CDFIs provided £181m in loans and investments in 2005, up 23% from 2004. Loans range in size from £50 to £1,000,000. CDFIs have financed more than 18,000 businesses and individuals, and improved the net income of 210,000 households.
Investing in CDFIs is also tax-efficient. Community Investment Tax Relief (CITR) is available to individuals and companies in the form of a tax relief, which reduces the investor's income tax (or corporation tax) liability. See Philanthropy UK’s A Guide to Giving for more information.
► Visit the CDFA website to find a CDFI in your area.
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