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Regional Matters

December 22, 2022

How are CDFIs Managing Pandemic-Related Disruptions?

Last month, the Federal Reserve released results from its most recent COVID-19 Community Impact Survey.1 The survey is designed to collect information on the effects of the COVID-19 pandemic on low- to moderate-income (LMI) communities and the organizations serving them. Among these organizations are community development financial institutions (CDFIs), which have a mission to provide credit and financial services to underserved individuals and communities. (See "Expanding Credit Access through Community Development Financial Institutions," Econ Focus, Fourth Quarter 2022.). This post examines CDFI responses to the survey to provide recent insight into how these organizations and their communities are faring, adding to what we learned when the Fed fielded its separate, biennial CDFI Survey in 2021.

The CDFI Sample

Among the 1,743 respondents to the 2022 survey, which include a variety of community organizations that serve LMI communities, 148 identified themselves as CDFIs (approximately 8.5 percent of the sample). The top issues respondent CDFIs worked on were housing (28 percent of respondents), small business (26 percent), and consumer finance (22 percent). When asked what type of area they primarily serve, 53 percent said they served urban areas, 37 percent rural areas, and 10 percent suburban areas. Additionally, 84 percent reported serving LMI communities – a higher share than the full sample (72 percent).

Effect of the COVID-19 Pandemic on Communities CDFIs Serve

CDFIs were asked how six different economic components were faring in their communities: household financial stability, small business, access to health care, services for children, housing stability, and basic consumer needs. For every component, the majority of CDFIs reported at least some continued disruption in 2022 related to the pandemic. Small business had the largest level of disruption (79 percent of respondents reporting some or significant disruption), followed by household financial stability, housing stability, and basic consumer needs at about 70 percent.

On the positive side, the severity of disruption across all economic components reported by CDFIs showed improvement from a year ago. For example, while 57 percent of CDFIs recalled significant disruption in small business in 2021, 28 percent reported the same in 2022.2 For household financial stability, the share of CDFIs reporting significant disruption fell from 53 percent in 2021 to 31 percent in 2022.

Effect of the COVID-19 Pandemic on CDFIs Themselves

In addition to answering questions about their communities, CDFI respondents were also asked how their organization has fared during the pandemic. Like the communities they serve, CDFIs as an entity are also experiencing continued disruption from the COVID-19 pandemic, but those disruptions are lessening. Thirty-two percent of CDFI respondents reported they had experienced significant disruption in 2021, but the share dropped to 17 percent in 2022.

The survey also included questions that allowed respondents to indicate their current top challenge. Over one-third of CDFIs cited their top obstacle as difficulty recruiting staff and volunteers. Meeting community demand for services and adapting to uncertainty were the second and third most cited challenges (15 percent and 14 percent, respectively). These three issues were among the top four cited across the full sample; funding/fundraising was the number two challenge when accounting for all respondents. Results from the 2021 CDFI Survey also indicated staffing as a top challenge for CDFIs. In that survey, limited staffing was the most reported factor preventing CDFIs from offering additional products and services on a sustained basis.

Current Challenges for CDFIs

To further understand the challenges faced by organizations, the Community Impact Survey asked respondents to describe how critical aspects of their organization -- including demand for services, expenses, staffing levels, and funding -- had changed over the year. Many CDFI respondents reported moderate to significant increases in expenses (71 percent) and demand for services (69 percent) relative to 2021. (This reported increase in demand comes after most respondents to the 2021 CDFI Survey reported taking on new clients with whom they had no relationship prior to the pandemic). Despite increased demand, 41 percent of CDFIs reported significant or moderate decreases in staffing levels since 2021, and 28 percent reported decreases in funding.

Within these areas, respondents also indicated their top challenges. Most staffing challenges for CDFIs came from hiring and retaining staff (30 percent), a lack of qualified candidates (17 percent), and the inability to offer competitive positions (13 percent). These were also the top three issues among all respondent organizations in the survey.

CDFIs reported that the top challenges associated with meeting demand came from lack of staff (37 percent) and lack of funding (16 percent). These two issues were also among the top issues for all organizations. Sixty-two percent of CDFIs reported being able to meet 75 percent or more of the demand for their products and services in 2022 (compared to 45 percent of respondents overall). Looking ahead to 2023, three-quarters of CDFIs anticipate being able to meet most of their demand (compared to 58 percent of all respondents).

Lastly, higher wages (36 percent) and non-labor overhead and input costs (17 percent) topped the list of challenges related to expenses. These two issues were also the top two cited issues among all respondents.


The Federal Reserve's COVID-19 Community Impact Survey has been fielded for the past three years to shed light on the breadth and severity of pandemic-related challenges within LMI communities and the organizations serving them. Upon further examination of CDFIs that responded to the 2022 survey, we observe that many of these institutions and the communities they serve are still experiencing disruptions, though the disruptions are transitioning from being significant to moderate. CDFIs most commonly cited staffing as their primary challenge and the biggest obstacle to meeting growing demand for their products and services, echoing what respondents shared in last year's CDFI Survey. Looking ahead to 2023, though, CDFIs expect to meet more of their demand than they were able to meet this year.


The Federal Reserve previously fielded the COVID-19 Community Impact Survey in 2020 and 2021. In 2022, the survey was administered from Aug. 3 to 31. Responses were collected through a convenience sampling method that relied on contact databases to identify representatives of nonprofit organizations, financial institutions, government agencies, and other community organizations.


It is important to note that while questions are similar between this year and previous years of the COVID-19 Community Impact Survey, the 2022 survey asked respondents to recall conditions in 2021 and indicate current conditions. Therefore, any comparisons made between 2021 and 2022 are not based on previous surveys. The only exception is when the article explicitly references the separate 2021 CDFI Survey.