New OFN Research Looks at Effects of CDFI Fund FA Awards

Sacha Adorno, Strategic Communications, OFN

November 18, 2025 – 

OFN’s just-released research paper — CDFI Fund Financial Assistance Awards and OFN Member Loan Funds — offers a quantitative analysis of how critical government funding strengthens CDFIs and amplifies community impact. To dig deeper, OFN’s Adrienne Smith and Dafina Williams explore how FA Awards boost balance sheet strength, leverage, and lending, and why that matters now.

Read time: 8 minutes

Over the past 40 years, the CDFI industry has become a vital part of the nation’s financial infrastructure, expanding economic opportunity in rural, urban, and Native communities that mainstream finance often overlooks. 

CDFIs are trusted partners to both the public and private sectors, which invest in these community-based lenders to deliver responsible, affordable, place-based financing. This support helps create jobs, strengthen local economies, and build thriving communities. 

OFN has been telling the CDFI story for decades. Now, our latest research publication — CDFI Fund Financial Assistance Awards and OFN Member Loan Funds — offers a fresh, comprehensive analysis of how the U.S. Department of the Treasury’s CDFI Fund Financial Assistance (FA) Awards help support the CDFI mission to invest where it’s needed most. With decades of strong bipartisan support for CDFIs, OFN seeks to provide the necessary research to inform advocacy and ensure federal support continues for the vital work that the CDFI industry delivers to Main Street.

Since 1994, the CDFI Fund has made FA awards through the CDFI and Native American CDFI Assistance (NACA) Programs, enabling CDFIs to reach deeply into underinvested communities and geographies. The awards are competitively awarded to CDFIs, and awardees determine how best to deploy loans and other financial products to address local priorities. 

Spanning 2009–2022, OFN’s new study examines the impact of receiving a first FA award on OFN member loan funds, focusing on financial strength, leverage, and lending. Key findings show that receiving an initial FA award supports: 

• Asset growth: A 52% increase in total assets within three years of receiving a first FA award. 
• Leverage: A 69% rise, equating to $2.4 million more in capital available for lending within three years of receiving a first FA award. 
• Mission-aligned lending: A 75% expansion, or an average of $6.2 million in additional loans outstanding, by year three. 
• Smaller member loan funds: Those receiving relatively larger awards relative to their assets experienced the greatest proportional growth. 

In short, the findings substantiate what the industry has long observed: FA awards are catalytic. They strengthen member loan funds’ financial strength, attract additional investment, and increase lending portfolios. 

Taking a deeper look at the research, Adrienne Smith, Senior Vice President of Research, and Dafina Williams, Chief Public Policy Officer and Head of Government Affairs, discuss the inspiration behind the study, its key findings, and how CDFIs can leverage this evidence to advocate for sustained public investment.

For those unfamiliar with FA Awards, what are they?

Smith: FA Awards are one of the CDFI Fund’s cornerstone programs. They’re competitive grants awarded to certified CDFIs to strengthen their capital base and expand lending. Base awards, made through the CDFI Program, comprise the bulk of FA Award dollars. NACA, a subset of FA Awards, provides dedicated funding for Native CDFIs serving Tribal, Alaska Native, and Native Hawaiian communities. 

Williams: Unlike project-specific funding, FA awards are institutional investments. They offer flexible dollars that CDFIs can use for lending capital, loan loss reserves, or operational support. This flexibility allows each CDFI to deploy funds where they’re needed most, for example, financing affordable housing, small businesses, homeownership, health care centers, or other community-based investments.

What inspired this paper?

Williams: Policymakers have consistently asked us to provide hard data showing how federal dollars flowing through the CDFI Fund translate into measurable community impact. We’ve long needed fresh evidence to demonstrate what these dollars accomplish. 

Smith: When our policy team suggested this study, we were excited to respond. Previous research on FA Awards is more than a decade old, so it was time to update and expand the evidence base. The industry and our government partners need contemporary analysis exploring the potential effects of CDFI Fund funding.

In a nutshell, how did you measure the Awards’ effect on CDFIs?

Smith: This was a quantitative study using a multi-year dataset. We merged data from the CDFI Fund’s Awards Database with IRS Form 990 filings to track the financial performance of OFN member loan funds over time. The sample comprises 341 OFN member loan funds. 

We focused on loan funds that received their first FA Award between 2009 and 2022 and matched them with similar members that hadn’t received an award, to control for other growth factors.

Using a difference-in-differences method, we compared the financial trajectories of both groups, measuring three domains: financial strength, as represented by total assets, net assets, and earned and contributed revenue; leverage, in terms of notes payable and capital available for lending; and lending, as measured by loans outstanding, a proxy for community investment. 

This quasi-experimental approach enabled us to quantify the potential causal effect of receiving an FA Award. 

What stood out most in the findings?

Smith: The scale and speed of the impact were notable. Within a year of receiving a first FA Award, recipients’ total assets grew by 20%, reaching 52% by year three — an average increase of $4.5 million relative to the comparison group. Net assets rose by nearly half. 

Leverage expanded as well: Notes payable increased 69% by year three, equating to $2.4 million in new capital to lend. Mission-aligned lending grew 75%, averaging $6.2 million more in loans outstanding relative to the comparison group that did not receive an award. 

In other words, FA Awards do exactly what they’re designed to do. They give OFN member loan funds the strength and flexibility to expand lending and serve more clients. Smaller member loan funds — those having fewer assets and receiving larger awards relative to their assets — saw the greatest proportional gains. 

Why is this research necessary for the CDFI field right now?

Williams: This research is critical. It helps us clearly demonstrate, with research and data, how FA Awards strengthen institutions and fuel measurable community outcomes. Policymakers have long asked how these programs translate federal dollars into impact, and that scrutiny has only intensified. 

As investment in CDFIs grows, so does the need for transparency and accountability. OFN and our members need research and data to complement compelling stories of impact — and this study delivers it. It’s an excellent addition to OFN’s growing research program, which offers evidence about the CDFI and loan fund approach toward community investment.

It also builds on OFN’s Business Model of Loan Funds paper, published earlier this year. In our advocacy work, we’ve found that people generally understand how banks and credit unions operate, but there’s still mystery around loan funds. The two studies work in tandem. One explains how the loan fund model operates and sources capital, while the other demonstrates how public investment amplifies its impact. Together, they help demystify the model and strengthen our case for continued support on Capitol Hill and beyond. 

How can CDFIs and industry champions use this research as an advocacy tool?

Williams: It’s natural and understandable for funders — especially the federal government — to want to know if their investments are making the impact we claim. Studies like this are invaluable for making the case for the CDFI Fund on Capitol Hill and with the Treasury. They provide a credible, data-driven narrative to pair with borrower stories. Numbers and human impact together make a powerful argument. 

This research also supports our allies. Congressional champions, Hill staffers, and agency officials can use these findings in hearings or reports to demonstrate the return on public investment. 

OFN receives FA Awards regularly. We bring that capital into our balance sheet and, like other CDFIs, use it to attract additional capital. This enables us to deploy more resources to CDFIs in our network that may not have accessed FA Awards directly. It’s a multiplier effect, and this study gives us the proof points to back it up. 

What’s next?

Smith: There’s much more to explore. We want to understand the motivations behind applying for awards, how award size affects outcomes, and how FA compares with other CDFI Fund programs like the Bond Guarantee and New Markets Tax Credit. We also want to pair this quantitative study with qualitative case studies about how our members use FA awards in their important, community-focused projects.

We also aim to strengthen data infrastructure across the industry. Conducting this kind of longitudinal research highlighted the importance of better data systems for understanding impact.

Williams: From a policy perspective, we’ll continue pairing empirical research with real-world stories from the communities CDFIs serve. Policymakers respond to both — evidence and experience — and together they build a strong case for continued public investment in the CDFI Fund. 

From Research to Practice

Smith and Williams presented on the FA Awards study during a recent webinar co-hosted by Local Initiatives Support Corporation (LISC), which has just published complementary research on the impact of CDFI lending on borrower wealth and assets. LISC’s study — CDFI Impacts on Wealth and Assets: Lending, Credit Enhancements, and Strategies to Close the Racial Wealth and Resource Gap — found that CDFI financing measurably strengthens the financial health of borrowers.

Learn More

View the webinar here.

Read the papers:

• OFN: CDFI Fund Financial Assistance Awards and OFN Member Loan Funds  
• LISC: CDFI Impacts on Wealth and Assets: Lending, Credit Enhancements, and Strategies to Close the Racial Wealth and Resource Gap

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Tags: CDFI Fund, CDFI Leadership, Community Development, Impact Investing, Public Policy, Research