America blooms where we water her
How CDFIs unearth economic mobility opportunities
Produced by Sarah Merion and Sachi Shenoy of Radiant Data
Across the country, it's no surprise: Americans are struggling, and the so-called “American dream” is eroding. Only about 5 in every 10 of today’s workers will out-earn their parents (Opportunity Insights). Compare this to the previous generation when 9 out of 10 workers could out-earn their parents.
But here’s the thing: Americans have been starting businesses at a faster rate in the past four years than in the previous twenty (U.S. Census Bureau, Business Formation Statistics). Small businesses contribute to over 43% of America’s GDP and almost half of the American workforce (US Chamber of Commerce).
These business owners are hungry to change their economic situations through entrepreneurship — but ingenuity and grit alone aren't enough to chart a new financial trajectory. They must have access to affordable capital.
Enter Community Development Financial Institutions (CDFIs) — the unsung heroes in this scenario. Since 1994, CDFIs have served on the front lines to support small businesses by providing affordable access to capital.
Started in 1994 within the US Department of Treasury, the CDFI Fund was created to provide access to capital to all communities - and particularly those individuals typically shut out from traditional main street banking, underserved regions, or unbanked populations.
Notably, the CDFI Fund was established as a bipartisan initiative through the Riegle Community Development and Regulatory Improvement Act of 1994.
As of May 2023, there were 1,487 certified CDFIs that have mobilized $452 billion and created hundreds of thousands jobs.
For every $1 invested through the US Treasury CDFI Fund, $8 in private dollars is invested by corporations, philanthropies, and individuals like you.
The income gap isn’t just a present-day challenge -- it’s a future crisis in the making.
In this study, we see a troubling trend: median incomes for 27-year-olds in the highest-earning cohort are steadily rising, while those in the lowest-earning cohort are not only flatlining but declining over time.
Scroll over the vertical bars below to see how the income gap widens year by year.
Then ask yourself: what happens if these trend lines continue to go unchecked?
"While we are still far from full financial inclusivity in our country, CDFIs set a solid foundation for progressing forward in our fight for equity."
- Robert F. Smith
Chairman and CEO at Vista Equity Partners
and Champion of CDFIs
Click here to read more on why Mr. Smith feels that CDFI are essential.
One powerful force that can help reverse this frightening trajectory is the concept of Economic Connectedness (EC), coined by Raj Chetty and his team at Opportunity Insights. EC is defined as "the degree of interaction between low- and high income people."
And this matters - a lot.
Chetty’s research shows that higher levels of EC can boost individual income by up to 20%. That’s why we use EC as a cornerstone for identifying opportunity zones across the U.S.
Explore the map below to see how your county compares:
- Blue counties show stronger economic connectedness
- Orange counties reflect weaker connectedness and untapped opportunity
2.
Cultivating
Growth
Here’s the silver lining:
There are counties across the U.S. that are ripe for investment -- the diamonds in the rough, if you will.
But how do we find them?
We’re looking for counties that show what we call "Economic Mobility Opportunities" -- places where two powerful conditions intersect:
- Low rates of economic connectedness
- High rates of business formation per capita
When these two forces converge, we uncover something deeper: motivation, tenacity, and drive (and often in the face of systemic adversity). These are the communities where residents are doing everything they can to build a better future. What they need now is access to capital and business advisory support to match their ambition.
This intersection – a resurgence in business formation paired with economic connectedness – paints a picture of the path to economic mobility for thousands of Americans.
Explore below: Hover over the dots below to explore. Counties in the upper-left red quadrant represent high-potential areas for economic mobility where low EC meets high entrepreneurial activity.
3.
Opportunity
within Reach
Physical proximity shouldn’t determine economic opportunity.
Many of the counties we’ve highlighted may not sit near wealthy communities or established economic hubs. But we can simulate the effects of increased economic connectedness by mobilizing wealth into these high-potential regions.
CDFIs are well-positioned to support the entrepreneurs and small business owners in these areas.
These individuals are ready for capital, eager for mentorship, and full of drive. Tasked with serving under-resourced communities, CDFIs can direct financial and social investments where they’re needed most. When we invest in these counties, the return is more than financial. It's increased social mobility, stronger communities, and shared national prosperity.
With today’s shifting political climate, private and philanthropic funding is more essential than ever.
The time to act is now - not just to sustain struggling communities, but to reverse downward economic trends that could ripple across the entire country. Whether you realize it or not, this affects us all.
“Within 6 months of receiving these loans, we had introduced multiple new management positions, increased incomes, and grew our production team to accommodate the new growth!”
- Sadie Scheffer
CEO and Founder, Bread SRSLY
Other Small Business Success Stories
Kentucky Doctor Constructs CDFI-Funded Medical Building Powered by Rooftop Solar
Idaho Couple Uses CDFI Loans to Grow Local Meat Processing Business
Baltimore’s Oldest and Largest Worker-Owned Coop Expanded with CDFI Help
If you have a Donor Advised Fund, you have the power to direct dollars to where they’re most needed - and create an impact immediately.
Explore Below: The resulting map below shows counties most ready for needed capital, as identified through their high business starts and lower EC. The blue dots represent the CDFI(s) in that county to direct investment to.
Then, take action: Reach out to the CDFIs listed below to learn more, and consider recommending a grant from your DAF to help fuel their work in these high-potential communities.
Methodology:
We collected Economic Connectedness data from Opportunity Insights to understand financial need on a county level. This research was published in 2018, and we overlayed business formation data from the same year. The cross section of these two values we define as Economic Mobility Opportunity counties. We also use CDFI organization data from the US Department of Treasury.
About the Author:
Radiant Data is on a mission to humanize data within financial services. By harnessing data to address issues of economic equity and financial inclusion, we help organizations amplify their impact. We welcome your feedback and look forward to opportunities for collaboration.
Sarah Merion
sarah@radiantdata.co
Connect with Sarah on LinkedIn
Sachi Shenoy
sachi@radiantdata.co
Connect with Sachi on LinkedIn
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