Economic challenges also persist. Access to basic banking services, responsible credit, and opportunities to build financial assets are critical to rebuilding an inclusive economy and shared prosperity, but according to a 2009 FDIC report, close to 30 million U.S. households are either unbanked or underbanked.3 Many turn to high-cost, predatory providers as an alternative. According to the Credit Builders Alliance, 40% of adults living in the U.S. do not have a credit score that affords them an opportunity to access prime credit, leading them to high-cost, predatory lenders.
While the picture may look grim, we see great signs of hope. Emerging models of redevelopment are successfully stabilizing isolated neighborhoods and preserving affordable housing. Leading Community Development Financial Institutions (CDFIs) show that it is possible to provide responsible financial services to the unbanked and a growing group of social entrepreneurs are testing and validating new credit scoring models, new operational platforms, and new ways of migrating individuals from predatory providers to responsible ones.
At the Citi Foundation, our goal is to find these successes, invest in them, and collaborate with our grantees to build an inclusive financial system. In 2012, the Citi Foundation invested close to $10 million in Neighborhood Revitalization programs. We are committed to maintaining economically vibrant communities in the U.S. by: increasing the flow of capital to low- to moderate-income communities to develop or preserve affordable housing, small businesses and community facilities that advance economic and/or environmental sustainability; designing scalable ways to provide financial services that responsibly meet the needs of low- to moderate-income people; providing opportunities to build financial assets and opportunities; and supporting effective changes to policies and industry practices that multiply the impact of private, public and civic resources.
CDFIs serve as an anchor for our broader neighborhood revitalization strategy and our support complements Citi's broader efforts in this sector.
1 The State of the Nation's Housing 2011, Harvard Joint Center for Housing Studies. Retrieved from http://www.jchs.harvard.edu/publications/markets/son2011/son2011.pdf.
3 FDIC National Survey of Unbanked and Underbanked Households, December 2009. http://www.fdic.gov/householdsurvey/full_report.pdf