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CDFI Coalition Institute Marks 25th Anniversary of CDFI Fund
Recently, community development financial institutions (CDFIs) from around the country meet for a two-day conference in Washington, D.C. It was the first public appearance for new CDFI Fund Director Jodie Harris, who replaced Annie Donovan when she stepped down in early January. In addition to Harris’s keynote address, there was also a CDFI Fund panel comprised of the new deputy director for policy and programs as well as staff from certification, compliance monitoring and evaluation, financial strategies and research, the grant-based programs and bond guarantee program offices. Topics discussed included the bureau’s reorganization, updates on funding rounds, compliance and reporting changes, certification, the fiscal year (FY) 2018 awards process, and data collection. A two-hour open office followed the panel for CDFI Fund staff to meet one-on-one with conference attendees who had individual questions.
Altogether, the CDFI Coalition Institute agenda included 12 panels, as well as keynote addresses by Sen. Ben Cardin, D-Md., ranking member of the Senate Small Business Committee; Rep. Tom Graves, R-Ga., ranking member of the House Appropriations Subcommittee on Financial Services and General Government (FSGG); and Sen. Chris Coons, D-Del., ranking member of the Senate Appropriations Subcommittee on FSGG. In addition to hearing from members of Congress, CDFI industry representatives made scheduled visits to meet with congressional staff on Capitol Hill to inform legislators of the importance of the CDFI Fund grant programs that the administration’s 2020 budget request proposes to eliminate (i.e., Bank Enterprise Award (BEA) Program, CDFI Program, the Native American CDFI Assistance Program, Capital Magnet Fund, and the Healthy Food Financing Initiative) similar to their FY 2018 and FY 2019 requests that a Republican-controlled Congress rejected. It is even less likely that a Democratic House will agree to them. More on that here.
While the 2019 omnibus appropriations provided $250 million for the CDFI Fund, level with FY 2018, there is a sign-on letter being led by Reps. Carolyn Maloney, D-N.Y., Barbara Lee, D-Calif., and Don Young, R-Alaska, requesting $300 million in appropriations for the CDFI Fund in FY 2020. The CDFI Coalition signaled its support for the $50 million increase during the conference panel entitled “Legislative Outlook and Priorities in 116th Congress.” Specifically, the CDFI Coalition indicated that the $300 million in funds should include not less than: $218.4 million for the CDFI program; $19.2 million for the Native American CDFI Assistance (NACA) program; $30 million for the BEA program; and $32.4 million for administration and research. The CDFI Coalition is also urging Congress to extend the CDFI Bond Guarantee program at the authorized level of $500 million.
The most recent CDFI Program and NACA Program performance data released by the CDFI Fund in November 2018 covering fiscal years 2003 through 2016 contains data on 855 CDFIs. Key findings in the report includes: more than 80 percent of CDFI lending portfolios are targeted to serve low-income families, high poverty communities and underserved populations; non-metropolitan and rural areas account for nearly 18 percent of lending, exceeding the national rural population share (15 percent); and persistent poverty counties (PPCs), both urban and rural, likewise account for more than 21 percent of all CDFI lending, exceeding the share of population living in PPCs (7.6 percent).
Other key takeaways are that, in 2016, banks and credit unions dedicated more of their staff activities to financial services whereas loan funds and venture funds focused more on lending and investing. With respect to lending, consumer lending constituted the majority of lending for banks and credit unions as measured by the number of loans; loan funds emphasized business, microenterprise, home improvement, and home purchase loans; and venture funds largely focused on business and microenterprise loans.
One overarching finding in the CDFI Fund’s summary snapshot report that underscores the importance of the CDFI Fund to the CDFI industry is that the most prominent source of contributed revenue to CDFIs across all institution types (banks, credit unions, loan funds, and venture capital funds) is the “government” category. As the CDFI Coalition points out in their FY 2020 Programmatic Appropriations Request, an increase of $50 million for the CDFI Fund over the $250 million in the FY 2019 Consolidated Appropriations Act would leverage $600 million, which translates to leveraging $12 in private capital for every dollar in federal support.
The CDFI Fund’s 25-year track record of investing in CDFIs serving low-income communities is impressive. According to the CDFI Coalition, since 1994, the CDFI Fund has awarded more than $3.2 billion on a competitive basis to CDFIs, including Native American CDFIs, small and emerging CDFIs and financial institutions through the BEA program. In FY 2018, CDFIs program awardees made more than 280,000 loans or investments totaling more than $11 billion, including loans to nearly 15,000 small businesses. Additional details of this activity include: 17,963 microloans totaling $2.1 billion; 207,657 consumer loans totaling $3.5 billion; 19,050 home improvement or home purchase loans equaling $2.1 billion; 33,613 affordable housing units financed; and 343,471 individuals received financial literacy training.
What better way to acknowledge the 25th anniversary of the CDFI Fund than to increase its annual appropriation to $300 million in FY 2020.