More Requests, Less Funding Means a Leaner CDFI Round
Community development credit unions may receive less money on a per credit union basis from the U.S. Treasury's CDFI Fund this year, both because the program has less money to distribute and because there will likely be more CUs eligible for the money that is available.
The CDFI fund exists to strengthen and support financial institutions that have been found to work with lower income and financially underserved communities, and community development credit unions have often received grants from the fund.
Congress has yet to set the appropriations level for the fund this year. Last year, the fund received an appropriation of almost $247 million, of which $109 million was spent by the CDFI program on financial assistance and technical assistance awards.
Last year's CDFI Fund appropriations did not include monies distributed by the Treasury Department's Community Development Capital Initiative and the Obama administration requested $250 million to support the fund programs this fiscal year.
The fund has already opened its funding round for this fiscal year at that level but with the awareness that the actual amount of money appropriated could very well come in lower than the administration's appropriations request.
The CDFI Coalition, a group of community development financial institutions that support the Treasury Department's CDFI Fund, is cautiously optimistic that the program will survive the federal budget process without major cuts to this year's appropriation's request.
"We have friends on both sides of the aisle, particularly in the Senate," said Coalition Chairman Jeannine Jacokes. "The situation in the House is a little less clear because we haven't seen the committee assignments yet, but overall we are cautiously optimistic," she added.
CDFIs and the CDFI Fund received unprecedented attention and levels of funding under a majority Democratic Congress and the Obama Administration, including loans to build capital using funds from the Troubled Asset Relief Program.
Jacokes acknowledged that it was unlikely that the CDFI Fund would see any budget increases from previous years but said the coalition was working very hard to convince legislators not to make significant cuts.
She acknowledged that much of the incoming Congress' rhetoric has been focused on budget cutting but noted that cutting budgets is often easier to do in the abstract and more difficult when it becomes clear that a given budget cut is likely to impact a representative's district.
"There is that moment when they realize that this budget cut or that budget cut will really hurt the district," Jacokes said.
Cliff Rosenthal, CEO of the National Federation of Community Development Credit Unions and past chair of the coalition, joined in both Jacokes' optimism and caution. He felt optimistic about the fund's maintaining its funding level for its core programs but thought funding for its two newest programs was more at risk.
The two new programs are the Healthy Food Finance Initiative and the Bank on USA program.
The healthy food initiative would allow CDFIs, including some credit unions, to finance small businesses and other enterprises that could help bring healthy food into poor and underserved neighborhoods. The Bank on USA program would promote access to affordable and appropriate financial services and basic consumer credit products for households lacking such access, according to the fund.
Rosenthal also noted that to some extent some CDCUs might see lower awards from the fund because more of them might apply for funding. The push among CDCUs to qualify for CDCI funding last year resulted in significantly more CDCUs recognized as CDFIs. (CDFI recognition was one of the steps in the CDCI application.) And some of those new CDFIs are likely to apply for CDFI funding this year, Rosenthal said.
The fund distributed $12.7 million to 21 CDCUs and the federation from the CDFI program in 2010.