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Growth, Equity, & Individual Welfare

A Theoretical Framework for “Moving the Needle” on CDFI Impact Evaluation

Research Report and Brief in Collaboration with AltCap


Community development financial institutions (CDFI) are grassroots entities that guide sustainable economic growth by prioritizing the needs of marginalized populations. Traditionally, CDFIs have been evaluated by the extent to which their activities foster local development and/or lessen economic inequities. Our analysis suggests this phenomenon is the result of deeply entrenched alliances between the public sector and the interests of CDFI stakeholders. These institutions are major resource providers and thus have set the narrative around CDFI impact measurement and evaluation. We propose an alternative framework that prioritizes changes in individual welfare which foster economic autonomy and improve relationships with community institutions. Our framework is admittedly theoretical, and further iteration will be required to operationalize it into a workable concept. We conclude with suggestions to “move the needle” by using incremental policy shifts as catalysts for larger change.


While the industry has grown sevenfold between 1997 and 2021, yet research has struggled to find examples of CDFIs using successful impact measurement techniques or program evaluation initiatives. This is concerning because CDFI intervention methods use credit access as a tool for community development. But excessive credit can be destructive, especially when provided to the historically marginalized constituencies served by the industry. The existing framework set by the sector’s stakeholders has impeded attempts to engage in meaningful impact measurement and evaluation. As a result, there is a fundamental misalignment between how CDFIs were designed to function versus how they are incentivized to operate. There are no easy ways to resolve this tension, which is why we argue for a re-orientation that emphasizes individual welfare at the systems level.


CSBDF_Moving-the-Needle-Research Brief
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McCall, Jamie R., Anzawi, Nora L., Zeller, Miles T., & James R. Onorevole. 2022. “Growth, Equity, and Individual Welfare: A Theoretical Framework for ‘Moving the Needle’ on CDFI Impact Evaluation. Carolina Small Business Development Fund and AltCap. Raleigh, NC and Kansas City, MO.

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