Community Development Financial Institutions: Issues of Performance and Governance Valentina Hartarska Assistant Professor Department of Ag. Economics & Rural Sociology Auburn University, 210 Comer Hall, Auburn, Al 36849, phone 334 844 5666, fax 334 844 5639, e-mail: hartarska@auburn.edu . September 16, 2005 (Preliminary Version; please do not cite without permission) Abstract: CDFI serve an important social function because by providing access to financial services to underserved low-income individuals and families. Understanding what governance mechanisms promote efficient use of scarce resources that these organizations possess matters because only sustainable institutions have the potential to revitalize low-income communities and change low-income individuals’ lives in the long-term. The focus of this paper is on evaluating the impact of board size and composition on the performance of CDFIs. The results show that CDFIs with larger boards have better outreach, while diverse boards may not be best able to guarantee that CDFIs will achieve their stated objectives. Financial support this research was provided by the Center for Financial Research at the Federal Deposit Insurance Corporation.