Your organization probably doesn’t think of investing in CDs as a way to improve the lives of others. Yet, when it deposits funds with a bank that carries a Community Development Financial Institutions (CDFI)¹ designation and uses CDARS®, that’s exactly what your organization can do.² With CDARS, your organization can help strengthen underserved local communities while accessing multi–million–dollar FDIC insurance coverage and earning CD–level interest that may compare favorably to Treasuries.

Like traditional financial institutions, CDFI depository institutions are profit–making enterprises. However, CDFIs have a socially driven mission that traditional banks do not have – to lend to underserved communities or provide other services in economically distressed areas.

One bank in particular–City First Bank of DC, a CDFI and a member of the Community Development Bankers Association (CDBA)–has focused on building the economic health of underserved communities in Washington, DC and the surrounding areas since it opened its doors in 1998.

City First focuses its lending and investing on the difficult loans and projects that otherwise might not be completed, such as financing for community development, preservation of affordable housing, construction or renovation of community facilities (e.g., schools, churches, etc.), and business operations of small for–profit and nonprofit businesses. As a result, City First’s lending and investment activities have helped to create nearly 5,000 affordable housing units, create or retain over 3,400 jobs, and finance over 7,000 new charter school seats since the bank’s formation.

A key to meeting City First’s mission is maintaining a strong funding source for loans—deposits. That's where CDARS has helped. Offering CDARS enables City First to attract large deposits from public funds, government agencies, nonprofit organizations, individuals, and businesses that are socially responsible investors like you, complying with investment goals or policy mandates. When your organization deposits its funds using CDARS, it can earn interest and access multi-million-dollar FDIC insurance on CDs while working directly through a single bank relationship. As a result, your organization can benefit from the time-saving conveniences of One Bank, One Rate, One Statement® (and one 1099 tax form depending on your bank’s offering). If you are accustomed to collateralization, these conveniences can substantially reduce your administrative burdens and enable you to devote more time to other activities in support of your organization’s mission.

How does CDARS work? Financial institutions, like City First, that offer CDARS are members of IntraFi’s network of financial institutions. When you place a large deposit through a IntraFi network CD transaction at City First, your funds are placed into CDs issued by other network banks—in increments below the standard FDIC insurance maximum of $250,000—so that both principal and interest are eligible for FDIC protection.

With the help of a sophisticated matching system, deposits are exchanged with other members of the network. These exchanges, which occur on a dollar-for-dollar basis, bring the full amount of your original deposit back to your bank. As a result, the full amount of your deposit is available for lending in the local community.3

With CDARS, your organization can elect to place its funds through a CDFI, like City First, that dedicates the majority of its activities to serving economically distressed neighborhoods and, at the same time, earn interest and access multi-million-dollar FDIC coverage on CD investments through a single relationship.

To learn more about how your organization can use CDARS to help make a difference in its local community and to find a CDFI/CDBA institution near you, visit the CDARS website.

City First is a leader in the financing of charter schools by providing a wide range of loans and tax credit financing instruments that cover operations, leasehold improvements, and even new facilities. This critical lending work is made possible through its deposit customers. For example, with the help of grant and charitable contributions from governmental agencies, private institutions, and nonprofit organizations, City First financed the first new educational facility developed in the East Baltimore community in many decades – the East Baltimore Community School Campus. Along with two non–bank CDFIs, City First provided the full $35 million in financing needed for this massive school project, which is designed to serve over 700 children.

[1] Designated by the U.S. Department of Treasury, Community Development Financial Institutions (CDFIs) are private sector financial institutions that work in economically distressed target markets that are underserved by traditional financial institutions. All CDBA banks are CDFIs. In 2001, the Office of the Comptroller of the Currency (OCC) issued a policy statement on Minority–Owned National Banks that recognized the important role that minority–owned banks play in addressing the financial needs of the communities they serve and affirming the agency’s commitment to the success of these banks.

[2] Use of the IntraFi Network Deposits services is subject to the terms, conditions, and disclosures set forth in the applicable program agreements, including the applicable Participating Institution Agreement and Deposit Placement Agreement. Limits apply, and customer eligibility criteria may apply. If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the depositor’s responsibility to determine whether the placement of its funds through IntraFi Network Deposits or a particular IntraFi Network Deposits transaction, satisfies those restrictions. IntraFi Network Deposits program withdrawals are limited to six per month when using the IntraFi Network Deposits savings option. IntraFi Network Deposits are registered service marks of IntraFi Network LLC.

[3] When deposited funds are exchanged on a dollar-for-dollar basis with other banks in the IntraFi Network, your bank can use the full amount of a deposit placed through IntraFi Network Deposits for local lending, satisfying some depositors’ local investment goals or mandates.